How Will the Supply Chain Affect the Future of Specialty Foods?

The specialty food market reached total sales of $175 billion in 2021—up 7.4% vs. 5.8% the year before, the Specialty Food Association (SFA) announced on June 9 in its annual State of the Specialty Food Industry Report. But looking ahead, the SFA said the supply chain could cause strong headwinds when it comes to growth.

The SFA said in a statement that parts of the industry that will grow in the next few years “in part hinge on supply chain bandwidth” as makers say they are unable to forecast sales because they often don't know what their supplier shipments will look like.

The SFA said that lead times for shipments “fluctuate, too, causing production schedule delays.”

All of this influences how makers formulate their products, the SFA said, as makers evaluate which SKUs they can confidently produce, made with ingredients they can reliably source and priced properly to achieve profit despite increased raw material costs.

"The specialty food market has prospered amid two difficult years, with our latest research showing specialty continues to grow at a faster rate than all food," Denise Purcell, VP of content and education for the SFA, said in a statement. "Growth will continue, but at a slower pace than the industry experienced during the 2020 pandemic-influenced whirlwind of grocery shopping and at-home meal preparation—and will depend on supply-chain bandwidth and shifts in challenges like inflation, shipping issues, cost increases and materials shortages."

The report also said Black, Indigenous and people of color (BIPOC) and women-owned brands are in demand.

“Consumers want more BIPOC- and women-owned brands, and retail buyers and foodservice operators are seeking out incubators, brokers, B2B wholesalers and distributors, and even sales consultancies that specialize in supporting and growing these brands,” SFA said in a statement. “Showcasing these brands has moved far beyond seasonal features to align with observed months like Black History or Women's History and will continue to expand.”

The SFA said coming out on top in the top 10 categories in retail dollar sales was meat, poultry and seafood (frozen/refrigerated). The SFA listed cheese and plant-based cheese in second, while chips pretzels and snacks landed third.