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 18,300 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.

Perishable Products

Specialty food stores typically carry more perishable products than traditional food retailers, often two-thirds or more of their product offerings.

Demand Dependent On Economic Conditions

The typical specialty food customer is more affluent (household income over $50,000) than the typical traditional grocery store customer.

Industry size & Structure

A typical specialty food retailer operates out of a single location, employs 11 workers, and generates about $1.3 million annually.

    • The specialty food stores industry consists of 18,300 companies that employ over 203,700 workers, and generates about $24 billion annually.
    • Total US sales of specialty foods grew 13% in 2020 compared to 2018 and reached $170.4 billion.
    • Traditional grocery stores and supermarkets remain the largest sellers of specialty foods, with about 60% of sales.
    • Natural food stores' sales rose 9.8% in 2020.
    • Of organic product sales, 45% are through traditional food retailers and 37% are through natural food stores.
    • Specialty foods represent about 21.5% 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, The Fresh Market, and Trader Joe's.
                                  Industry Forecast
                                  Specialty Food Stores Industry Growth
                                  Source: Vertical IQ and Inforum

                                  Recent Developments

                                  Nov 7, 2022 - Thanksgiving Meals Will Cost More
                                  • Thanksgiving meal items are estimated to cost 13.5% more this year than in 2021, according to an Information Resources Inc. (IRI) survey. To manage inflationary pressures, consumers are shopping early and seeking promotions, the Specialty Food Association (SFA) reported in November. “This year, consumers are planning further ahead for Thanksgiving than ever before, picking up staple items as they see promotions that fit within their budgets,” said IRI’s Alastair Steel, adding “The weeks leading up to Thanksgiving will be a tremendous opportunity for CPG brands and grocery retailers, and recent data will empower optimization on promotions and advertising strategies for key products.” Categories expected to see heavy volume include baking, beverages, meat (turkey and ham), side dishes, and pies in the weeks leading up to Thanksgiving, according to the IRI survey.
                                  • More than three-quarters of consumers surveyed by the Specialty Foods Association (SFA) and SliceMR said they purchase specialty food – a record-breaking 76%. The SFA’s Today's Specialty Food Consumer research report, released in October 2022, found that the incidence of specialty food purchase is holding steady among many age groups and is up 6% over 2021 among millennials -- the core group of specialty food consumers. Gen-Z’ers – most of whom are now 18 years old or older -- are equal to Gen-X in specialty food purchase likelihood, with both groups second only to millennials. Notably, 25% of specialty food consumers said they like to shop where the store features products from diverse suppliers including women-, Black-, BIPOC-, LGBTQ+-, and veteran-owned companies. Moreover, specialty food consumers care about attributes like organic, sustainable, and upcycled, the survey found.
                                  • The Food and Drug Administration in September 2022 announced it is updating the marketing term "healthy" to reflect what has been learned about what makes a wholesome diet. The new proposed FDA rule would align the definition of the "healthy" claim more closely with current nutrition science. Under the proposed rule a flavored yogurt with a high sugar content could no longer make the “healthy” claim on its label, while fatty-salmon, which under the existing rule can’t make the healthy claim, could. The FDA said the new definition is intended to both empower consumers to eat better and, potentially, foster a healthier food supply by prompting manufacturers to add more good foods like vegetables or whole grains to their product lines. The agency also is researching a symbol that manufacturers could display on the front of packaging to show their product meets the new "healthy" definition.
                                  • More young adults in the United States are drinking coffee than ever before, according to the latest Atlas of American Coffee released by the National Coffee Association (NCA) in September 2022. The NCA's latest National Coffee Data Trends report found that coffee reached record-high popularity with 18-24 year olds, with 51% having drank coffee in the past day, surpassing the record of 50% set in September 2020. Highlights from the NCA's Trends report include: More people drink coffee each day than drink tap or bottled water; 30% of past-day coffee drinkers had cold coffee (including cold brew, iced coffee, and frozen beverages); and 32% of Americans had flavored coffee in the past week with vanilla the most popular flavor, followed by caramel and mocha. Coffee’s growing popularity defies its steep rise in price, with ground coffee up nearly 39% since late 2019 according to the US Bureau of Labor Statistics.
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