New research finds that sales of specialty foods and drink will rise 4.4% a year to 2006. Many 'foodies' have turned to specialty foods, finding mass-market brands increasingly uninspiring. In the future, the market won't just be for affluent media types: supermarkets will raise the profile of specialty foods and bring them to a wider audience.

However, major grocers must be careful not to undermine the smaller retailers that drive innovation in the sector.

Datamonitor's new report, "Specialty & Gourmet Shoppers" finds that specialty foods and drinks - high quality, small-scale produced, gourmet or delicacy food and drink with regional attributes - are flourishing across Europe, with sales set to grow 4.4% over the next five years. While individual specialty producers may be small, their collective 2001 sales reached €33.8bn in Europe.

At the moment, a core of specialty shoppers account for 53% of spend on specialty food and drink. They typically belong to the ABC1 social grades, live in large towns, and are internationally orientated, open-minded and well educated. Although not an especially large group, specialty shoppers are affluent and often at the cutting edge of emerging trends.

Many supermarkets are catching onto the demand for higher quality products. Retailers such as Sainsbury's and Waitrose view specialty goods as a way to be seen to support the local community, while also enhancing their quality image. The relationship can also help independent specialty retailers: 25% of specialty shoppers say they first noticed specialty products in the supermarket.
Big stores could still capture more of the specialty goods market: even core specialty shoppers appreciate the benefits of one-stop shopping and store-accessibility. However, supermarkets must avoid the temptation to capture too much of the specialty retailers' consumer base too quickly. Such a move could potentially destroy them - and therefore the breeding ground for innovative and high quality new products.

There should be scope for coexistence, particularly as much of the growth in specialty food and drinks market will come from the population at large rather than the core shoppers. As 'normal' people travel more frequently, to more exotic destinations, and dine out more frequently, they will be exposed to a wider variety of cuisines. For retailers, this represents an excellent opportunity to move away from low margin goods.

(c) 2002 Datamonitor. All rights reserved. Republication or redistribution, including by framing or similar means, is expressly prohibited without prior written consent. Datamonitor shall not be liable for errors or delays in the content, or for any actions taken in reliance thereon.