The 34th Annual NASFT West Coast Winter Fancy Food Show begins tomorrow (running until Tuesday, January 20) at the Moscone Convention Center in San Francisco, California. Just like fancy food shows past, the huge convention center floor will be filled with exhibitors from all over the world, displaying their respective specialty, gourmet, ethnic and natural-organic food and beverage products to members of the retail trade.This year the show will be packed with retailers, brokers, distributors, food service operators and other assorted members of the specialty foods trade, as it is every year. The show is sponsored by NASFT, the National Association For The Specialty Food Trade, the leading trade group for members of the specialty foods trade.
Sellers will be selling, brokers will be looking for new lines, specialty foods makers and marketers will be networking, and although the fancy food show isn't traditionally a "selling show," some orders will be taken and deals struck betwen buyers and sellers, as happens each year. And you can bet exhibitors will be selling more aggressively this year than perhaps in any time in the recent past.
On the exhibit floor, the thousands of specialty food and beverage companies displaying their respective wears will be putting the best face on the business, introducing some new products and promoting existing goods. There will be plenty of spin, something that always makes the fancy food show fun, along with some complaining about the currrent bad economic times.
But the true reality of how bad the current times are for specialty foods makers and marketers, as well as brokers, distributors and retailers that focus primarily on the specialty category, will be discussed most seriously off of the exhibit floor, in the hotel bars and San Francisco restaurants where the real business and talk goes on during fancy food show time.
And the times they are rather tough for most in the specialty foods business right now.
Below are some of the things members of the specialty foods trade will be talking about in those San Francisco hotel bars, restaurants (and perhaps at a gentleman's club or two) and on the sidelines off the main exhibit floor at Moscone Center starting tomorrow:
>The recession and financial/credit crisis: The situation is hurting near everybody in the industry, from the big specialty foods makers and marketers to medium-size companies and small-entrepreneurial operations. Manufacturers can't get credit, which for many is needed for production, selling, promotion and in some cases even to temporarily make payroll. The frozen credit markets are allowing only the most credit-worthy to access lines of credit.
>Payables-Receivables: Everybody is holding payables in this down economy. In many cases retailers are paying distributors late, which in-turn means distributors are paying specialty foods suppliers late. As a result, suppliers in-turn are paying their brokers' commissions late. They also are paying other suppliers -- glass makers, label makers, printers -- late. It becomes a vicous circle. And with credit so tight it's near-impossible to get short-term bridge loans to help with cash-flow when payments are late. Many have turned to factoring firms that are in the business of advaning companies money on receivables in return for a substantial percentage of the amount due.
>Consumers trading down: During the two most recent economic recessions, in 2001-2002 following the September 11, 2001 terrorist attacks and in the 1992-1993 recession, consumers still bought plenty of specialty and gourmet foods in the main. Those two recessions were much milder and nowhere as deep as the present one is, and their was no financial/credit crisis like at present, so consumers tended to buy specialty and gourmet products at their near-same levels because it was the one affordable indulgence they could splurge on.
Not now. Consumers have cut way back on everything, including food and grocery products. The first items to go have been items like expensive flavored olive oils, fancy mustards, imported preserves, gourmet cookies and other mainstays of the specialty foods trade. Specialty foods makers and marketers, ranging from the divisions of huge consumer packaged goods companies to mid-level and small artisinal producers, are feeling this sting strongly.
>The shelf space crunch: Retailers ranging from the mega-supermarket chains to the regional U.S. chains, as well as mass merchandisers like Wal-Mart and Target, along with specialty foods chains like Cost-Plus World Market and others, have been increasing the number of skus of their own store brand specialty, natural and organic foods items dramatically over the last few years. This includes the "Big Three" U.S. supermarket chains -- Kroger, Safeway and Supervalu. Store shelf space that once held the products from exhibitors at the fancy food show has now in many cases been replaced by store brands. This trend is growing fast. Grocery wholesalers such as Unified Western Grocers in the west (and others throughout the U.S.) and specialty distributors like Tree of Life, Inc. and others also are pushing their own provate label specialty and natural products more so.
