- Four out of 10 American adults regularly purchased premium foods and beverages last year and fresh and easy-to-prepare premium items were among the fast-growing categories, according to data from IRI and the Specialty Foods Association published this month in Food Technology.
- Among the most common characteristics consumers use to define high-quality foods and beverages are better ingredients (57%), better flavor (52%), 100% natural (46%), uses real spices and herbs for flavoring (38%), minimal processing (35%), something familiar but made with better ingredients (34%), and 100% organic (31%), according to The Hartman Group.
- "Convenient decadence" and sophistication of healthy foods were common themes among the best-selling new products last year. They included Oscar Mayer Deli Fresh BOLD (Kraft Heinz), Dannon Oikos Triple Zero (Danone), fairlife (Coca-Cola), Yoplait Greek 100 Whips! (General Mills), Simply Juice Drinks (Coca-Cola), Breyers Gelato Indulgences (Unilever), and Cheerios Protein (General Mills).
Premium isn't just about ingredients or packaging, but also about consumers' perceptions. Consumers often associate smaller companies and brands with higher quality, and that has led to a continued increase in market share for smaller companies versus larger manufacturers. Over the past five years, the 25 largest food manufacturers reported a CAGR of 0.1%, compared to 3.2% for the next group of 75 manufacturers and 6.3% for the smaller companies tracked, according to Nielsen data.
Premium products can help manufacturers boost sales regardless of retail channel, as they increased their share across all retail formats last year, according to IRI. Wine, yogurt, chocolate candy and beer had the highest premium product share overall. Outside grocery and natural food stores, convenience stores saw the highest premium sales in the wine and energy drinks categories, while natural cheese, yogurt and wine drove premium sales in drug stores.
It's notable for manufacturers that better ingredients exceeded the importance of better flavor in terms of consumers' perception of high-quality foods. Manufacturers are often concerned about how changing to more "natural" ingredients might impact flavor, and in turn impact the product's appeal to consumers.
If that brand doesn't fit into consumers' typical definition of a premium product, those concerns may be magnified. Even slight flavor variations could cause backlash from loyal customers. But if a product does fit the premium bill, manufacturers may have more leeway with flavors changing as a product is reformulated with better-for-you ingredients.
Specialty food sales hit a record high of $120.5 billion in 2015, a 21.2% increase in dollar sales and 13.7% in unit sales over the two years before, according to the Specialty Food Association. Consumers most likely to buy gourmet foods were aged 25 to 44, followed by those 18 to 24. These groups were more likely to buy gourmet snacks, drinks and easy meals. Older consumers, who tended to purchase gourmet foods less often, were more likely to buy specialty foods and ingredients for meal preparation.