Dare to be different

Despite the thrifty mindset that persists among American consumers post-recession, sales of specialty and gourmet foods are soaring. According to the New York-based Specialty Food Association, retail dollar sales of specialty foods grew 8 percent in 2013 alone, reaching more than $88.3 billion, suggesting that value-minded consumers still relish small indulgences.

The association’s “State of the Specialty Food Industry 2014,” produced in conjunction with global market research firm Mintel and Schaumburg, Ill.-based SPINS, notes that cheese and cheese alternatives represent the largest specialty food category. The fastest-growing categories, however, are nut and seed butters, eggs and frozen desserts. The categories with the highest penetration, meanwhile, are refrigerated salsas and dips and tea.

The specialty and gourmet arena encompasses unique and exciting flavor profiles, high-quality formulations and beautiful packaging. Moreover, most categories within it are not dominated by any national brands. The space, therefore, presents a huge opportunity for retailers to differentiate themselves from competitors via the right store brand products.

Pay attention to flavor trends

To truly connect with consumers, retailers will need to ensure their own-brand specialty and gourmet items mesh with today’s flavor trends, whether those trends are current or emerging. One such trend is that toward ethnic flavors/products, notes Todd Whitten, vice president of sales for Tulocay & Co., Napa, Calif.

“Our population is changing, and these consumers have money,” he says.

In terms of more specific on-trend flavors, Colette Harris, marketing and PR manager for Pendleton, Ore.-based Barhyte Specialty Foods Inc., points to coconut flavors, as well as sriracha and bacon.

“Chia seeds and nut butters seem to be big also,” she says.

And store brand condiments such as various mustards and cooking sauces could be ideal vehicles for retailers to showcase unique on-trend flavors.

“With Pinterest and other social media platforms being so big, I think people are really starting to experiment in their own kitchens,” Harris says, “and using different/unique condiments as part of that process to get started with cooking really helps.”

Also in vogue, flavor-wise, are specialty finishing salts, all-natural smoked salts, spices and pepper, says Megan Smith, a representative for Woodinville, Wash.-based SaltWorks Inc.

“They are really taking off in both the manufacturing/food processing sector [and] the retail consumer sector,” she says. “Specialty salts also continue to have a huge push behind them, with consumers becoming more and more aware of them, as more manufacturers are listing ‘sea salt’ as a marketing technique on their packaging and advertising than ever.”

In introducing trend-minded specialty and gourmet items, however, retailers should avoid copying what’s already out there, advises Domenic Masone, president of Villa Ravioli, Montreal.

“Retailers should find the items they want to duplicate, but put their own spin on [them],” he says. “A consumer will pay more for a private label … than a national brand if they see that they’re getting a value. We know this as well from private label pasta that we produce for retailers.”

But don’t go overboard when it comes to flavor differentiation, Harris suggests. It’s best to ensure product development is centered on flavor trends that show signs of longevity.

“Jumping on a hot new flavor bandwagon that doesn’t have longevity doesn’t do you any good,” she stresses. “We try to stay away from anything too ‘gimmicky.’”

Give it a healthful spin

One multicategory trend with longevity is that toward better-for-you formulations — which represent a huge opportunity within the specialty and gourmet space. For example, retailers could go both upscale and better-for-you for store brand snacks.

“We live a more active on-the-go lifestyle, and young adults are not going after the salty high-fat snacks their parents purchased,” Whitten says. “I believe the new high-protein snacks — energy bars, granola, healthy chips — taste great and give you the protein that is needed to maintain good energy levels.”

Specialty and gourmet store brand items within the freezer case also could go the better-for-you route, Masone suggests, adding that this area of the store has seen little in the way of new and exciting items for some time.

“Consumers are becoming well-educated in reading labels, and we as manufacturers have to adapt or we will fall behind,” he says. “Being a fresh frozen pasta manufacturer, we take this seriously and have added all-natural, vegetarian and even gluten-free [items] to our lineup. We are even tinkering with dairy-free fillings in place of ricotta.”