On top of this trend, food retailers are taking shelf space that has been used to merchandise specialty foods and in many cases replacing the space with more basic, value-oriented (more inexpensive skus of white rice replacing basmati and wild rice skus, for example) food and grocery items because that's what the consumer is demanding in the current severe recession.
Safeway Stores, Inc. is a good example of this. Since late in the first quarter of 2008, Safeway has been adding numerous new items to its store shelves under its Safeway and other value store brands. In many cases these items took the place of manufacturer branded specialty foods items. And this is on top of Safeway's introduction over the last couple years of thousands of skus across all categories of its "O' Organics" and "Eating Right" premium organic and healthy foods store brands, along with its "Safeway Select" premium and specialty foods brand.
There's only so much "share-of-the-shelf." When space is needed for store brands it often comes at the expense of manufacturer, especially smaller manufacturer, specialty food and grocery brands because they have slower movement compared to a store brand -- even if that store brand is a premium one. REtailers also make higher margins on their own brands.
The 130 store Raley's supermarket chain and the upscale Wegmans chain on the east coast are two regional chains, both key customers for specialty foods marketers, that have also been dramatically reducing the amount of space devoted to manufacturer specialty foods brands on their respective store shelves in favor of their own store brands. Both regional chains, as have many others, have been introducing store brand specialty product after specialty product in the last year, ranging from basic items like olive oil to more exotic products like fig and raspberry-infused balsamic vinegar, which is one of the latest lines introduced by Raley's under its "Raley's" store brand.
When retailers like Safeway, Raley's and Wegmans, which are just three examples of the many retailers doing the same, eliminate specialty foods brands for their store brand items, that also hurts distributors and brokers, as well as the brand's manufacturers and marketers. Distributors lose sales and brokers lose commissions.
Cost Plus World Market, long a key customer for specialty foods companies and importers, is another example of this store brand trend. Cost-Plus has been banging out specialty items after specialty item, in category after category -- condiments, oils and vinegars, snacks, confections, beverages and more -- under its "World Market" store brand. Every time it introduces a new line and item it has to either reduce facings of manufacturer specialty brands or eliminate those items all together -- or both. And of course when this happens it also hurts brokers, who lose commissions on lines discontinued by the 300 store chain, which is one of the top specialty foods venues in the U.S.
We haven't even mentioned an additional fact yet -- that in addition to store brand specialty items displacing manufacturer brand items on the shelf, the store brands, which are almost always prices at least 15% (and most often more) lower than the supplier brands take sales away from those manufacturer brands. For example, placing a 16oz bottle of "Safeway Select" Balsamic Vinegar next to two manufacturer specialty brands on the shelf and pricing it 15-20% lower can easily reduce the average weekly sales volume of those two manufacturer brands by 50%. That's dramatic.
>More aggressive buyers: Specialty foods manufacturers and marketers also are getting hit hard by retail buyers and distributor buyers for deeper and longer deals, more promotional monies and higher spoils allowances, among other chargebacks. Distributors are aggressively asking for higher off-invoice promotional amounts and not always passing the full amount on to the retailer. In turn, retailers are demanding better deals from distributors, including more promotional money. In turn, the retailers aren't always passing those deals on to consumers at the shelf. This has always gone on in the industry. However in these bad economic times it's happening more. Everybody is struggling and looking for ways to ease that struggle.
Those specialty foods companies that sell primarily to specialty foods retailers, and there are many, perhaps the majority who exhibit at the fancy food show, are hurting the most. Sales at specialty and gourmet food stores are way down. Shopping at a specialty foods store is generally a planned trip for consumers, unlike a trip to the supermarket which they have to do is. As such, many consumers are completely avoiding specialty foods stores because they know once inside they are likely to spend money they don't have. Better to avoid the stores completely goes the reasoning.
Despite the struggles going on across the specialty foods industry at present, the fancy food show, which starts tomorrow, will still be packed. Perhaps not as busy as last year in terms of exhibitors, but we suspect there will be as many attendees. For some its the only chance they have all year to network with other members of the trade.
And the specialty foods industry is vibrant. It will survive. But we do know of a number of long established specialty foods companies that are on the ropes. We also know a couple that have gone under this year. There also are many specialty foods professionals, ranging from marketers and operations people to sales folks, at all levels, out of work. You can bet there will be lots of networking for jobs at this year's San Francisco fancy food show as well. Most are out of luck though. Hiring is near non-existent. Layoffs are happening. More cutbacks are to come.
