Baker Tilly Capital, LLC’s H1-2017 Specialty foods M&A update provides an overview of the U.S. specialty foods market, industry trends and relevant transactions from January 1, 2017 to June 30, 2017 (H1-2017).
Specialty foods accounted for approximately $99.7 billion in sales at retail in 2016 (5.6 percent increase from 2015 and 15.4 percent increase from 2014) and $27.7 billion in foodservice outlets (4.9 percent increase from 2015 and 13.7 percent increase from 2014), according to the Specialty Food Association (SFA) in its The State of the Specialty Food Industry 2017 report. This compares to just 2.3 percent growth in overall food sales (non-specialty and specialty) from 2014 to 2016. Demand for specialty foods remains strong, although sales growth is slowing down as the market matures. Slowing dollar sales growth has also been impacted by food deflation in recent years, which has had a considerable impact on food retailers. “Fresh” is one of the leading trends these days and retailers are continuing to expand their offerings in their “perimeter-of-store” departments. When including produce, certain retailers adapting to these trends are generating more than 50 percent of sales from perimeter-of-store departments. This includes Whole Foods, which stated in its 2016 annual report that perishable foods accounted for 67 percent of sales in each of the last three years.