5 Trends for the Specialty Food Industry in 2020

By January 31, 2020 March 25th, 2020 Audit, Manufacturing and Distribution
5 Trends For The Specialty Food Industry in 2020

The 2020 Winter Fancy Food Show took over San Francisco last week, featuring over 80,000 products and 1,400 exhibitors. Anticipation for the convention was high following a year of record growth in which the specialty food industry racked up $148.7 billion in sales. Each year the Specialty Food Association hosts the event as a means of showcasing the latest trends in the industry.

Today, nearly three in four consumers purchase specialty food products. The Association defines these products as premium, produced in small batches or featuring authentic recipes and high-quality ingredients. After spending time at the three-day event, we left with five key takeaways about the direction of the specialty food industry.

1. CBD as a (Future) Dietary Supplement

The 2018 Farm Bill officially removed hemp from the Schedule I list of controlled substances. As a result, the hemp-derived CBD industry experienced considerable growth as it shed the federal regulations that continue to hinder the cannabis industry. Despite federal legalization, it is up to the Food and Drug Administration (FDA) to develop regulations that would allow businesses to sell hemp-derived CBD in food supplies or as nutritional supplements. However, experts predicted that without congressional action it would be years before anything really came to fruition.

Therefore, the introduction of a recent bipartisan bill is significant as it may expedite the process. The legislation amends the Federal Food, Drug and Cosmetic Act to include CBD in the definition of dietary supplements. As such, the bill would allow the FDA to regulate CBD made from hemp as a dietary supplement and provide a pathway forward for hemp-derived products. It might not be long before hemp-derived CBD products hit the shelves as lawfully marketed dietary supplements.

2. Plant-based Food Continues to Thrive

As sustainability and consumer health continue to climb the list of customer priorities, the number of plant-based food options also rises. Experts at the Fancy Food Show discussed trends and research in plant-based food, as well as how retailers can expand their plant-based options. It comes as no surprise to see so much attention paid to plant-based alternatives, as U.S. retail sales of plant-based foods have grown 31% since 2017, bringing the total plant-based market value to $4.5 billion.

3. Product Innovation to Align with Customer Preferences

In 2019, consumer awareness drove trends towards health, wellness and clean label products. Moving into 2020, these trends are amplified. Conscious consumerism is at the heart of the industry and consumer preference continues to drive innovation and creativity. One example is Kuli Kuli, a leading moringa brand in the United States. Their brand and product focus on healthy options, promoting foods made of moringa – a plant they describe as even more nutritious than kale.

Traditionally, the company focused on their central product – the moringa energy bar. However, as customer preferences evolved and health-conscious consumers sought out convenient ways to satisfy their hunger and boost nutrition, the company introduced smoothie shots as a supplemental, on-the-go product. Just like in the case of Kuli Kuli, consumer preferences will continue to steer the creation of new products.

4. Focus on Eliminating Food Waste

The United States Department of Agriculture estimates that up to 40% of food produced for consumer consumption becomes waste. In 2010 alone, they calculated that food loss at the retail and consumer levels reached 133 billion pounds – which corresponds to $161 billion worth of food. The problem is very real.

That is where we see food companies stepping up to the plate. For instance, new startups have emerged in recent years intent on using wasted ingredients to make new food. Treasure8 designed technology to dehydrate fruits and vegetables to turn them into nutritious, self-sustainable chips. They are not alone. Other companies are coming up with strategies and products to simultaneously reduce waste and lower greenhouse gas emissions. Plus the tactic appears to be economically feasible, as a 2017 study suggested that consumers might pay more for foods with “upcycled” ingredients.

5. Push for Compostable Packaging

In line with other sustainability efforts, there is a push for compostable food packaging. One Step Closer to an Organic Sustainable Community (OSC2) focuses on the Packaging Collaborative Initiative to secure functional and sustainable options for heat sealable/flexible overwrap and pouch applications. According to the group, most sustainably-minded companies in the world do not currently have environmentally friendly, non-GMO options when it comes to flexible packages.

As such, there appears to be a push to decrease the reliance on petroleum-based plastic and secure renewable, flexible film structures to address packaging concerns.

How can Squar Milner help?

If you are looking for accounting professionals with experience working with those in the food and beverage space, look no further.

We have a team with considerable experience working with clients in retail, manufacturing, distribution and other related sectors and we are ready to work with you too.

We are able to provide comprehensive tax, audit, R&D, M&A, consulting and advisory services to help your business adapt to the latest trends and maximize your accounting strategies.

KEY CONTACTS

Larisa Rapoport
Partner, Audit Services

lrapoport@squarmilner.com

Kevin O’Connell
Principal, Audit Services

koconnell@squarmilner.com

Disclaimer: This material has been prepared for informational purposes only, and is not intended to substitute for obtaining accounting, tax, or financial advice from a professional tax planner or financial planner. All information is provided “as is,” with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information.

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