May 1, 2007
BY RENEE M. COVINO
Sitting dead-center in the specialty arena, gourmet food distributors offer visionary perspective on their rapidly growing niche.
What’s so special about specialty food distributors? For one, they have a very good vantage point from which to observe the specialty/gourmet market and all that it entails today. And as key players that operate between both sides of the market — the specialty manufacturers and a growing mainstream of retailers carrying these ‘select’ items — they are well-equipped to educate the market, and perhaps help bring it to an even more ‘special’ level. All the industry has to do is consider them a valuable resource and listen, starting with Confectioner’s diverse trio of specialty distributors — based in three different parts of the country offering local and national perspectives.
The first order of business for our panel is to define the market and its growth — a task that is perhaps not as clear-cut as it once was. Generally speaking, food and related items that deal with “premium quality and taste” are considered specialty/gourmet, according to John McCurry, president and CEO of Wythe Will Distributing, serving most of the country. But today, that premium definition certainly encompasses a lot more than it did in the past. The way one regional player sees it, you could say that the “upper-crust consumables” market has definitely expanded its horizons.
“Five or six years ago, I would have equated specialty/gourmet with European/Mediterranean,” states Scot Trojanowski, vice president of Z.T. Wholesale, Inc. “But today, there are so many sub-categories that it can be as broad a category as grocery. Now when you think specialty/gourmet you must include: methods of production — natural, organic, kosher; raw material sourcing — single bean, fairly traded; ethnic — Hispanic, Asian, etc., along with the usual European and limited-production items.”
But there’s no confusion over what these expanding definitions add up to — a “huge opportunity for growth,” according to Trojanowski.
McCurry believes “that the growth of gourmet/specialty foods and fine confections will continue to outpace mainstream foods because when consumers experience quality, they recognize the difference and continue to buy. Our country is also becoming more diverse, thus the exposure to many new and different candies, snacks, and foods.”
In addition to changing demographics and tastes, “increased media coverage and better culinary education are driving purchases to try new products and/or trade up consumer purchases,” notes Ryan Peters, director of sales and business development for J.C. Wright Sales Co. “The category continues to be a driving force for growth and focus as retailers look for a point of differentiation between themselves and the mainstream retailer.”
But the so-called mainstream retailer is in on the action too — precisely what is causing premium to grow so quickly, and to continually raise its bar to a higher level — in multiple categories. Coffee was perhaps the premium trailblazer — but it’s brewed over into almost every consumable imaginable.
“It was not long ago that the food industry was all about how cheaply we could price a pound — now 13 ounces — of coffee,” explains McCurry. “But you know when McDonald’s starts brewing premium roast coffee, it is a mainstream trend. This is now a strong trend in candy, confections and snacks with items such as dark chocolate, premium chocolates, kettle-style chips, and premium cookies. It has also become strong in segments such as EVOO (extra virgin olive oil), gourmet condiments and even in premium drink mixers.”
In its Midwest backyard, Z.T. Wholesale has experienced an “exciting breakthrough” in the premium candy arena, according to Trojanowski — “the warm reception to Omanhene’s new 100g chocolate bars.” He explains, “Retailers today understand the meaning of single-bean origin and are excited to learn that the product is actually finished in that country of origin.” He adds that “the biggest example of this was Roundy’s common-sense approach to embracing the product.”
So while there are great strides being made in the overall category, and certainly at the mainstream level, there is definitely room for improvement, according to our panel. Here is their insight on a few key issues.
On having the correct product assortment when the category is experiencing such phenomenal growth and proliferation of SKUs:
McCurry: “We are constantly dropping items and adding new ones. Trying to anticipate consumer demand is the really fun part of being involved in a dynamic, growing category. SKU proliferation is a problem, and we must use our experience and expertise to pick the right items. The right items are the ones that the consumer wants to purchase. We all must know our customers better and the consumer even better. Throwing everything against the wall to see what sticks is the road to disaster.”
Trojanowski: “The sheer volume of products is definitely our primary challenge today. We have become extremely selective in the offerings that we bring in-house. The number of products competing for shelf space grows exponentially each year. Products that do get our attention are usually natural or organic, but even then, the manufacturer needs to have a good game plan for a successful launch.”
Peters: “While existing core products are essential, new product launches and implementation is actually the key to keeping the selection fresh and exciting. For our company, regional Northwest products are focal points, as are imported products that offer uniqueness or a level of sophistication not found in most stores/areas. There is also a heavy emphasis on ethnic food categories.”
