Beverages, snacks, and plant-based foods are standouts in the specialty segment which despite approaching maturity continues to outpace the growth of conventional, according to Mintel research presented yesterday during the session 5 Key Drivers in Specialty Food.

“Specialty food and beverage sales account for 16 percent of all food and beverages so the fact that it’s approaching 20 percent is a major milestone,” said David Browne, senior analyst, Mintel.

Helping spur sales is the rise in popularity of specialty beverages, which hold 18 percent share of all specialty products and account for $12 billion in sales. The fastest growers are ready-to-drink tea and coffee (19 percent), water (15 percent), and refrigerated juices and functional beverages (7 percent).

“Rising trends include functional drinks that boost energy, mental focus, relaxation, and microbiome health,” said Browne.

Boding well for specialty is the fact that consumers are making snacking part of their daily routine with everyday snacking appealing to close to half of specialty food consumers. High protein and low sugar options are helping lead the way in the category that accounts for $18 billion in sales and holds 27 percent of specialty food and beverage share. Jerky and meat snacks were the fastest sellers in the segment, experiencing 10 percent growth, followed by chocolate and other confectionery (9 percent), and juices and functional beverages (7 percent).

Plant-based foods are not only becoming mainstream, but innovations in the segment are driving growth in several of the top 10 specialty food categories, which are led by shelf stable creams and creamers (37 percent), plant-based meat alternatives (36 percent), and refrigerated creams and creamers (20 percent).

According to Browne, one-third of specialty food consumers have purchased plant-based products, and preliminary findings from Mintel research show the vast majority of committed plant-based consumers (90 percent), are specialty food consumers.

E-commerce is a key channel for purchasing these products with 41 percent of shoppers buying at least some of their groceries via the channel. “We feel confident that online specialty sales will double to $6 billion in sales within the next few years,” said Browne.

The top 10 online specialty categories achieved purchases from 10 percent to 15 percent of specialty food consumers in 2018, with some emerging for the first time, including water and sparkling water, with 15 percent of specialty food consumers purchasing, nuts, seeds, trail mix, and dried fruit, with 11 percent purchasing, soda and carbonated beverages, 11 percent, bars, 10 percent, and juice, 10 percent.

Another channel holding promise for specialty food makers is foodservice, said Browne. While specialty foods only account for 4 percent of all food in the $32 billion channel, it holds great potential, he said, but warned that it can be “a tough nut to crack,” for those looking to break into the space. 

Positioning claims in the specialty food space draw dedicated consumers, led by all natural with 68 percent of specialty food consumers buying these foods, organic (55 percent), and Non-GMO (45 percent), locally-sourced (41 percent) and eco-friendly (40 percent), ethical (37 percent), fair trade (36 percent), plant-based (34 perent), gluten-free (27 percent), and sustainable (25 percent).

“One-quarter to one-third of all purchases are coming from each of those,” said David Lockwood, director of Mintel Consulting.

Also driving specialty food growth are generational preferences with trial peeking between ages 25 and 34, number of categories purchased peeking within the 45 to 54 age range, and spending on food at home peaking between ages 35 and 44.

“Gen Z is most likely to spend the largest percentage of their food budget on specialty,” Lockwood said. “Millennials spend the most per week on food prepared at home, and Gen X purchases the most categories since they may have young children and older children at home.” 

Specialty food consumers are also seeking specialty foods to fit into special diets that they are following, with many taking an a la carte approach to these lifestyles, Lockwood said. Specialty food consumers currently follow 4.5 diets vs. 3 diets for non-specialty food consumers. The most popular are low-sugar, high protein and low carb.

“Dieting has changed since younger adults are following more than one diet at the same time,” said Lockwood. “There is an enormous amount of opportunity here.”

Altruism also continues to influence the specialty food space. While consumer support for transparency and traceability is significant, it hasn’t changed much in the past five years, according to Lockwood. What has, are companies’ willingness to make these things part of their long-term goals.

“Specialty companies are changing from looking strictly at innovation to considering what they can do to change the world,” Lockwood said.

The Front Burner Foodservice Pitch Competition takes place today at 5 p.m. on the Main Stage. Chef Joanne Weir will host as three finalists pitch their products in front of a live audience and select foodservice judges. We asked each finalist to weigh in on the future of foodservice industry.

Q: What will have the biggest impact on foodservice in 2020?

