Natural & Specialty Foods Retail Industry Trends

Growth in Specialty Food Sales

Specialty food sales increased almost 15 percent between 2005 and 2006, according to Mintel. Products introduced in gourmet stores, specialty retailers, and health food stores have driven growth. Most new products came from the confectionery, beverage, and fruit and vegetable categories. Increased availability through mainstream channels has exposed specialty foods to a broad range of consumers and helped grow the market.

Strong Demand for Natural/Organic Products

Sales of natural products grew about 10 percent between 2004 and 2005. Rapidly growing categories include produce, baked goods, food supplements, and pet products. Increased awareness of the role food plays in long-term health has helped grow sales of natural and organic products. Baby boomers, who tend to be affluent and more concerned with nutrition, will help drive future demand.

Imports Increasing

Imported foods are a growing segment of the US food market and especially important to specialty food retailers. Increased international travel has driven demand for imported and ethnic products in the US. Large growing immigrant populations continue to seek out food from home countries.

Declining Employment

Employment in specialty food stores declined 15 percent between 2000 and 2006. While sales of specialty foods have grown, grocery stores and other large retailers have captured much of the market growth at the expense of smaller stores. In particular, meat markets and confectionery/nut stores have suffered from increased competition. Employment has declined 2 to 3 percent annually since 2001, and has yet to recover from the last recession.