On their top suggestions for specialty suppliers to improve the specialty category:
Peters: “With so many products hitting the market, be sure your pricing, promotional, and brand support is well thought out and comprehensive. Getting to the retail shelf is only part of the equation; staying there is quite another.”
McCurry: “My pet peeve is packaging. Many gourmet/specialty products are packaged so poorly that they have no chance to arrive at a retail store in salable condition. A few pennies saved in packaging are really costing thousands of dollars.
“Standardization is also good for the entire supply chain. I would like to see UPC numbers and code dates printed on the cases. We use a computer system to track products and dates through our distribution center, and it is not efficient to open cases at the receiving dock to find out what the product is and what the ‘best by’ date is. All companies should adopt industry standards instead of doing their own thing that works for them but for no one else.”
On their top recommendations for retailers looking to increase specialty/gourmet sales and profits:
McCurry: “It is proven that retailers who have an appropriate variety of specialty foods have a higher transaction amount per customer, a higher profit per transaction, and a more loyal customer. My recommendation is that retailers simply offer their customers the choice to purchase premium quality and premium taste products by displaying specialty/gourmet products along with mainstream products. Once customers try specialty/gourmet, the differences will be obvious and they will repurchase often. Premium quality sells itself.”
Trojanowski: “Yes, retailers should integrate the category. They need to cut their specialty/gourmet items alongside ‘everyday’ items.”
On what will move the specialty/gourmet market forward:
Peters: “Increased consumer demand and desire for gourmet foods; continued focus from the media and PR from within the industry; retailers’ continued need to differentiate their image and selection from price-driven store formats; mainstream retailers carrying a greater selection of gourmet, and a strong push of more ethnic and imported/international food offerings.”
A FINE FORUM: MEET THE "SPECIAL" PARTICIPANTS:
John McCurry, president and CEO, Wythe Will Distributing, has had a career in the food business for more than 35 years. The last seven have been in the specialty/gourmet niche. He is “very bullish” on the future of the specialty/gourmet foods and fine confections business. “The best change in the industry is that the successful retailers are focusing on the consumer and realizing that success comes from giving consumers what they want,” he states.
Scot Trojanowski, vice president, Z.T. Wholesale Inc., has “been involved” in the candy business “since I was old enough to walk and talk,” he says. He is a proud fourth-generation member of his family’s business, and has worked for Z.T. Wholesale full-time since 1994.
Ryan Peters, director of sales and business development, J.C. Wright Sales Co., has over 17 years experience within the specialty, ethnic and natural foods industry. He joined J.C. Wright in 2003, and has since led the company sales initiative “to diversify the customer base and add hundreds of new customers to the portfolio.” He has also created an account management and category management team to support the company’s exponential sales and customer growth. Prior to joining J.C. Wright, Ryan worked for Associated Grocers (AG) as the Category Manager for Specialty and Natural Foods.
PARTICIPATING COMPANY HIGHLIGHTS
Wythe Will Distributing, Toano, Va., started more than 30 years ago as a distributor of candy and confections and has grown into a distributor of gourmet foods and fine confections with customers in 49 states. Company website: www.wythewill.com
Z.T. Wholesale, Inc., Milwaukee, dates back to 1919, when Polish immigrant Zigmunt Trojanowski began selling candy and cigarettes to local groceries, taverns and other small businesses in the Milwaukee area. Today, Z.T. Wholesale “continues his tradition of value and service three generations later,” according to the company. It distributes and services beverages, snacks, candy, and gourmet food items to both chain grocery and specialty stores in southeastern Wisconsin and northern Illinois. Company website: www.ztwholesale.com
J.C. Wright Sales Co., Kent, Wash., has “led the way in gourmet and ethnic food distribution in the Northwest” since its inception in 1947. What started as “a modest family business” by Jack Wright Sr. has grown into “one of the industry’s most respected specialty food distributors” through the leadership of Jack Wright Jr., Kevin Wright and their team. Today, the company warehouses and distributes more than 8,000 gourmet, natural, and ethnic food products. Its buyers are diligent about sourcing and hand-selecting the best products available — which translates into supporting local farmers and suppliers; partnering with local chefs to launch products; and procuring items from the rest of the United States and internationally. Company website: www.jcwright.com