Speaking of all-natural items, those and organic products, integrated with mainstream products, also represent a prime store brand opportunity in the specialty and gourmet arena, says Agron Kosova, manager of Fine Italian Food, Naperville, Ill.

“Consumers are more aware of the quality of food and are trying to buy the best value,” he says. “This doesn’t mean that they are looking just for the best price. As we are involved more with imported foods, customers are looking more for authentic products and not imported-style items.”

Change with the seasons

Seasonal items, rotated in and out, present yet another potential growth area for store brand specialty and gourmet products, according to Rich Turchon, co-founder, chief operating officer and general manager, sales of Canton, Texas-based Phoenix Food Co. Unique items such as a lemonade cheesecake for spring or a caramel apple cheesecake for fall hold particular appeal. Even seasonal dip mixes could get a unique flavor spin.

“In dip mixes, we have some really cool things like jalapeno or bacon or garlic or pesto,” Turchon says, “and depending on how you put them together — for example, a jalapeno-bacon-cheddar dip mix — it can be different from the standard dip mix.”

Shine a light on it

Healthy or indulgent, seasonal or available year-round, a specialty or gourmet item should be encased in packaging that makes it stand out on the shelf.

“Too often with a private label brand, everyone is trying to peel back the costs,” Turchon says. “If the packaging doesn’t look high quality, the consumer is going to think the product is not of high quality. And that might not be the case.”

Whitten agrees.

“Be as passionate about the packaging as you are about the product,” he stresses.

But retailers should keep the package on par with what currently exists on the upscale side of the category, Smith says. They don’t want to skew “too economy” or “too expensive” in comparison to shelf mates.

That being said, totally unique packaging can work when a product has no competition on shelf. For example, Fine Italian Food offers a line of natural extra virgin olive oil sprays in “unique, elegant packaging,” Kosova says.

Great packaging is critical, but demos also can be very effective in getting shoppers to try — and buy — new store brand specialty and gourmet items.

“If a product is good, let the customer try it,” Masone advises. “You have a 50/50 chance they’ll put it in the cart instead of perhaps 5 percent by just looking at it.”

Harris likes the idea of demos and also says recipe ideas that go along with the product are helpful.

“Give people inspiration as they’re shopping,” she advises.

And cross-merchandising can be a selling tool for certain specialty and gourmet items.

“For spices, having them near their intended cooking mates works well, I believe,” Smith says, “such as keeping salts or spices that go well with steak or grilling at the meat counter.”

More cheese, please

Americans love cheese. According to “State of the Specialty Food Industry 2014,” produced by the New York-based Specialty Food Association in conjunction with global market research firm Mintel and Schaumburg, Ill.-based SPINS, cheese and cheese alternatives represent the largest specialty food category.

And in its new “Cheese: Natural and Specialty Cheese in the U.S. and Global Markets” report, the Packaged Facts division of Rockville, Md.-based MarketResearch.com forecasts retail dollar sales in the $16 billion natural and specialty cheese sector to grow by a compound annual growth rate of 4 percent between 2014 and 2018.

But that growth won’t necessarily come from traditional cheese favorites. To meet consumer demand for both more indulgent and more healthful cheese options, Packaged Facts expects to see manufacturers and restaurateurs continue to introduce more exotic cheeses into the market. And that exotic cheese arena could spell store brand opportunity for retailers.

“The broadening of the American palate beyond traditional favorites, cheddar and mozzarella, is driving growth of higher-priced specialty and ethnic cheeses,” says David Sprinkle, Packaged Facts’ research director. “Consumers are generally looking for products that are more indulgent, with new tastes and experiences, or healthier more nutritious indulgences that still taste good.”

On the indulgent side, flavors of some newly launched cheeses tend toward robust, the market research firm notes, with smoky, peppery and gourmet varieties most prevalent. On the better-for-you side, marketers have been addressing consumer health and diet concerns with better-tasting reduced-salt and reduced-fat cheeses, as well as cheeses made from “healthier” milk.

Cheese sales also are benefiting from the snacking trend, as marketers introduce products that cater to on-the-go occasions, Packaged Facts notes. For more information, visit www.packagedfacts.com.