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Fancy Food Show, held June 25-27 in New York. "They are expecting
distinctive flavors, want locally sourced foods, artisanal foods, things
that are handmade and locally produced. Whether it's condiments
or commodities, consumers are trading up across all of these kinds
of categories. And even if the consumer is just doing that a couple of
times a week, it's having a significant impact on the industry."

QUALITY

D I S C OV E R T H E N O R T H DA KO TA D I F F E R E N C E

Consumers are adopting new food routines with a focus on health and
wellness, transparency and global flavors, Dr. Balanko said. Offering
products with such distinctions of quality, small and mid-size brands
are carving a space formerly dominated by legacy players, she said.
"Of the top 100 brands in the United States, 90% are losing share, and
68% are experiencing falling sales," Dr. Balanko said. "Brands capturing
the consumer imagination are offering something new, something
different and something perceived as high quality."
Small specialty brands may have relatively low household penetration
but are generating as much as or more revenue than legacy brands, she
said. As an example, she compared Oscar Mayer, in 23% of households
with $172 million in annual sales, with GT's Kombucha, in 2% of households with $313 million in sales.
"It takes very few households to generate a lot of specialty dollars
because users tend to be more loyal and buying at higher price point,"
she said.
Only 35% of U.S. adults have purchased a specialty brand in the past 30
days, according to Hartman research, but all demographics participate
in the segment, Dr. Balanko said.
"Millennials have been at the forefront of redefining food culture for the
last decade, and it's not surprising they are the ones who want these
upgraded experiences all the time, but Gen X finally matters to the
premium marketplace because they tend to overindex for purchasing."
The rise of the specialty food segment is changing the retailer-supplier
relationship, she said. As specialty sales drive retailer profitability,
retailers become less dependent on slotting fees paid by larger
consumer packaged goods firms and become more confident in
allocating additional space in stores to smaller specialty brands, Dr.
Balanko said.
"Retailers have a lot to say about the evolution of the specialty
marketplace," she said. Going forward, she added, "retailers will need
to commit to a position around specialty or value because that's where
we're seeing growth in the retail industry. Folks who are putting a stake
in the ground and offering more innovative food and beverage experiences, and those offering a strong value play like the Aldis and Lidls of
the world."

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