But we think there's reason for optimism. The 34th NASFT Annual Winter Fancy Food Show ends on Tuesday, January 20, the day a new American President, Barack Obama, is sworn-in as the country's 44th President. And with Obama's taking office there's a new spirit blowing across the land in which serious people want to do serious things to improve this economy.
Doing so will take time. We suspect all of 2009, and most economists agree, is going to be a wash in terms of remaining in economic recession. We also believe things are going to get worse before they get better.
But members of the specialty foods trade, which includes many natural foods players as well, are a resourceful group. Most are tough. Most are determined. They have seen bad times before. Some will go out of business but most will survive. Additionally, there will be a new wave of industry consolidation once the credit crisis is over as well, we believe.
Right now job one is to survive for a better day. Use the bad economic times to innovate. Some of the best merchandising and marketing ideas are born out of hard times, for example.
As members of the specialty foods trade arrive in San Francisco today for the show's three day run we suggest you look around you at the City By The Bay. It's a perfect example of renewal and reinvention. It was rebuilt after the earthquake and fire of 1906. Much of the city had to be rebuilt again after the 1989 earthquake. It's a place where people from throughout the country and even the world have come to reinvent themselves, despite the high cost of living.
Sellers will be selling, brokers will be looking for new lines, specialty foods makers and marketers will be networking, and although the fancy food show isn't traditionally a "selling show," some orders will be taken and deals struck betwen buyers and sellers, as happens each year. And you can bet exhibitors will be selling more aggressively this year than perhaps in any time in the recent past.
On the exhibit floor, the thousands of specialty food and beverage companies displaying their respective wears will be putting the best face on the business, introducing some new products and promoting existing goods. There will be plenty of spin, something that always makes the fancy food show fun, along with some complaining about the currrent bad economic times.
But the true reality of how bad the current times are for specialty foods makers and marketers, as well as brokers, distributors and retailers that focus primarily on the specialty category, will be discussed most seriously off of the exhibit floor, in the hotel bars and San Francisco restaurants where the real business and talk goes on during fancy food show time.
And the times they are rather tough for most in the specialty foods business right now.
Below are some of the things members of the specialty foods trade will be talking about in those San Francisco hotel bars, restaurants (and perhaps at a gentleman's club or two) and on the sidelines off the main exhibit floor at Moscone Center starting tomorrow:
>The recession and financial/credit crisis: The situation is hurting near everybody in the industry, from the big specialty foods makers and marketers to medium-size companies and small-entrepreneurial operations. Manufacturers can't get credit, which for many is needed for production, selling, promotion and in some cases even to temporarily make payroll. The frozen credit markets are allowing only the most credit-worthy to access lines of credit.
>Payables-Receivables: Everybody is holding payables in this down economy. In many cases retailers are paying distributors late, which in-turn means distributors are paying specialty foods suppliers late. As a result, suppliers in-turn are paying their brokers' commissions late. They also are paying other suppliers -- glass makers, label makers, printers -- late. It becomes a vicous circle. And with credit so tight it's near-impossible to get short-term bridge loans to help with cash-flow when payments are late. Many have turned to factoring firms that are in the business of advaning companies money on receivables in return for a substantial percentage of the amount due.
>Consumers trading down: During the two most recent economic recessions, in 2001-2002 following the September 11, 2001 terrorist attacks and in the 1992-1993 recession, consumers still bought plenty of specialty and gourmet foods in the main. Those two recessions were much milder and nowhere as deep as the present one is, and their was no financial/credit crisis like at present, so consumers tended to buy specialty and gourmet products at their near-same levels because it was the one affordable indulgence they could splurge on.
Not now. Consumers have cut way back on everything, including food and grocery products. The first items to go have been items like expensive flavored olive oils, fancy mustards, imported preserves, gourmet cookies and other mainstays of the specialty foods trade. Specialty foods makers and marketers, ranging from the divisions of huge consumer packaged goods companies to mid-level and small artisinal producers, are feeling this sting strongly.
