• by Aaron Baar , November 30, 2007

Sales of gourmet and specialty foods are expected to rise nearly 63%, to $96 billion over the next five years, according to new research in the category from Packaged Facts.

According to the study, sales in the (admittedly loosely defined) gourmet, specialty and premium food and beverage category grew to $59 billion in 2007, a nearly 11% increase over 2006.

The research company predicts the entire category will grow at a compound annual rate of 10.2% between 2007 and 2012. That's higher than a predication made in a previous report two years ago, predicting a compound growth rate of 9.7% between 2005 and 2009.

"America's fascination with world flavors, along with its growing ethnic population, is also helping to fuel the dramatic growth of gourmet/premium foods and beverages," according to the research. "As the United States increasingly becomes and recognizes itself as a multicultural society, ethnic foods are soaring in popularity and acceptance."

The research cited several factors for the growth, including consumer desire to have more natural ingredients and a proliferation of gourmet and premium products in supermarkets and convenience stores. Mainstream supermarkets accounted for 52% of the total category sales.

"Attracted by the high growth rates and higher profit margins of gourmet/premium foods and beverages, more and more mainstream marketers are moving into this segment, either through acquisition or through internal development," according to the research. "Retail distribution of gourmet/premium foods and beverages is expanding as well, leading to greater availability, greater exposure and more choices, often via 'channel blurring'."

According to Packaged Facts, nearly 15% of all new product introductions in 2007 fell into gourmet/specialty foods category, with an estimated 641 new product or product-lines meeting that distinction during the year. Of these products, many -- some 40% -- were marketed as healthier choices than mainstream foods. Some 259 products were labeled or classified as "natural," according to the research. (In 2006, 174 products carried that designation.) Another 123 products were tagged as "fresh" and 49 were labeled "organic."

The beverage category -- which includes flavored sodas, waters and other non-alcoholic, pre-packaged drinks -- was the largest segment, comprising 37% of the total sales (about $21.5 billion). Baked goods, pastas and grains were 15% of the total sales ($8.6 billion), and fresh foods, such as produce, meat and poultry, accounted for just under 13% ($7.4 billion) of the total. Moving forward, the cheese and dairy segment, which accounted for about 6% of category sales, is expected to grow the fastest over the next five years, at an estimated compound annual growth rate of 13%, according to Packaged Facts.