The specialty food market hit $175 billion in 2021, an uptick of 7.4% from 2020, according to the latest State of the Specialty Food Industry Report from the Specialty Food Association.
Much of the growth was due to inflation — for example, the specialty retail market grew 4.3% in dollar sales, but only 0.6% in unit volume sales. The report notes that “stay-at-home mandates and meal preparation drove growth in several categories in 2020, leaving not only little room for continued growth, but several falloffs in 2021 as people ventured more out of the home.” Growth is expected to continue this year, but at a slower rate.
Specialty foods made up 21.9% of all food and beverage sales in retail last year, mostly center-store, shelf stable grocery products. However, while this category grew 3.2% in dollar sales, unit sales decreased 0.7% compared to 2020. Refrigerated foods were the fastest-growing, with dollar sales up 7.7% and unit sales up 4.2%.
|Top 10 categories by retail dollar sales||Top 10 fastest-growing categories|
The plant-based specialty retail market looked somewhat different in 2021 than in 2020. While plant-based specialty products grew faster than the specialty retail market as a whole, some plant-based categories grew at a much slower rate. The “largest growth gap” was for refrigerated plant-based meat alternatives, which grew only 34% in specialty compared to 66% in the total market. The report notes that prior to three years ago, the plant-based alternative meat category was 97% specialty products, but now non-specialty products make up much of the category growth.
The specialty beverages market is also changing. In 2021, specialty beverages grew twice as fast as food, which was a reversal from the previous year when food grew 21% and beverages only 16%. This jibes with IRI’s recently released New Product Pacesetters report, where beverages reached record representation.
Going forward, the report notes that growth will depend on both supply chain bandwidth and how well manufacturers can adapt. In addition, specialty food shoppers are looking for products with smaller footprints, perishables, and products from BIPOC- and women-owned brands.