May 28, 2015
by Erica Shaffer
ROCKVILLE, Md. – Consumer demand for foods with attributes such as fresh, locally produced, or organic has foodservice operators and big box retailers striving to fill the niche for 'natural,' market intelligence firm Packaged Facts said in its “Shopping for Local Foods in the US” report.
In 2014, local foods generated almost $12 billion in sales, or approximately 1.8 percent of total retail sales of foods and beverages, according to Packaged Facts calculations. So, food manufacturers and retailers — such as Minneapolis-based Target Corp. — are right on time to capitalize on the growing trend for fresher, locally sourced, natural or organic foods.
“Target is banking that national brand processed foods will be usurped by products such as gourmet sauces and oils made from fresh and locally sourced ingredients,” David Sprinkle, research director for Packaged Facts, said. “Of course there's the caveat that these healthier products will be positioned and sold at affordable prices to remain competitive with more recognizable national brands.”
Local products, the report states, provide retailers, foodservice operators and food marketers “a shorthand descriptor to help position food as high quality, fresher, more authentic, trustworthy, environmentally friendly, and supportive of the local community—key factors for attracting shoppers into the store and encouraging repeat business.”
In March, Target announced plans to focus on several categories of food products, including better-for-you snacks, while expanding its natural, organic, locally grown and gluten-free product offerings. The retailer's Made to Matter collection of better-for-you products launched in April 2014.
Nancy Kruse, president of The Kruse Co., Atlanta, said during a presentation at the National Restaurant Association Restaurant, Hotel-Motel Show, that the key to delivering on the promise for simple and authentic foods is conveying freshness of ingredients, preparation and presentation.
Packaged Facts forecasts local foods will grow 11 percent over the next five years, gradually rising to 12 percent. The pace of growth in the local foods category is faster than the 5 percent annual rate of total food and beverage sales of 2.4 percent of total retail sales of food and beverages.