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San Diego Union Tribune January 16, 2008

Gourmet Growth

Specialty food market continuing to thrive despite bad economic times.

By Jennifer Davies STAFF WRITER 
January 16, 2008

Specialty foods such as fine cheeses, exotic teas and expensive chocolates are no longer only for the discerning food snob. Increasingly, these gourmet items are being gobbled up by the masses as well.

At Colorado gourmet tea maker Two Leaves and a Bud, sales are growing at a triple-digit rate. Richard Rosenfeld, founder of the three-year-old company, said people are willing to pay for quality when it comes to food and beverages.
“You can spend $8 for a box of our tea or $6 for a box of ordinary tea,” Rosenfeld said. “The one thing about specialty food is that it's a very affordable luxury.”

While overall food sales increased 4 percent over the past two years, the specialty foods sector has grown 17 percent, according to the National Association for the Specialty Food Trade. In 2006, specialty food sales were $38.5 billion – double the level five years earlier.

The growing variety of specialty foods was on display this week at the 33rd Winter Fancy Food Show at the San Diego Convention Center. The show attracted about 1,100 exhibitors from around the world promoting everything from Indian-and Thai-spiced baby food to soy jerky and raw Sicilian almonds.

Ron Tanner, vice president for the National Association for the Specialty Food Trade, said the event is one of the biggest it has had – covering about 250,000 square feet of exhibit space.

Still, while the event keeps growing, some exhibitors said they were concerned that the sluggish economy might slow demand for their pricey, gourmet products. 

The president of Paradigm Foodworks, an Oregon food company that makes and distributes a variety of specialty food items such as mustards, fudge sauces and scone mixes, said her company noticed “a little bit of softening in the last quarter” Still, Lynne Barra said, her business has been able to weather economic downturns before as people tend to splurge on food when times are difficult.

“Historically, if the economy is bad, when disaster strikes, people buy food,” Barra said.

Her comments were echoed by other exhibitors who said that while people might be cutting down on such big-ticket luxuries as cars and boats and even such items as pricey handbags and jewelry, gourmet food should be able to withstand the current economic head winds.

Lori Rapone, sales associate with Sweetfields, a Jamul maker of edible flowers, said the business got started after the Sept. 11, 2001, attacks.

Now, Rapone said, the business is booming as restaurants and caterers alike look for unique ways to appeal to consumers. She said it's “pennies” to add glazed pansies or a frosted rose to a dessert or drink.

“Everybody is looking for that extra something special,” Rapone said, adding that sales have increased 40 percent over the past two years.

Tanner said food is different from other categories because people use it for comfort and develop near-addictions to certain tastes.

“You've been buying this $4 curry mustard for your turkey sandwiches and you really like the taste,” he said. “And when you think about how much it costs for each use, you'll still buy the mustard.”

But there may be a limit to what people will pay.

Some items are getting less affordable as the weak dollar boosts the price of European imports, said Michael Chittick, purchasing manager for Bear Creek Fine Foods, a Washington distributor of specialty foods.

“Italian chocolate is now really expensive,” Chittick said.

Because of that, Chittick predicted that items from Australia and South America, with more favorable exchange rates, will make further inroads into the American palate.

The Australian government had a pavilion at the show featuring the continent's wines, native nuts and chocolates.

Tanner said the weak dollar could could hurt sales of European foods.

“European products are very challenging because they are very expensive,” he said. “That's where you'll see items from Australia have an opportunity.”

Still, Russ Bruhn, president of Carlsbad Gourmet, which makes a line of strawberry products from spreads to mustards to salad dressings, said his business is taking off locally as more consumers seek out healthy products at stores like Whole Foods and Jimbo's.

“The specialty business is coming of age” because people are concerned about high-fructose corn syrup and trans fats, Bruhn said.

Plus, he added, more people are demanding more unique products.

“Everything was so generic,” Bruhn said. “It was boring.”

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