Specialty Food Growth Fueled by Millennials

specialty food growth Happy Millennials | PBFY

Specialty Food Growth Fueled by Millennials

Specialty food in the United States has been seeing a growth spurt in sales for some time now, and experts are crediting millennials with the uptick. For 2018, data published in the 2019-2020 edition of The State of the Specialty Food Industry showed that sales from specialty foods and beverages had increased to about $148.7 billion in 2018 alone. The sales figure translated to an increase of 9.8% from 2016.

Specialty foods aren’t your everyday foods; they’re unique and high-quality food items produced in small quantities for value and with possibly rare, high-quality ingredients. 

Specialty foods have been popular since before the age of technology when inventive cooks created unique dishes that couldn’t be found everywhere. Today, specialty foods continue to thrive. They are sometimes categorized broadly under fresh, frozen, refrigerated and plant-based specialty foods.

Below, we highlight the different top-performing specialty foods per category.

The following categories contributed to 2018’s specialty food growth with the highest sales in retail platforms:

  • Cheese and plant-based cheese
  • Frozen, refrigerated meat, poultry, seafood
  • Chips, pretzels, snacks
  • Non-RTD coffee and hot cocoa
  • Bread and baked goods
  • Chocolate and other confectionery
  • Refrigerated entrées
  • Frozen desserts
  • Frozen entrées
  • Yogurt and kefir

The following categories are ranked according to their dollar growth rate and overall contribution to 2018’s specialty food growth:

  • Refrigerated plant-based meat alternatives
  • Rice cakes
  • Frozen plant-based meat alternatives
  • Water
  • Refrigerated RTD tea and coffee
  • Shelf-stable creams and creamers
  • Refrigerated creams and creamers
  • Frozen desserts
  • Jerky and meat snacks
  • Refrigerated pasta

Overall Growth

According to the industry report, specialty food sales growth for 2018 was bigger than that for all food sales by a huge margin – 10.3% to 3.1%. Annual specialty food growth has been positive for the last five years, with an average of 7.2% growth every year between 2013 and 2018, which translates to growth from $47.3bn to $67bn. Mintel predicts that by 2023, that figure will have grown to $89.1bn, achieved with a compound annual growth rate of 5.9%.

Meanwhile, between 2016 and 2018, the frozen and refrigerated categories of specialty foods saw the biggest jumps in sales; frozen foods saw a 16.3% rise while refrigerated foods saw a 12% rise.

Additionally, total sales of specialty foods in the United States for the year 2018 capped at $148.7bn, with retail outlets being the most popular sales platform ($113.4bn), followed by Foodservice ($32.4bn) and online ($2.85bn)

Generational Preferences

According to The State of the Specialty Food Industry report, the biggest chunk of purchases was made by the ‘millennial’ age group, with up to 84% of American millennials making a specialty food purchase. The report believes that this development is because millennials are more financially stable than other age groups and can afford to buy highly-priced specialty foods.

Members of the Gen X group (ages 43 to 54) came in second place, with about 75% of all American Gen-Xers making specialty food purchases. Gen-Xers were found to shop online more, were impulse buyers and made sustainability and local sourcing of their specialty foods a priority. Gen-Xers are also expected to have a bit more money on them, so they can afford to purchase specialty foods whenever they want to.

Younger buyers meanwhile, especially those in the Gen Z age group (ages 18 to 24) weren’t so enthusiastic. While about 66% of them were found to have made a specialty food purchase in 2018, that was a much lower number than the 79% that made similar purchases in 2017. 

The report’s findings concluded that Gen-Zers were more frugal and financially responsible than their older counterparts, in addition to having less money to spare.

Gender Preferences

As specialty food growth becomes more pronounced, food producers need to know who was making the purchases. When broken down according to gender, women and men’s decisions to make specialty food purchases become clearer.

Women, according to the report, were found to prefer specialty foods because of their unique taste, and because they were superior to the usual picks from the grocer’s. Women were also found to be more willing to pay more for better quality and were more likely to read every product label before making a purchase.

They also preferred regional foods to foreign alternatives and chose ‘made from scratch’ meals in favor of ready-made meals. When buying groceries, women were found to prefer physical visits to the grocery to online purchases.

Men, on the other hand, were found to prefer quick-meal specialty foods, especially those that didn’t require a lot of prepping. Men also chose specialty foods more if they were good for the environment, if they were good for their health, if they were visibly of superior quality or if they got a chance to taste them before purchase.

Unlike women, men were also more likely to order groceries online. In an unsurprising twist, men were also more likely to have specialty food for breakfast and lunch than women, in addition to being open to international cuisines.

Outlook

Judging by the results of the report, here’s the future outlook for specialty food growth in the United States.

  • Specialty beverages are to be the next big thing in the coming years. Already, beverage sales beat food sales in the years between 2016 and 2018.
  • Plant-based specialty products are another hot upcoming trend. They’re backed by increasing preference for plant-based diets in the United States and have already seen a promising 24% increase in retail sales since 2016, according to the report.
  • Producers and sellers need to reconsider their marketing tactics toward Gen-Zers, who are proving to have different tastes altogether. They’ve been found to have spent the least on specialty foods last year and were found not to prefer buying quick specialty meals at delis, supermarkets and the like. While not considered a trend yet, their behavior is ominous.
  • Specialty foods producers need to start creating more breakfast-centric foods. They’re already growing in demand.
  • Customers are more knowledgeable about sustainability and environmental damage, and they want better, safer packaging. They also want companies to cut down on their food waste.

Share this post

Leave a Reply