Oser Communications Group

8 SNACKING NEWS August 2018 SNACKING NEWS water, jerky and meat snacks, and that snacks as a category now account for 27.6 percent of the specialty foods market. Of the 13 snack categories in the survey, five grew faster than 20 percent, led by rice cakes. Conventional supermarkets and mass merchandisers still make the lion's share of specialty food sales. But those two channels are on different growth trajecto- ries, as consumers do less specialty food shopping in supermarkets and more in mass market stores, club stores and online. Consumers who responded to the survey named 13 channels as places where they've bought specialty foods within the last month – a dramatic rise, with 22 per- cent of people saying they buy specialty foods at discounters. Department stores are on the list and so are home stores, liquor stores, gift stores, convenience stores and club stores. "Supermarkets are losing out, while club stores and online e- tailers have improved," Lockwood said. Even though the number of shoppers in conventional supermarkets is dropping, total sales in supermarkets are still grow- ing. The natural foods channel is also hold- ing its own. Its shoppers tend to spend more than the shoppers in conventional grocery stores, since the natural foods in- ventory is built around specialty foods. The Overall Market for Specialty Food is Strong and Growing. The United States market for specialty food products is strong and growing faster than the overall market for food products. The total U.S. specialty food market is currently estimated to be about $140 bil- lion, which includes price look-up (PLU) items such as fresh fruits and vegetables and foodservice sales as well as $63 bil- lion in products accounted for with SKUs and brand names. Sales in brick and mor- tar grocery stores grew by 4.7 percent dur- ing 2016 and 2017, compared to 5.7 percent in 2015 and 2016. Growth in the foodservice channel was 7.6 percent dur- ing 2016 and 2017, and it's projected to continue outpacing growth in retail chan- nels over the next few years. "It's pre- dicted to be a key to growth in our industry," Lockwood said. The Influence of a New Generation The specialty foods market is feeling the influence of the i-generation, iGen, the generation younger than the Millennials. Its members are currently 18 to 23 years old. Millennials have driven the specialty foods industry over the past few years, but iGen consumers will be coming up over the next five years, at the same time that Baby Boomers are dropping out of the market, Lockwood said. iGen consumers are exploratory experimenters: 79 percent say they've bought specialty foods in the past six months. The iGen consumer hasn't yet devel- oped strong opinions about brands, but they have the strongest desire of any of the generations to support smaller companies, both locally and globally. These younger generations have begun to shift their rea- sons for buying specialty foods away from preparing everyday meals at home and to- wards snacking, buying food to serve to guests and food to take to work. "I would expect this to keep moving this way," Lockwood said. One way that Millennials and iGen con- sumers express their exploratory natures is through the serial adoption of various structured eating plans. Last week's vegan might be next week's Paleo eater, as he or she explores different types of structured eating habits, which can even include eat- ing habits like juice cleanses, mixing and matching various parts of different eating plans and even fasting, which is currently on the rise. Lockwood compared this to the way that computer games are designed to be played: there's no one "right answer" – computer gamers are expected to try var- ious strategies, fail and try again until they find a pathway that's successful for them. These younger consumers are taking that approach to their eating habits, he sug- gested. "This is a serious cultural shift not to be underestimated. That's going to change everything that we do," he said. "If you're going to make a product and hang its fortunes on a single diet, you should know that people are going to come in and out of it very quickly. ... This is probably the most exciting new thing that I've seen come out of this research." The Cheese Stands Alone As for specialty foods themselves, cheese, a category that includes non-dairy alterna- tives, is once again the single largest product category in the specialty food market, with just over $4 billion in sales in 2017 and 6.6 percent growth from 2015 to 2017. Cheese is followed in the list of top specialty food sellers by frozen or refrigerated meat, poul- try and seafood and then by chips, pretzels and snacks; non-ready-to-drink coffee and hot cocoa; bread and baked goods; choco- late and other confectionery; yogurt and kefir; frozen desserts; refrigerated entrees and frozen lunch or dinner entrees. Consumer interest in plant-based foods is propelling that category to a 3 percent share of the specialty foods market with a 10 percent growth rate. That trend is ex- pected to continue over the next decade. Nearly a third of specialty foods