There will be a larger shift to natural and organic options in 2020 and beyond. Many millennials and Gen Z consumers are becoming more aware of what they put into their bodies and this will force the industry to make food that is good for consumers as well as tasty. As vegan options continue to grow in retail, I expect them to grow in foodservice as well, along with CBD. Fast casual food is another category that I expect tremendous growth out of, making premium fine dining an expectation of the past.
-- Dinesh Tadepalli, Incredible

There will be a continuation of change in the cultural landscape of America, with major influences coming from traditional Asian and Hispanic flavors. In addition, there will be continued growth of specialty burgers and pizza. Fast casual will become better and accessibility will be a differentiator. We will also see more sustainable to-go packaging.
-- Bob Trently, Savencia Cheese

Online ordering and delivery. As digital disruption continues, brands must embrace technology or be left in the dust. Consumers want great food and great service, and now there is an added convenience of ordering it online and having it delivered to their door. Convenience and speed will lead in this decade. My advice is to adapt to this quickly-evolving model of foodservice and continue to monitor it as the current disruptors will get disrupted and the overall game will continue to change. Consumers will additionally continue to value companies who care about them and aspire to do good things.
-- Christine Lantinen, Maud Borup

Want to know how to build your brand the “right” way? Join Houlihan Lokey’s Brandon Ng and a panel of emerging brand superstars at the Winter Fancy Food Show as they deconstruct how they have been able to thrive regardless of the deal environment.

Ng, who focuses on the better-for-you natural food and beverage business, will mine the firm’s deep history of assisting food entrepreneurs with the sale of their companies to help attendees understand the best ways to build a food company.

Panelists include Michele Kessler, CEO of REBBL; Ilana Fischer, CEO of Whisps Cheese Crisps; Russell Barnett, creative marketing executive at My/Mo Mochi Ice Cream; and Brian Rudolph, co-founder and CEO of Banza.

The Building Your Brand the “Right” Way panel takes place on the Main Stage on January 21 at 11:00 a.m.

La Cocina, a nonprofit incubator focused on providing affordable kitchen space and mentorship to women- and immigrant-led food businesses, is working to bring a marketplace to the Tenderloin district of San Francisco.

La Cocina’s Municipal Market will feature seven businesses that sell healthy, affordable meals to area residents who often lack access to fresh produce and/or cooking equipment. The marketplace will create 30 to 40 jobs in the area of the city that has one of the highest unemployment rates.

“La Cocina's Municipal Marketplace was born out of La Cocina's strategic planning work in identifying the needs of working-class entrepreneurs in a rapidly changing city, as well as an opportunity to partner with the city on a vital corner in the heart of our working-class Tenderloin district,” says executive director, Caleb Zigas. “Projects like this will only truly serve their community if they come from those communities. As such, they can be platforms for residents, a home away from home for families and a signal of what our cities can and should accomplish for all of their communities."

Four years ago, Randy Shaw, executive director of the Tenderloin Housing Clinic, approached Zigas about transforming a 7,000-square-foot former U.S. post office into a community-led marketplace. Situated on the corner of Golden Gate Avenue and Hyde Street, the building is central to the Tenderloin community. The project is based on a replicable, sustainable business model that’s designed to feed the community and fosters its growth.

The seven restaurants that were chosen include cuisines from Nepal, El Salvador, Algeria, Africa, Mexico, and a San Franciscan bodega. All are owned by members of the Tenderloin community. The mix includes both established and fledgling restaurants, which was intentional, as La Cocina wanted to create an informal mentor program where the business owners could rely on each other for guidance, according to Zigas.

Chef Guadalupe Moreno is the owner of Mi Morena, one of two Mexican restaurants within the marketplace. Mi Morena offers Mexico City street-style guisados tacos featuring handmade corn tortillas and grilled meats. Moreno says she’s excited to be a part of the marketplace “because it's giving me an opportunity as an immigrant entrepreneur to showcase my culture and food in my own neighborhood.”

But the marketplace won’t just be a food destination, says its manager Sarah Qadri. It will have a robust calendar of community-serving programs in partnership with other Tenderloin community organizations, like Because Justice Matters and the Tenderloin Community Benefit District. The space will also be used for job training, business classes, and cooking demonstrations.

Since opening in 2005, La Cocina has helped cultivate low-income food entrepreneurs as they formalize and grow their business by providing affordable kitchen space, industry-specific technical assistance, and access to market opportunities. A community marketplace presented a way for it to further support entrepreneurs and the Tenderloin community at large.

La Cocina recently hired a community manager to help the organization become a constant player in the Tenderloin district. The manager will attend community meetings, field questions, and offer tours of the marketplace to help gain the trust of the community before it opens its doors.

Municipal Marketplace is on track to open in Q1 2020 but La Cocina is trying to close its capital campaign, with a goal of reaching $5.4 million to cover construction, permits and utilities, interior design, kitchen and A/V equipment, facade improvements, and administrative costs. More information can be found here: sites.google.com/ lacocinasf.org/municipalmarketplace.