>The shelf space crunch: Retailers ranging from the mega-supermarket chains to the regional U.S. chains, as well as mass merchandisers like Wal-Mart and Target, along with specialty foods chains like Cost-Plus World Market and others, have been increasing the number of skus of their own store brand specialty, natural and organic foods items dramatically over the last few years. This includes the "Big Three" U.S. supermarket chains -- Kroger, Safeway and Supervalu. Store shelf space that once held the products from exhibitors at the fancy food show has now in many cases been replaced by store brands. This trend is growing fast. Grocery wholesalers such as Unified Western Grocers in the west (and others throughout the U.S.) and specialty distributors like Tree of Life, Inc. and others also are pushing their own provate label specialty and natural products more so.
On top of this trend, food retailers are taking shelf space that has been used to merchandise specialty foods and in many cases replacing the space with more basic, value-oriented (more inexpensive skus of white rice replacing basmati and wild rice skus, for example) food and grocery items because that's what the consumer is demanding in the current severe recession.
Safeway Stores, Inc. is a good example of this. Since late in the first quarter of 2008, Safeway has been adding numerous new items to its store shelves under its Safeway and other value store brands. In many cases these items took the place of manufacturer branded specialty foods items. And this is on top of Safeway's introduction over the last couple years of thousands of skus across all categories of its "O' Organics" and "Eating Right" premium organic and healthy foods store brands, along with its "Safeway Select" premium and specialty foods brand.
There's only so much "share-of-the-shelf." When space is needed for store brands it often comes at the expense of manufacturer, especially smaller manufacturer, specialty food and grocery brands because they have slower movement compared to a store brand -- even if that store brand is a premium one. REtailers also make higher margins on their own brands.
The 130 store Raley's supermarket chain and the upscale Wegmans chain on the east coast are two regional chains, both key customers for specialty foods marketers, that have also been dramatically reducing the amount of space devoted to manufacturer specialty foods brands on their respective store shelves in favor of their own store brands. Both regional chains, as have many others, have been introducing store brand specialty product after specialty product in the last year, ranging from basic items like olive oil to more exotic products like fig and raspberry-infused balsamic vinegar, which is one of the latest lines introduced by Raley's under its "Raley's" store brand.
When retailers like Safeway, Raley's and Wegmans, which are just three examples of the many retailers doing the same, eliminate specialty foods brands for their store brand items, that also hurts distributors and brokers, as well as the brand's manufacturers and marketers. Distributors lose sales and brokers lose commissions.
Cost Plus World Market, long a key customer for specialty foods companies and importers, is another example of this store brand trend. Cost-Plus has been banging out specialty items after specialty item, in category after category -- condiments, oils and vinegars, snacks, confections, beverages and more -- under its "World Market" store brand. Every time it introduces a new line and item it has to either reduce facings of manufacturer specialty brands or eliminate those items all together -- or both. And of course when this happens it also hurts brokers, who lose commissions on lines discontinued by the 300 store chain, which is one of the top specialty foods venues in the U.S.
We haven't even mentioned an additional fact yet -- that in addition to store brand specialty items displacing manufacturer brand items on the shelf, the store brands, which are almost always prices at least 15% (and most often more) lower than the supplier brands take sales away from those manufacturer brands. For example, placing a 16oz bottle of "Safeway Select" Balsamic Vinegar next to two manufacturer specialty brands on the shelf and pricing it 15-20% lower can easily reduce the average weekly sales volume of those two manufacturer brands by 50%. That's dramatic.
>More aggressive buyers: Specialty foods manufacturers and marketers also are getting hit hard by retail buyers and distributor buyers for deeper and longer deals, more promotional monies and higher spoils allowances, among other chargebacks. Distributors are aggressively asking for higher off-invoice promotional amounts and not always passing the full amount on to the retailer. In turn, retailers are demanding better deals from distributors, including more promotional money. In turn, the retailers aren't always passing those deals on to consumers at the shelf. This has always gone on in the industry. However in these bad economic times it's happening more. Everybody is struggling and looking for ways to ease that struggle.