con- sumers said that they'd made purchases of plant-based foods in the last six months. The Best Opportunity for Grocery Retailers Retail competition and stubborn food price deflation limited growth in 2017, but specialty food is forecast to reach a 19.4 percent share of total U.S. grocery sales in 2022. "It's a really, really strong market," Lockwood said. Specialty foods retailers' best opportunity to capitalize on the strength of the market over the next few years will be to convert those who buy small amounts of specialty food items into heavier consumers of specialty foods, ac- cording to Lockwood. "They're the easiest to sell," he said. "When you're talking to someone who has experienced specialty food and they liked it, they liked it because of one of three things: it tastes better, it connects them to a place or it connects them to a cause. ... As you convert light buyers into heavier buyers, you bring them into the heavier spending group." Heavy buyers of specialty foods are highly engaged in the shopping process. They ask questions, read about food and talk to others about what they've found. They spend for their food according to their perception of value rather than strictly on price. Heavy specialty foods buyers are much more likely than all other shoppers to be on the lookout for company values, efforts to eliminate food waste and treatment of employees. "Knowledgeable employees are just as important as local and regional products, so this is a key ad- vantage to natural and specialty stores be- cause national chains have not been able to address this issue," Lockwood said. Light specialty food buyers, on the other hand, are a lot more like non-buyers than like heavy buyers – they're actively look- ing for products that are superior to con- ventional foods in some ways, but they'll only buy if they don't have to compromise much on either price or convenience. They may respond to local products. "Retailers are right to put a lot of effort into provid- ing more local and regional products, as this is important to about half of all shop- pers," Lockwood said. Traditional grocery stores will stay rel- evant to consumers by providing an envi- ronment in which their shoppers can explore, Lockwood said. "People go there for exploration," he said. "Maybe you want to know how to cook something. I need to go to a specialty store to find someone to tell me how to prepare that. ... If you want to know what new local things are available, you're not going to get that at a convenience store." n Specialty Food Market Continued from Page 1 Flax4Life Adds Two Cakes to its Gluten Free Bakery Products BY LORRIE BAUMANN Flax4Life is a family-owned and operated bakery specializing in flax-based products that are certified gluten free, dairy free, nut free and non-GMO. Its bakery products are high in fiber, Omega-3 fatty acids, pro- tein and lignans and are made with all-nat- ural, high quality ingredients. The company was founded after a fam- ily relative began having mysterious health problems that were finally diagnosed as celiac disease. Finding a lack of options on the market that met the newly discovered need for a diet free of gluten, the family decided to open a certified gluten free bak- ery so they could be sure of baked goods that would be safe to eat for people who can't tolerate gluten in their diet. "It was just through trial and error that they came on flax," said Flax4Life Market- ing Coordinator Sarah Bishop. In flax, the family discovered a flour that was high in fiber and Omega 3s and was a good source of protein. The bakery's first Flax4Life prod- ucts were its Muffins, which are now offered in six varieties: Wild Blueberry, Carrot Raisin, Chocolate Chip, Cranberry Orange, Apple Cinnamon and Hawaiian Pineapple. They were followed by Toaster Buns, sandwich rolls offered in three flavors: Orig- inal, Everything and Cinnamon Raisin; Brownies in four flavors: Chocolate, Toasted Coconut, Dark Cherry and Cappuc- cino; and Granola in five flavors: Apple Cin- namon, Chunky Chocolate, Hawaiian Pineapple, Banana & Coconut and Cran- berry Orange. This summer, Flax4Life is launching its Cakes, in Chocolate Shaving and Carrot Cake varieties. The 8-inch square cakes will be sold fresh from the bakery case for $10.99 to $12.99 at retail. The Chocolate Shaving Cake is a devil's food cake with a fudge frosting finished with a topping of dark chocolate curls, while the Carrot Cake has the traditional warm cinnamon spice with raisins and carrot chunks baked in. It's frosted with a dairy-free cream cheese frost- ing topped with toasted coconut. The company's next venture is likely to be an entrant into the snack food market, possibly with cookies and protein bites, since the grab and go snack category is currently lacking gluten free options, Bishop said. "Everyone's life is so hectic, and you need that little treat to keep you going through the day – that's what we're trying to fill," she said. The company is also listening to its cus- tomers and is researching sugar alternatives to sweeten products from its current range. n

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