If you love gourmet food, you should visit the Fancy Food Show, at least once, put on by the National Association of the Specialty Food Trade (NASFT). This is a trade show for specialty food retailers and distributors where manufacturers and importers display (and sample!!) the most delightful, exotic gourmet food treats. This summer’s show was held at the Washington DC convention center and my first experience walking the floor, tasting the samples and speaking to small business owners. It was highly enjoyable, but overwhelming, with over 2,400 exhibitors showing over 180,000 products. Cuts of exotic meats and every imaginable type of gourmet cheese, chocolate, yogurts, and pastas are on display in one giant gastronomical extravaganza. The three hot food trends I observed at the show were 1) Regionally authentic, 2) Ethnic, and 3) natural/organic/gluten free.
Specialty Trades
Gourmet food brands compete for presence and distribution in what is known as “specialty trades” – the channel of retailers that offer specialized products catering to a small group of knowledgeable customers. Many categories outside of food have a specialty channel as well – hardware, appliances, apparel, sporting goods, footwear, etc. Smaller retailers, usually with no more than one or two stores or two in a particular city, offer unique products that would not be carried by mainstream retailers. These retailers look for vendors that bring breadth and depth of unique offerings rather than top selling items. They view their store names as meaning far more to their consumer than the manufacturer’s brand. This is a relationship business, not a big box approach. It’s a growing business too. For example, CNBC calls Specialty Food Stores one of the “recession–proof” industries of the last several years.
Specialty Trade Challenge for Manufacturers – Specialty Trade suppliers face challenges in three areas versus mass market brands:
Competitive Positioning – Standing out in a crowded supplier marketplace
- It is hard to stand out from the crowd as a manufacturer, importer or brand. There are far too many competitors with overlapping offerings (how many importers / makers of virgin olive oil are really needed?). This which leads to a diminished focus on brand building. There is often little funding available for direct to consumer brand communication and an over-reliance on trade partnerships to get the shelf presence needed to build brand awareness. This is the opposite approach that mainstream brands take – where consumer demand is created by the manufacturer while gaining distribution to support the brand building campaign.
Innovation – Creating something that is actually new
- Manufacturers in specialty trades tend to be small, flexible and innovative. New items are launched constantly – often at trade shows. However, with a lack of consumer input in traditional market research, product launch results are a hit or miss proposition. With a steady stream of new brands and varieties, most are duplicates of what is already available. (e.g. hundreds of new brands of salsas, organic chips, etc.)
Execution – Excellence in supplying and selling to the trade
- From a manufacturing standpoint, runs are small and expensive. Manufacturing is handled at larger co-manufacturer plants making costs of goods higher and profits lower than mass brands who manufacture their own products. Retail relationships are built on breadth of assortment and high touch service, rather than consumer interest in brand. Not being able to supply the smallest of volume item can mean losing an entire account to another player. Finally, a lack of differentiation of suppliers leads to an inability to price products profitably at retail – the small manufacturer risks losing out to the competition if prices do not remain competitive.
The 5 Secrets to Building an Enduring and Profitable Brand in Specialty Trades
1. Keep the product range and communication focused – Be known for doing a couple of unique products really well.
2. Have a personal story behind the company and the flagship product that retailers and consumers can remember. Tell the story often. Remember, product quality is essential, but is not a unique benefit in building a brand. Every successful player in this market has high quality so it does not make you unique or memorable. Most brands at the Fancy Food show used the term “quality” as their single strategic identifier. Most of them will not be remembered.
3. Invest in awareness, even if it is in a small geography, small group of fanatic fans or a small group of retailers.
4. Partner with the retailer – participate in their growth plans with co-marketing ventures.
5. Get some consumer input – even if it is a small study or focus group. Use this data to shape your product decisions, key attributes and use it to present to the retailer. Retailers really want to please their customers, and if you can show them what their own customers think, about your brand as well, it is very powerful.
Specialty trades, with their unique offerings and specialized service, are growing in importance. Many of the brands that started here have become well known mainstream national brands. The partnership between the manufacturer and the specialty trade retailer should focus on the consumer and building each other’s brands. This should be the focus of all players and will ensure the continued growth and profitability of the channel.
Photo courtesy of Earths Choice
