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The $26 billion gourmet/specialty foods market.

Curiously, while the big whales of American industry ran aground in the 1980's, the small fish of the Gourmet/Specialty food market swam straight upstream, growing throughout the '80s at an annual rate of between 10% and 20%.

Curiouser still, this growth occurred in a chaotic marketing environment that demands that producers, importers, distributors, food brokers, and retailers overlap their activities even as they synchronize their efforts.

Reflecting on the marketing situation, David A. Weiss, Packaged Facts' president, notes: "The comment 'you can't tell the players without a scorecard,' was never more apt. In fact, in the Gourmet/Specialty food game, you can't distinguish the players from the umpires, coaches or general managers, without a scorecard."

The '90s may have witnessed the death of yuppiedown, but one of the food categories it nurtured is alive and well. According to a new study from Packaged Facts, the New York-based market research firm, the $26 billion market for gourmet/specialty foods grew 6% last year. And retail sales of those products are expected to increase by 6%-7% annually over the next five years, bringing the market to a projected $37.5 billion by 1997.

The growth of the category is due to the energies of another '80s arche-type, the small entrepreneur. Hundreds upon hundreds of (mostly small) firms market gourmet/specialty foods in the United States, most of them filling specific niches. Underscoring the extent of competition in this marketplace, the National Association for the Specialty Food Trade (NASFT) reported more than 2,000 member companies in 1991, a four-fold increase over 1985.

There are few "market leaders" per se in the gourmet/specialty foods business, although certain marketers are dominant in their respective categories (for example, Petrossian in caviar, Godiva in chocolates, and Dickinson's in jams). Instead, small entrepreneurial operations with regional or semi-national distribution are the norm. Consequently, unlike most other consumer goods businesses, gourmet/specialty food manufacturers generally do not control the marketing of the goods they produce. Instead, their product merchandising and promotions involve producers, importers, distributors, food brokers, and retailers in a complicated synergistic process.

Specialty food distributors, who often act as primary marketers, are one of the most powerful factors in this marketing equation. They can be either generalists handling a diversified product base, or specialists who concentrate their business around a certain type of product (cheese is a frequent example). Specialty foods are also distributed by food brokers and general grocery wholesalers, and by manufacturers who sell their products directly to retail outlets or to consumers via mail order. And to make things even more complicated, some supermarket chains distribute upscale private-label lines exclusively to their own stores. Reflecting on the marketing situation, Mr. Weiss, notes: "The comment 'you can't tell the players without a scorecard,' was never more apt. In fact, in the Gourmet/Specialty food game, you can't distinguish the players from the umpires, coaches or general managers, without a scorecard. The success of this kind of organized chaos makes you wonder why business schools spend so much time on organizational models."
Project Retail Sales of Gourmet/Specialty Foods: 1991-1997
Year Retail Sales % Change
1997 $37.5 7%
1996 35.1 7
1995 32.8 7
1994 30.7 7
1993 29.0 6
1992 27.5 6
1991 26.0 6
Source: Packaged Facts

No doubt, this chaos is responsible for the nonconformity that rules the category. And that nonconformity may explain gourmet/specialty food's success in a hostile marketing environment. Whereas the food industry as a whole is dominated by a few giant companies that show extreme resistance to new products, the gourmet category is flooded with hundreds of new products and marketers each year. This activity was the key factor in the gourmet foods category's ability to fight off the recession in 1991.

But it must be a headache for retailers, some of the largest of whom have reported receiving upwards of 600 presentations per year. (Smaller outlets are more likely to encounter 150 presentations per year.) Yet there must be great rewards too, because, miraculously, retailers accept an average of one-third of the new gourmet entries they receive.

But while the dynamism of new product activity is preventing the category from becoming mature in terms of sales, psychological maturity seems to be setting in. Recent introductions have been relatively conservative, with few items that could be termed "revolutionary." Notable new product trends include the rise of trendy regional cuisines such as home-style Southern, Northwest, and Native American, the continued popularity of Mexican and Southwestern foods, and the growing "green" and gift markets. The plethora of new products also encompasses an ever-widening array of condiments (including salsas, incendiary habanero sauces, gourmet vinegars, and fine olive oils) and dairy products (including goat cheese, manchego cheese, and light cheeses).

The Packaged Facts study, THE GOURMET/SPECIALTY FOODS MARKET, is over 275 pages long and broken out into five sections: The Products, The Market, The Marketers, Distribution and Retail, and The Consumer. It includes many tables and graphs, examples of advertising in various media, and comprehensive discussions of new product trends in major product categories. Profiles of leading gourmet/specialty food marketers, distributors, and retailers are provided, along with data on pricing, assortment, display and other aspects of product merchandising in supermarkets, gourmet/specialty food stores, and minor channels.
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Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Publication:Frozen Food Digest
Article Type:Industry Overview
Date:Oct 1, 1992
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