All food sales, both specialty and non-specialty, grew much faster between 2018 and 2020, a reflection of the COVID-19 pandemic's effect on buying, at-home meal preparation, and consumption. Specialty food sales, speciﬁcally, grew 24 percent at retail from 2018-2020, and 19.4 percent in 2020 alone. Categories related to cooking or baking at home soared, beneﬁtting products like baking mixes, pasta and sauces, frozen entrees, and meat, poultry, and seafood (frozen and refrigerated).
In contrast to online and brick-and-mortar retail, sales to foodservice, which was devastated by the pandemic, fell off by 30 percent. Industry estimates predict foodservice's overall recovery will take years, while retail sales are expected to continue thriving.
"The ripple across all channels of the specialty food industry has been tremendous," said Bill Lynch, president of the SFA. "We've seen businesses flex their creativity in ways they never could have imagined, from restaurants becoming pop-up specialty food grocers to makers increasing production to meet consumer demand. Despite these historic challenges, the industry has continued to innovate and grow, as outlined in our annual research."
The annual State of the Specialty Food Industry research is an examination of market size and sales; dollar and unit sales growth; specialty food category penetration; growth forecasts in key categories; and 10-year tracking and forecasting in key categories.
Key facts and figures:
Top 10 categories in retail dollar sales
- Meat, poultry, seafood (frozen, refrigerated)
- Cheese and plant-based cheese
- Chips, pretzels, snacks
- Bread and baked goods
- Non-RTD coﬀee and hot cocoa
- Frozen desserts
- Refrigerated entrées
- Chocolate and other confectionery
- Frozen entrées, lunch and dinner
- Shelf-stable condiments, dressings, marinades
Top 10 fastest-growing categories
- Shelf-stable sauces, pasta and pizza
- Dry beans, grains, rice
- Frozen fruit and vegetables
- Refrigerated creams and creamers
- Refrigerated plant-based meat alternatives
- Refrigerated pasta
- Refrigerated RTD tea and coﬀee
- Shelf-stable creams and creamers
The impact of COVID-19: Insights and takeaways
Center store rebirth. A year of home cooking has led to consumers rediscovering the usefulness and necessity of a home pantry.
Improving discovery. Combined with limited in-store sampling, fewer demos, and the decimation of foodservice, 2020 was a rough year for innovation discovery. This will be one of the key issues for the specialty industry in 2021 and beyond.
Specialty's ecommerce visibility issue. Related to diminishing discovery, specialty is facing challenges with the growth of online shopping, as it allows fewer opportunities for impulse buys.
Plant-based competition. The plant-based specialty food and beverage market grew 42 percent, nearly twice as fast as the entire specialty market. Much of the growth occurred in 2020 when surge shopping served as a gateway in some categories. But the plant-based sector is shifting as big CPG players innovate in the specialty space, with massive funding and scale, and non-specialty ingredients.
Channel shifting. Almost every online e-grocery market saw phenomenal growth in 2020, while drug stores gained new customers by adding grab-and-go and refrigerated aisles. Dollar stores continued pulling people from all other channels, and in 2021 are projected to account for 50 percent of all newly opened stores. Consumers shopped in stores for groceries that they may have rarely visited much in prior years.