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
Recent Developments
Mar 13, 2023 - New “Product of USA” Label Requirements
- The US Department of Agriculture in March proposed new requirements that would allow labels on meat, poultry or eggs to use the phrases “Made in the USA” or “Product of USA” only if they come from animals “born, raised, slaughtered and processed in the United States,” The New York Times reports. Current policy allows voluntary use of such labels on products from animals that have been imported from abroad and slaughtered in the US and on meat that’s been imported and repackaged or further processed, according to NYT. The new regulatory requirements are designed to better align the voluntary “Product of USA” label claim with consumer understanding of what the claim means. Under the proposed rule, the “Product of USA” label claim would continue to be voluntary. About 12% of the beef consumed in the US is imported.
- Whole Foods Market is asking its suppliers to lower prices as inflation moderates, The Wall Street Journal reports. The Amazon-owned grocery chain told suppliers at a recent virtual summit that it wants to bring down retail prices in its stores as companies’ own costs start to decline, according to a recording of the meeting viewed by WSJ. Food manufacturers have raised wholesale prices, citing higher transport, labor and production costs, and grocery chains have passed those increases along to customers. While higher food prices have helped grocery-store operators and their suppliers generate higher sales and profits, inflation-battered consumers are cutting back on purchases, trading down to less expensive store brands, and are doing more shopping at dollar stores to save money. While overall inflation has begun to slow, grocery prices have continued to climb, although less steeply in recent months.
- As of January 1, 2023 sesame was required to be declared on the label of any packaged food containing it as an ingredient, according to the US Food and Drug Administration. The Food Allergy Safety, Treatment, Education, and Research (FASTER) Act, signed into law in 2021, named sesame the ninth most common food allergy among children and adults. While companies had until the start of this year to comply with the agency’s requirements for food allergens, many companies have been voluntarily declaring sesame as an allergen on the label prior to the law’s effective date. The sesame labeling requirements apply to packaged foods. Allergen labeling requirements for foods that aren’t packaged may vary, like bagels in a grocery bin or bakery goods displayed on trays.
- Eco-conscious consumers will be looking to purchase more environmentally-friendly foods in greener packaging this year, according to 2023 grocery trends identified by the Specialty Food Association’s (SFA) Trendspotter Panel. The panel said to watch for products developed from ingredients like mushrooms, seaweed and jackfruit. Also, expect more seed-to-shelf future supply chains, indigenous farming practices and seed diversity. “With growing unrest over climate issues and their impact on the future food supply, products that feature some aspect of sustainable ingredients, upcycled ingredients, or environment-friendly packaging, are leading the way,” Drexel University's Jonathan Deutsch told the panel.
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