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
Jul 13, 2024 - Rising Sales and Prices
- According to the US Bureau of Labor Statistics, sales for food and beverage stores, including specialty food stores, rose 3.2% in March from a year earlier and jumped 8.4% from February. Rising consumer spending this year is supporting rapidly rising producer prices for specialty food retailers. In May, the producer price index for specialty food stores climbed 11.7% year over year to just above its record high in March. Meanwhile, employment by specialty food stores shrank 3.6% in May year over year, while average industry wages rose 1.6% over the same period to $18.31 per hour, BLS data show.
- 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.
- US grocery sales are projected to fall over the next five years compared to the last five, with ecommerce outperforming in-person sales, according to the US eGrocery Sales Forecast: 2024-28, from Brick Meets Click and Mercatus. Overall grocery sales, and ecommerce in particular, surged during the pandemic and its aftermath as record-high food inflation took hold. Both inflation and consumers' affinity for online grocery shopping are proving sticky. According to the new report, ecommerce is projected to increase at a compound annual growth rate (CAGR) of 4.5% versus a 1.3% rate for in-person grocery shopping. Total online sales could reach $120 billion by the end of 2028 and account for 12.7% of the total grocery sales in the US, according to the Brick Meets Click forecast. Delivery and pickup sales combined will represent 10.7% of total grocery sales in five years, per the report.
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