Those specialty foods companies that sell primarily to specialty foods retailers, and there are many, perhaps the majority who exhibit at the fancy food show, are hurting the most. Sales at specialty and gourmet food stores are way down. Shopping at a specialty foods store is generally a planned trip for consumers, unlike a trip to the supermarket which they have to do is. As such, many consumers are completely avoiding specialty foods stores because they know once inside they are likely to spend money they don't have. Better to avoid the stores completely goes the reasoning.
Despite the struggles going on across the specialty foods industry at present, the fancy food show, which starts tomorrow, will still be packed. Perhaps not as busy as last year in terms of exhibitors, but we suspect there will be as many attendees. For some its the only chance they have all year to network with other members of the trade.
And the specialty foods industry is vibrant. It will survive. But we do know of a number of long established specialty foods companies that are on the ropes. We also know a couple that have gone under this year. There also are many specialty foods professionals, ranging from marketers and operations people to sales folks, at all levels, out of work. You can bet there will be lots of networking for jobs at this year's San Francisco fancy food show as well. Most are out of luck though. Hiring is near non-existent. Layoffs are happening. More cutbacks are to come.
But we think there's reason for optimism. The 34th NASFT Annual Winter Fancy Food Show ends on Tuesday, January 20, the day a new American President, Barack Obama, is sworn-in as the country's 44th President. And with Obama's taking office there's a new spirit blowing across the land in which serious people want to do serious things to improve this economy.
Doing so will take time. We suspect all of 2009, and most economists agree, is going to be a wash in terms of remaining in economic recession. We also believe things are going to get worse before they get better.
But members of the specialty foods trade, which includes many natural foods players as well, are a resourceful group. Most are tough. Most are determined. They have seen bad times before. Some will go out of business but most will survive. Additionally, there will be a new wave of industry consolidation once the credit crisis is over as well, we believe.
Right now job one is to survive for a better day. Use the bad economic times to innovate. Some of the best merchandising and marketing ideas are born out of hard times, for example.
As members of the specialty foods trade arrive in San Francisco today for the show's three day run we suggest you look around you at the City By The Bay. It's a perfect example of renewal and reinvention. It was rebuilt after the earthquake and fire of 1906. Much of the city had to be rebuilt again after the 1989 earthquake. It's a place where people from throughout the country and even the world have come to reinvent themselves, despite the high cost of living.
Once the financial capital of the western U.S., that ended. But San Francisco reinvented itself, becoming the advertising and muti-media capital of the west instead, as an example of business renewal.
And of course, Northern California and the San Francisco Bay Area is arguably the top region in the United States, and one of the top globally, for innovation in the specialty, gourmet, natural and organic foods industry.
So, look around. And think like many San Franciscans did after the fire of 1906 completely destroyed the city when they said to each other: "This too shall pass." And so too will the current hard times pass.
But in the meantime its all about being smart, frugal and innovative. The most innovative folks in the specialty foods trade today will become the most successful folks in the business when the recession ends.
Come up with ways to market specialty products in the recession. Themes like the "frugal gourmet." Offer added value. Get creative in promoting; use PR and free media rather than paid advertising. So few specialty foods companies are using social media sites and Blogs for marketing, for example. This is particualrly true of many medium and smaller companies who's Web presence looks like what one would expect in the first or second year of the existance of the World Wide Web, rather than in 2009. The cost of doing so is near-free -- and the potential impact huge.
Innovate, innovate, innovate. And have a good show.
And of course, Northern California and the San Francisco Bay Area is arguably the top region in the United States, and one of the top globally, for innovation in the specialty, gourmet, natural and organic foods industry.
So, look around. And think like many San Franciscans did after the fire of 1906 completely destroyed the city when they said to each other: "This too shall pass." And so too will the current hard times pass.
But in the meantime its all about being smart, frugal and innovative. The most innovative folks in the specialty foods trade today will become the most successful folks in the business when the recession ends.
Come up with ways to market specialty products in the recession. Themes like the "frugal gourmet." Offer added value. Get creative in promoting; use PR and free media rather than paid advertising. So few specialty foods companies are using social media sites and Blogs for marketing, for example. This is particualrly true of many medium and smaller companies who's Web presence looks like what one would expect in the first or second year of the existance of the World Wide Web, rather than in 2009. The cost of doing so is near-free -- and the potential impact huge.
Innovate, innovate, innovate. And have a good show.
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