The speciality and fine food sector has been in explosive growth in the past five years, says John Weaver, commercial director at premium food and drink distributor Petty, Wood.
“Premium and speciality products have become mainstream with own labels broadening consumers’ taste horizons,” he says.
But with shifting boundaries in the sector, with products such as speciality olive oils moving out of speciality and into the mainstream, defining the market is a difficult and subjective task.
Weaver says it is simply “food bought by connoisseurs, with profound knowledge of particular products and how they are prepared”.
Simon Bell, retail director at speciality foods supplier Merchant Gourmet, says: “Foods that are quite ordinary staple products in another country are part of our Continental deli offer. They can also be an upmarket offering of a more mainstream product - more niche than everyday.
“What was once considered exotic, such as olives, can move into the mainstream in a relatively short space of time.”
Bob Farrand, chief executive of the Guild of Fine Food Retailers, says: “The generally accepted definition is food made in small batches using authentic and mostly fresh ingredients, normally to traditionally based recipes.”
The market may be difficult to define, but a first-of-its-kind study, commissioned by the Guild in 2004, valued the market for delis and farm shops at £273.8m, up 8.8% year-on-year. A further 8.2% growth is forecast for 2005.
The leading category is cheese accounting for 25% of the market. Baked goods follows with 12% and charcuterie with 11%.
In the year to November 2004, 21% of businesses maintained turnover, while 36% recorded growth of 5% to 10%, and turnover for 27% rose by more than 10%. And confidence remains high in the sector with the majority expecting growth this year.
TNS data, on the other hand, values the market at £351m. It defines the market as three
categories, and indicates that growth is set to continue across each of them. Continental cheeses grew 10% to £224m, Continental sliced cooked meats rose 4.9% to £98m and olives were up 8.2% to £28m [52 w/e July 17].
Sainsbury and Tesco dominate the market with Sainsbury ahead of Tesco in Continental meats and olives.
While these overseas foods may have led early growth in the market, retailers are saying that their customers are increasingly asking for quality, regional British produce.
“Consumers will tire of the clone town effect,” says Weaver. “Regional sourcing will become a watchword.”
Delicatessens are the driving force for the sector now, adds Michael Brooks, sales director at premium nut supplier Dormen Foods. “About six years ago, lots of delis were closing down at the hands of supermarkets. But in the past three years there has been a revival in the independent trade.”
The supermarkets did open up the market to a wider customer base during the past 20 years. Yet one concern of speciality suppliers to the supermarkets is that fine foods are
likely to be the first to go to make way for high-margin non-food. “It’s a worrying trend,” says Henry Amar, chairman of distributor RH Amar. “They’re making speciality foods’ shelf space smaller to sell more jeans.”
Nevertheless, the prospects for the sector look resilient, says Amar, as it does well in uncertain economic times. “At the moment people are casting doubt over the state of the economy. In our experience this is the best climate for fine foods, as at the beginning of a recession people can't afford things like TVs. Instead they treat themselves to good food!”