Mintel and the Specialty Food Association have collaborated to produce the 11th annual State of the Industry Report – The Market, following the first report published in May 2004. The purpose of this report is to show changes in the industry as a whole, and in the specific segments included here.

Specialty foods are broadly defined for this report as products that have limited distribution and a reputation for high quality. These items continue to gain in popularity – and are easier to find in all kinds of outlets – as the American consumer has developed a more sophisticated and discerning palate.

This report encompasses three years of sales data (2011, 2012, and 2013) across 58 segments (though most often the tabulated data capture the primary 51 segments), and discusses the positive and negative factors that may have a bearing on each segment’s future growth or decline. Also, as in previous years, included in this report is a comprehensive look at distribution channels within the specialty food trade, from importer and broker to manufacturer, distributor, and retailer.

As the State of the Industry Report has evolved, so too has the quantity of available data. When compatible data sources are available, Specialty Food Association/Mintel has drawn from the various reports (particularly the most recent report).

According to the Specialty Food Association, specialty food products, as used herein, refer to food, beverages, or confections meant for human use that are of the highest grade, style, and/or quality in their respective categories. Their specialty nature derives from a combination of some or all of the following qualities: their uniqueness, exotic origin, particular processing, design, limited supply, unusual application or use, extraordinary packaging or channel of distribution/sale, the common denominator of which is their high quality.

SPINS’ coding effort separates Specialty Gourmet products across all channels based on brand positioning designations that are defined below.

Brand positioning

There are five main factors used to create segmentation for this report.

These factors are: brand intention, consumer perception, quality standards, channel distribution, and product segment standards.

“What positioning does a brand intend to project, how does the brand see itself?”

“How does the consumer see the brand’s positioning?”

“What are the manufacturers’ quality standards?”

“How does channel distribution reflect or skew that positioning?”

“And, how do individual product categories affect positioning (ie chocolate versus milk)?”

As with previous reports, the two segments of Specialty Gourmet and Natural Standards comprise exclusive, and therefore additive, sets of products.

Specialty Gourmet

Brand/products are referred to as specialty or gourmet. Most often these products contain all-natural and sometimes organic ingredients but not necessarily. They are marketed as artisan, premium quality, imported/regional, or ethnic/cultural. Three types of product segments were included under the Specialty Gourmet banner.

Included are natural-ingredient products with significant distribution in natural supermarkets:

• Brand examples: Ciao Bella, San-J, Food Should Taste Good, Wolfgang Puck Organic, Vosges

• Product example: Rao’s Marinara Sauce

Strictly Gourmet or Artisan brands found in multiple channels:

• Brand examples: Ecce Panis, Ghirardelli, Napoleon, Illy, Cabot

• Product example: Lake Champlain Dark Chocolate

Specialty and Ethnic brands mainly distributed in conventional food, drug, and mass outlets:

• Brand examples: Athenos, Goya, Kikkoman, Classico, Tillamook

• Product example: Kikkoman Soy Sauce

Natural Standards

Brands/products that are referred to as Natural Standards are marketed as and approved for sale at natural supermarkets because they meet the quality standards common to these outlets.

Criteria include:

• Organic ingredients (products that contain certified organic ingredients) or pure/natural ingredients (which is typically defined as no artificial colors, flavors, sweeteners, or preservatives, and minimal processing)

• Brand/company mission and ethics are aligned with and accepted as standard in the natural industry (environmentally conscious, no animal testing, charitable, sustainably minded, prominence of organic ingredients, and minimal processing)

• Brand examples: Organic Valley, Amy’s Kitchen, and Nature’s Path

Segment totals are included in this report for these divisions of Specialty Gourmet and Natural Standards. Both were included to address the concerns that natural products can be an inherent part of the specialty food market.

The following 58 segments have been selected for inclusion in this report. The segments chosen represent a large portion of the overall market, and while not exhaustive, are deemed to present a representative view of the whole market.

Categories included in market sales totals, but not tabulated in report include the following:

Data from this report are derived from sales through the following channels:

Mainstream channels:

• Food stores with $2 million or more in sales

• Drug stores with $1 million or more in sales

• Mass merchandisers

• Dollar stores (Family Dollar, Dollar General, and Fred’s Super Dollar only)

• Club (BJ’s and Sam’s only)

• Military stores

Natural channel:

• Natural supermarkets with $2 million or more in annual sales with a 50% natural product mix. However, Whole Foods Market, Trader Joe’s, as well as GNC, Vitamin Shoppe, and other supplement stores are not included.

Specialty channel:

• Food stores with $2 million or more in sales

• SPINS-defined specialty items comprise more than 25% of sales

• Supplement products comprise less than 50% of sales

• Stores have all departments represented

In addition to specific exclusions noted in the above definition, also excluded from sales figures in this report are sales through:

• Convenience stores

• Mail order

• The internet

• Minor channels, such as department stores, florists, airport outlets, and clothing boutiques

• Market size data are based on: Mintel/Specialty Food Association estimates for specialty food sales including PLU items, Whole Foods Market, and Trader Joe’s.

• Market segmentation data are based on: Specialty market sales are based on SPINS/Nielsen for FDM and natural food stores. Total market data are based on SPINS/Nielsen as well as MULO sales data from SymphonyIRI Group InfoScan® Reviews. MULO is defined as Multi Outlet, representative of the following channels: Total US Grocery, Mass, Total US Drug, Total Walmart, Dollar, Military, and Club.

Published here are the results of the Specialty Food Association/Mintel annual survey of the specialty food industry. The survey was carried out in January 2014 by GMI. This survey was also administered in all previous years. Where possible, comparisons between the surveys are included. Following is a list of the number of members in each sector who responded:

Note: % does not add to total due to rounding

There follows a list of abbreviations that are used in the report.

In order to provide an inflation-adjusted price value for markets Mintel uses the CPI to deflate current prices. The CPI is defined as follows: