Changing American Palates Fuels $34.7 Billion Specialty Food Market; New Mintel/NASFT Findings Cite Increased Distribution and Evolving Culture as Key Factors in Category Explosion.

CHICAGO -- Specialty food continues to show strong mainstream movement, heightened recently by Wal-Mart's journey into the arena. Mintel once again partnered with the National Association for the Specialty Food Trade, Inc. (NASFT) to unveil new findings on the $34.7 billion industry. Specialty foods are high quality products manufactured in limited quantities with higher price points.

"American consumers are continuing to take advantage of the country's diverse cultures and offerings," said Marcia Mogelonsky, senior analyst for Mintel. "Fresh and authentic ingredients are in demand, and this is driving opportunity within this market. Wal-Mart and other companies have identified the specialty foods industry as a viable market to enter, and it will be interesting to see how their presence affects the industry in the upcoming years."

Close to 5,200 new specialty food products were introduced last year, according to the Mintel Global New Products Database (GNPD). The launches are up 25 percent from 2000, and it represents the industry's continued upward climb. Confectionery, beverages, and fruit and vegetables are the leading "innovation" areas, experiencing strong launch increases from last year. This year, declines were seen in soup, sauces and seasoning, and dairy new product launches.

As consumer interest in new flavors and products continues to grow, so does the specialty food market. As U.S. immigrants continue to acculturate, their food traditions are becoming more mainstream. More Vietnamese, Thai, and Indian flavors will continue to flourish within this category. In addition, Fair Trade products maintain their steady increase.

"Many food fads were created within the specialty food channel, but the demystification of the market is dulling the exotic edge," said Mogelonsky. "Distributors will need to look at new ways to repackage and market their products, because mainstream carriers are preparing the product floodgates to open."

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