La Cocina will participate in the Winter Fancy Food Show’s Incubator Village located on the Esplanade Level of Moscone Center. It will exhibit alongside three of the companies it incubates, including Teranga, which uses organic and wild ingredients from Africa in its products and will participate in the Municipal Marketplace.

Erin Ransom is a brand growth and product innovation strategist. At Tofurky, she is responsible for global and multi-channel leadership, aimed at high-valued CPG impact. As a steward of both mature and emerging markets, Ransom advances investment toward an inclusive and sustainable CPG marketplace.

Specialty Food News spoke with Ransom about her upcoming session at the Winter Fancy Food Show and recent legislation around plant-based labeling. Ransom will speak on a panel titled, “Expanding Your Plant-Based Options in Retail,” taking place on the Main Stage on Monday, January 20 at 1:30 p.m.

Can you explain Tofurkey’s recent win against the state of Arkansas, which had ruled that plant-based companies weren’t allowed to use certain words to describe their product?

Tofurky won an injunction to prevent a law from being upheld in the state of Arkansas; that wouldn’t allow for the use of terms like “burger” or “sausage” on package labels. We must still prevail in a trial that prevents this law from being enforceable. While it’s possible that additional state level laws may be proposed, I believe that we’re setting the precedent for what constitutes fair evaluation practices in an important state like Arkansas. Should we prevail there, we believe this will indicate how plant-based product labelling will be governed at the federal level.

What does the future hold for Tofurky?
We see Tofurky as an engine for global change, to impact something much larger than the food ecosystem. We see our brand as a way to put social purpose on display; encouraging the business community around us to “do good.” In the near term, we’re investing in everything from language immersion programs for our staff to more sophisticated production equipment to increasing our capacity. Our corporate effort will be represented in product innovation, where you’ll see some really exciting new items from Tofurky in 2020.

What’s the biggest challenge you’ve faced in the last few years and how did you overcome it?
Product shortages. We’ve been challenged to meet demand for the skyrocketing growth in our space. We can really peel the remedy back to two simple ingredients: communication and money. We took our first outside investment in 40 years in 2019 to purchase new equipment and expand our facilities rapidly. Before we invested the money, we spent days at a strategic offsite identifying our opportunities and constraints amongst the executive team; to ensure the application of funds would solve our largest challenges in concert.

Where do you see the food industry heading in the next 10 years?
I see natural products becoming the expectation of the mainstream consumer; pushing our supply chain partners to grow and transport food in large-scale ways that are healthier for our planet. I also see that this new natural product norm will be customized for the consumer. They may not only shop for their groceries online, they may also be offered the ability to purchase food in unique assortments that meet their seasonal or life-stage profile needs so that that their nutrition is optimized.

What’s the one thing you want people to take away from your session?
I’d like people to know that getting good food into the hands of the right consumer is a multi-faceted strategy that requires curiosity, tenacity, money, and vision from great partners all the way from supply chain to merchandising.

Chef Elizabeth Falkner, author, artist, TV food consultant, and the president of Women Chefs and Restaurateurs, will be hosting the Front Burner Foodservice Pitch Competition at the 2019 Summer Fancy Food Show. She is appearing in conjunction with her year-round work with City Harvest, New York City’s largest food rescue organization and the partner charity for the Specialty Food Foundation’s post-Show food rescue. Falkner is a member of City Harvest’s Food Council, a group of top chefs and culinary experts who are dedicated to spreading awareness of the organization’s mission.

“We are honored to have Chef Falkner host one of the most highly anticipated events at our Fancy Food Show,” said Phil Kafarakis, president of the Specialty Food Association. “Her vast expertise aligns perfectly with the Front Burner Foodservice Pitch Competition, where our members go toe-to-toe in presenting the best foodservice-focused product. The competition is an opportunity for our members to see how foodservice buying decisions are made. Plus, it’s a lot of fun!” 

The Front Burner Competition will be held on Monday, June 24 at 5:00 pm at the Jacob Javits Center. The event is open only to registered Summer Fancy Food Show attendees.  Past winners include Hummustir, a deconstructed hummus-making kit; black pepper bacon jam from TBJ Gourmet; Brooklyn Delhi’s Tomato Achaar condiment; Mike’s Hot Honey, and a michelada shrub from Pacific Pickle Works. For more information or to apply for this year's competition, click here.

Members of the XX Factor: How Women are Reshaping the Future of Food panel at the 2019 Winter Fancy Food Show share their advice for female food entrepreneurs. 

