The Fancy Food/Natural Wellness Crossover Continues

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New York, NY — The 2018 Summer Fancy Food Show took place on June 30 – July 2 at the Javits Center bringing under one roof over 2,400 exhibiting companies and 34,000 attendees trying to stake a claim in the growing specialty foods market. According to the Specialty Foods Association, based on 2017 figures, the sale of specialty foods reached $140.3 billion, a 11% increase from 2015 figures. Retail buyers and distributors at the show included Whole Foods Market, Kroger, Trader Joe’s, UNFI and KeHE.

Trends

The level of cross-over between the specialty foods and natural/wellness categories continues to accelerate. This is very prevalent with functional beverages and specialty water. According to the Specialty Foods Association, sales of  functional beverages have grown 20% and specialty waters have grown 76% between 2015-2017.

Vinegars are one place where specialty and natural collide. An ingredient in food, it is also promoted and used in health applications such as mixing into water or using on the skin. There was a great deal of vinegar on the show floor designed to be ingested as shots or to fortify drinks. One prominent example is Vermont Village Organic Beauty Boost Functional Vinegar, an apple cider vinegar with cherry and lime juice that is spiked with collagen.

Specialty waters at the show put a fancy spin on upcycling and sustainability. O. Vine from the Golan Heights in Israel, for example, offers a wine-grape infused mineral water steeped in grape peel, a byproduct of wine products. Asarasi, based in Katonah, NY, makes flavored sparking water from water left behind from maple syrup production and Caskai Sparkling Cascara Infusion infuses its water in cascara, which is the dry husk of the coffee fruit, the waste product from coffee processing. One brand in which the collision of specialty and natural channels was particularly jarring was Willie’s Superbrew, which is an alcoholic malt beverage that touts only six ingredients and superfoods, with the tagline “Superfoods Fermentation” on its label.

WholeFoods was surprised to see Enerhealth Botanicals, based in Longmont, CO, at the show. Enerhealth makes  functional foods such as immune-supporting cocoa powder Coco Mojo, but also showcased herbal tinctures, hemp tinctures in particular. This was surprising to see at Fancy Food and pointed in the direction the industry and show are heading.

On the CoffVee front, Vera Roasting Co., of Newington, N.H., was promoting heart-healthy coffee infused with the antioxidant resveratrol and introduced a new wellness blend infused with CBD derived from industrial-grown hemp.

In terms of food, plant-based continues its reign. Fancy Food is known for its cheese and charcuterie and other specialty items, but when it comes to new product development, especially in snacking, plant-based is still big. A notable example was Pan’s Mushroom Jerky, giving consumers a vegan alternative to the popular jerky category. Cauliflower was the ingredient to watch in terms of plant-based as well as gluten-free with products such as Caulipower Vegetable Based Baking Mixes and Cali’flour Foods Cauliflower wraps that also incorporated collagen.

The Buyers

At a buyer’s panel hosted by the Specialty Foods Association, talk centered on Amazon Whole Foods Market and how brick-and-mortar retail is keeping up. The moderator Phil Lempert, the Supermarket Guru asked the four panelists, each representing different parts of the retail landscape, how Amazon Whole Foods Market changed things and how they are competing. The biggest change noted by the panelists is the way Amazon has changed consumer expectations. Emilio Mignucci, a third-generation owner VP of culinary pioneering at Di Bruno Bros, based in Philadelphia, PA, says Amazon has trained consumers to expect free shipping, not to mention free two-day shipping for Prime members. Di Bruno Bros also offers delivery but competing with Amazon in the shipping arena has real challenges when it comes to managing freight and keeping prices down.

Layla Kasha, VP of marketing at Emeryville, CA-based Grocery Outlet, a bargain supermarket, noted that everyday low price has become everyday second low price and as a result, consumers have become very price sensitive, making it difficult, even for a bargain market like Grocery Outlet to react and compete with rapid price drops happening online. The panelists agreed that delivery and ecommerce were forces brick-and-mortar needed to learn how to coexist with and figuring out where brick-and-mortar adds value and a point of differentiation is key to surviving. The good news is that sales from grocery delivery remain relatively low, at 2%, but at the same time, will continue to grow and adapt.

Robin McNamara, director of specialty food at Roche Brothers Marketplace, based in Wellesley, MA, questioned whether ecommerce can offer the same level of transparency brick-and-mortar retailers can. When it comes to actively standing apart from Amazon Whole Foods, McNamara and Maren Trocki, director of grocery and dairy at The Fresh Market, based in Greensboro, NC, agreed that offering unique specialty items not popular or available on ecommerce is a great way to remain competitive. A big part of this is offering local items.

McNamara relayed an experience she had overhearing an interaction at a Whole Foods Market where a customer was trying to get an item the store would have, before Amazon’s acquisition, simply ordered for the customer. Now, because all buying has to go through Austin, TX, this no longer possible and local items especially are going to have a difficult time getting on Whole Foods Market shelves. This opens the door for independent retailers. Curation is an aspect of brick-and-mortar retail customers value. The panelists also noted that shopping in a physical store was still an experience consumers desire, particularly when it comes to sampling and discovering new items/flavors. In fact, according to Lempert, Erewhon, a high-end natural grocer in Los Angeles, CA, experienced a 15% spike in sales the day the Amazon Whole Foods Market merger was announced.

What retail trends are pointing to, is a desire for smaller retailers with a great selection and an informed and helpful staff. “The conventional supermarket is a dinosaur,” Lempert maintained. In fact, larger grocers are purposefully making aisles narrower to encourage customer interaction and replicate the feeling of a smaller local grocery or specialty market. Ultimately, the discussion was optimistic, but brick-and-mortars have a lot of work ahead of them to stay relevant. Besides maintaining an interesting product mix, keeping up with consumers interests and desires is crucial. The panelists cited focus groups, surveys on receipts and through email and of course, social media as important resources. Trocki says The Fresh Market’s loyalty program also provides helpful information and customer feedback. It should go without saying, but also just chatting with customers in the store, developing a relationship in which they are comfortable providing constructive criticism and suggestions, is immensely important.

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