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
Sep 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. The 7.1% decline in the producer price index for specialty food retailers from its peak in March coincides with slowing inflation at the wholesale level, according to the Labor Department. Still, on a year-over-year basis, retail prices at the grocery and specialty food stores remain high, buoyed by the continued rise in personal consumption expenditures – up 2.6% in June – among more affluent consumers. Employment by specialty food retailers fell 3.1% year over year in July and remains below pre-pandemic levels, while average industry wages rose 4.8% over the same period to $18.58 per hour, BLS data shows.
- The growing mainstream appeal of specialty foods is driving robust sales growth, with US sales of $207 billion in 2023 – up 149% over the past decade, according to the Specialty Food Association. Sales are projected to reach $221.5 billion in 2024 and grow at a compound annual rate of 5.4% from 2023 to 2027. Shoppers most likely to purchase specialty foods include households with kids, those with incomes of $150,000-plus, “plant-forward” consumers, and West Coast residents, per the SFA. Purchasers tend to skew younger, with 83% of millennials, 77% of Gen Z, 73% of Gen X, and 53% of baby boomers making specialty food purchases last year, Food Technology Magazine reports. In 2023, 62% of shoppers bought specialty foods in a supermarket, 50% in a mass retailer, 42% in a natural food store, 25% at a farmers’ market, and 21% in a gourmet shop or convenience store.
- 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.
Get A Demo
Vertical IQ’s Industry Intelligence Platform
See for yourself why over 60,000 users trust Vertical IQ for their industry research and call preparation needs. Our easy-to-digest industry insights save call preparation time and help differentiate you from the competition.
Build valuable, lasting relationships by having smarter conversations -
check out Vertical IQ today.