Retail’s High-End Food Opportunity

May 06, 2004
Al McClain

By Al McClain

Attending the conglomeration of food shows led by the FMI (Food Marketing Institute) convention this week, I wondered if enough attention is being given to the unique opportunity
of specialty foods.

Consider that Wal-Mart differentiates itself primarily by selling fast moving items with mass appeal, at very low prices.

On the other end of the spectrum are specialty foods, which are often relegated to a separate section but sell for a premium.

Then consider that specialty food dollar sales at retail grew over 20% between 2001 and 2003, to nearly $23 billion, according to NASFT (National Association for the Specialty
Food Trade). Sample category growth figures include: 30% for cereals vs. 2% overall growth; 12% for cookies/snack bars vs. 1% total; and 13% for shelf-stable pasta versus 3% overall.

Moderator’s Comment: Mass retailers like to focus, naturally, on products that they can move quickly at high margins.
But, since supermarkets and other related retailers have not been able to sell nearly as much as they like, nor make the margins they’d prefer, isn’t it time to give some additional
consideration to high margin specialty opportunities?

Consumers are becoming more sophisticated when it comes to food preferences and baby boomers are reaching the stage where they may be willing to spend a
little more for higher quality offerings. This could be a real opportunity to sell truly differentiated products and make a good buck doing it. Rather than put the specialty food
department on automatic pilot and leave it to distributors to handle, it may just be worth paying a little more attention to a high profit opportunity that provides consumers
a satisfying experience and helps to build shopper loyalty, as well.

Al McClain – Moderator

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