Specialty Food Stores
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 19,000 specialty foods stores in the US sell produce, seafood, grocery, meat and poultry, bakery, prepared foods, specialty cheese, coffee and tea, nutritional supplements, vitamins, educational products, floral, and even certain household products. Most specialty food stores offer products deemed to be higher quality and premium-priced than traditional grocery stores.
Dependance On Economic Conditions
Specialty food customers typically are more affluent (household income of $75,000) than the average grocery store shopper.
Perishable Products
Specialty food stores typically carry more perishable products than traditional food retailers, often comprising two-thirds or more of their product offerings.
Industry size & Structure
A typical specialty food retailer operates out of a single location, employs 8-9 workers, and generates about $1.4 million annually.
- The specialty food stores industry consists of 19,000 companies that employ 160,000 workers and generate about $27 billion annually.
- Sales by US specialty foods stores increased by 5.2% in 2022 compared to 2021 and reached $28.4 billion.
- Traditional grocery stores and supermarkets are the largest sellers of specialty foods, with about 70% of sales.
- Sales of specialty foods and beverages across all retail and food services are expected to reach $207 billion in 2023.
- Of organic food sales, 56% are sold through traditional food retailers and 32% are through natural food/health stores.
- Specialty foods represent about 22% of all food sales at retail.
- Most specialty food stores are small, single-unit locations, but some specialty food retailers are relatively large, multi-state operations, such as Whole Foods Markets, Sprouts Farmers Market, and Trader Joe's.
Industry Forecast
Specialty Food Stores Industry Growth
Recent Developments
Aug 13, 2024 - Producer Prices Easing
- Producer prices for specialty food retailers rose 3.1% in July compared to a year ago but declined for the fourth consecutive month, according to the latest US Bureau of Labor Statistics data. July's 7.1% decline in producer prices for specialty food retailers from their peak in March coincides with slowing inflation at the wholesale level, according to the Labor Department. Still, on a year-over-year basis, prices at the grocery store and for specialty food items remain high, buoyed by the continued rise in personal consumption expenditures by more affluent consumers.
- The chair of the US Federal Trade Commission (FTC) Lina Khan, in August announced the agency and the Justice Department will launch an inquiry into high grocery prices, Supermarket News reports. While Kahn acknowledged that the prices on many items consumers purchase at grocery stores have declined since last year, she said consumers still feel pinched, adding, “It still isn’t clear that Americans are fully getting the competitive, affordable prices that they deserve.” Khan announced the inquiry at the first meeting of the multiagency Strike Force on Unfair and Illegal Pricing, launched by President Biden in March to probe the tactics big grocery chains use to hike prices and extract outsized profits. Key among the task force’s priorities is having the USDA make investments to increase competition in the food supply chain.
- According to a recent report from market research firm DataM Intelligence, the specialty food ingredient market is projected to experience significant growth between 2024 and 2030. The market for specialty food ingredients was valued at $112.4 million in 2022 and is expected to reach $168.6 million by 2031, growing at a compound annual growth rate of 5.2%, according to the report. Growth drivers include changing dietary preferences, a growing population, and increasing consumer awareness of the health benefits associated with specialty ingredients. The report defines specialty food ingredients as ingredients that typically “preserve, texture, emulsify, color, help process and improve nutritional profile to processed foods.” Examples include honey truffle mushrooms and other sweet proteins to replace sugar for sweetening and spirulina, a type of blue-green algae rich in protein, to replace artificial coloring agents that are sometimes added to smoothies, popcorn, and energy bars.
- Whole Foods Market is expanding its meat market quality standards to ensure that animals are raised humanely, the company announced in a June press release. The specialty grocer is partnering with three new third-party providers: A Greener World’s Certified Animal Welfare Approved, Humane Farm Animal Care’s Certified Humane Raised and Handled, and Regenerative Organic Alliance’s Regenerative Organic Certified. The newly expanded program will include species not previously covered under the animal welfare policy, such as bison, veal, venison, duck, goose, and quail, and cover frozen, smoked, cooked, and cured products sold in its meat departments. In 2026, in addition to the existing meat quality standards, the program logo or seal will appear on product packaging, shelf strips, or scale tags for all products in the meat department to confirm that the product is animal welfare certified, according to the company.
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