Moderator: Geetika Agrawal, La Cocina

Panelists: Pashon Murray, Detroit Dirt; Michelle Wolf, New Wave Foods; Inessa O-Childs, Treasure8; Brandi Decarli, Farm From a Box; Renske Lynde, Food System 6

Renske Lynde from Food System 6 speaks about what drives the heart of her business on the XX Factor: How Women are Shaping the Future of Food panel at the 2019 Winter Fancy Food Show.

Members of the XX Factor: How Women are Reshaping the Future of Food panel at the 2019 Winter Fancy Food Show discuss how to cultivate leadership through taking advantage of publicity, taking calculated risks, and embracing diversity.

Moderator: Geetika Agrawal, La Cocina

Panelists: Pashon Murray, Detroit Dirt; Michelle Wolf, New Wave Foods; Inessa O-Childs, Treasure8; Brandi Decarli, Farm From a Box; Renske Lynde, Food System 6

Brandi Decarli from Farm From a Box speaks about what drives the heart of her business on the XX Factor: How Women are Shaping the Future of Food panel at the 2019 Winter Fancy Food Show.

Pashon Murray from Detroit Dirt speaks about what drives the heart of her business on the XX Factor: How Women are Shaping the Future of Food panel at the 2019 Winter Fancy Food Show.

Michelle Wolf from New Wave Foods speaks about what drives the heart of her business on the XX Factor: How Women are Shaping the Future of Food panel at the 2019 Winter Fancy Food Show.

Geetika Agrawal from La Cocina speaks about what drives the heart of her business on the XX Factor: How Women are Shaping the Future of Food panel at the 2019 Winter Fancy Food Show.

Panelists on the XX Factor: How Women are Reshaping the Future of Food panel at the 2019 Winter Fancy Food Show discuss the challenges they face or have faced in securing capital for their organizations. Members also shared some advice for women looking to identify allies who can help them secure additional capital. 

Moderator: Geetika Agrawal, La Cocina

Panelists: Pashon Murray, Detroit Dirt; Michelle Wolf, New Wave Foods; Inessa O-Childs, Treasure8; Brandi Decarli, Farm From a Box; Renske Lynde, Food System 6

Panelists on the Foodservice Buyer panel at the 2019 Winter Fancy Food Show talk about the role that lifestyle diets play in the foodservice industry. The keto diet, in particular, is becoming very popular among consumers, meaning that companies must adapt their products quickly and successfully to keep up. 

Moderator: Dave Donnan, AT Kearney

Panelists: Evelyn Miliate, Raley’s; Matt Fitzgerald, HelloFresh; Bowie Cheung, Uber Eats

Members of the Foodservice Buyer panel at the 2019 Winter Fancy Food Show discuss the varying levels of customer demand for deliverable dessert. Some companies aren't seeing a huge demand, while others are struggling with operational challenges that hinder growth in the area.

Moderator: Dave Donnan, AT Kearney

Panelists: Evelyn Miliate, Raley’s; Matt Fitzgerald, HelloFresh; Bowie Cheung, Uber Eats

Members of the Foodservice Buyer panel at the 2019 Winter Fancy Food Show speak about how the meal kit dynamic has changed in the last few years. They discuss the benefits of the subscription model versus on-demand brick-and-mortar models, as well as the types of meal kits that are popular with consumers.

Moderator: Dave Donnan, AT Kearney

Panelists: Matt Fitzgerald, HelloFresh; Evelyn Miliate, Raley’s; Bowie Cheung, Uber Eats

Panelists on the Foodservice Buyer panel at the 2019 Winter Fancy Food Show discuss where the meal kit and meal delivery industry is headed in the future and what it means for their companies. 

Moderator: Dave Donnan, AT Kearney

Panelists: Bowie Cheung, Uber Eats; Matt Fitzgerald, HelloFresh; Evelyn Miliate, Raley’s

Bowie Cheung, member of the Foodservice Buyer panel at the 2019 Winter Fancy Show discusses the new trend of virtual kitchens, which help to optimize delivery operations for restaurants. 

Members of the Food & Tech panel at the 2019 Winter Fancy Food Show discuss what transparency means, and how the food industry can achieve the highest level of transparency possible. Full transparency requires a great deal of work from both the industry and the consumer, which can be a challenge for those not ready to commit. 

Moderator: Morgan Oliveira, Grounded PR

Panelists: Ross Polk, Fullcycle Bio Plastics; Raja Ramachandran, ripe.io; Danielle Gould, Food + Tech Connect, Arturo Elizando, Clara Foods, Ksenia Horoshenkova, ImpactVision