March 1999 will represent a milestone for the specialty food industry. The National Association for the Specialty Food Trade introduces a third Fancy Food Show, this one in Chicago’s McCormick Place. The addition of the Chicago show to the established New York and San Francisco venues has not been greeted with overwhelming joy by the entire exhibiting community.
That’s not surprising. There are so many food shows today and so many people who sell across various categories – specialty food, deli, bakery, confections – and in multiple retail formats – supermarkets, warehouse clubs, convenience stores, discounters, category killers, specialty-food stores, gift catalogs, etc. – that, between state, regional, national and international shows, an exhibitor can be in a show almost every day of the year. Retailers and distributors also sponsor shows themselves.
Much marketing is defensive. People exhibit in certain venues partly so their absence won’t be conspicuous. So for many exhibitors, another show, especially one sponsored by NASFT and bearing the Fancy Food Show name – in other words, one they feel funny about telling customers they are skipping – is a burden, not a blessing.
But, more than this, exhibitor distress over another show is symptomatic of the bifurcation of the buying community, the addition of a $15 fee to register, attendance declined as the number of “samplers’ dwindled. Yet there are many more legitimate small buyers than large ones at the show. Here’s why: Each independent store or café needs a buyer, and many a store sends a husband and wife team to do the buying. So if attendance at a big show represents the buying power of 10,000 independent specialty-food stores, gift-basket shops and independent restaurants, attendees break down to about 20, 000 buyers representing the small guys. A giant supermarket or department store chain also needs only one or two buyers. So if attendance represents the buying power of 10, 000 units owned by chains having 250 units each, that comes to 80 – that’s right, 80 – buyers representing 40 large chains.
Thus, the Fancy Food Show can be thought of as two shows in the same hall at the same time. One is for small buyers with credit cards looking to order cases to be shipped UPS. The other is for large buyers who, depending on their organization, either will purchase directly or via distributors and are unlikely to place product orders on the show floor.
The exhibitors bifurcate as well. Numerous exhibitors in San Francisco sell probably less than $100,000 a year. These exhibitors have no distribution system beyond UPS; they could not handle a big order if it was proffered. Many other exhibitors find small stores annoying. They don’t want to ship directly by the case, and their distributors don’t want customers with small drops.
This split in the exhibitor and attendee bases explains mixed feeling about a third show. Costco, Wal-Mart and Neiman-Marcus will send representatives to shows important for their business. Exhibitors who want to sell to these larger buyers probably would prefer one large show each year. Big buyers probably wouldn’t mind, either. It would save time and money for all concerned.
Small buyers and the exhibitors they procure from welcome a third show. It is a chance to reach Midwestern companies that are unlikely to fly to New York or San Francisco. Thus, to the vendor who sells to big buyers, a third show is an extra expense with little possible return. To the vendor who looks to ship by the case, the third show is a chance to build good business among buyers that are hard to reach without a show.
This bifurcation makes the Fancy Food Shows unlike any others. Tiny companies, almost inevitably, exhibit the most innovative products for the most innovative retail and foodservice concepts. This is why anyone serious about the food business needs to attend the Fancy Foods Shows. Sure, you can find product to buy. Much more important, though, is the ability to identify the trends, fads and fashions that continuously recreate the food business.
Part of this is product; so many companies were pushing biscotti in San Francisco that the trend is likely ready to peak. The coffee and tea boom continues in another form as coffee and tea flavorings come to imbue jams, jellies and just about everything else. We are in for a year of gimmicky “millennium food” with holograms, special shapes and other doodads as food producers try to hitch their wagons to the biggest party of all time: Dec. 31, 1999.
Maybe even more important, though, is a redefinition of where and how specialty food is sold and who the customers are. For years, the same brands of specialty food could not be sold in wildly different venues. If one tried to sell an upscale label in a supermarket, for example, local specialty-food stores boycotted the brand because they didn’t want to be compared in price or quality with the local supermarket. Although there have always been exceptions, they were generally confined to the strongest brands such as Walkers Shortbread, which consumers have identified with so closely that the label is a must-carry from convenience stores to gourmet shops.
Today, the dynamic of distribution is shifting. The stigma has been lifted from mass marketers. There is no more shame in being carried outside of traditional specialty-food shops. Many exhibitors at the show in San Francisco complained about big buyers, mostly protesting their arrogance. One warehouse club, for instance, refused to make appointments, yet demanded to see top people within 30 seconds of arrival at a booth or they left. But everyone seemed to want the firm’s purchase order, and nobody seemed concerned about being boycotted by independents for selling through warehouse clubs.
For many, the show seemed excruciating as they stood for three days and talked to people who sometimes seemed like they had never bought a full case of anything. Yet redemption was achieved and the show deemed immensely productive because of one key contact with the buyer from Target or Costco.
The specialty food industry would do well to reflect on all this. Throughout history, class relationships have been manifested through various means. Costume is one – how one dresses is a classic status signifier. Spatial stratification (where one gathers) is another. Yet the old standards are becoming difficult to interpret. In an age in which grunge can be seen as high fashion, shopping in rarified venues is unlikely to survive as a status symbol.
I’m reminded of when the Japanese entered the U.S. luxury car market by introducing Lexus, Infiniti and Acura nameplates. Mercedes had gotten so expensive that it left a market opening for a high-quality, high-prestige, less-expensive car. High cost and prestige go hand in hand, but not always. You can’t achieve prestige if your friends perceive you as stupid for overpaying. Now that word is getting out that you can buy the same brands almost everywhere, you can’t gain prestige by overpaying for the items in small specialty-food stores.
Hence, small retailers must find another way to differentiate themselves. Supermarkets have for decades been fighting the battle of parity products by emphasizing perishables. These are difficult to price-compare, as they fluctuate in price and quality frequently. What is more, a small operator can select superb product for a specialty cheese or produce line.
The industry faces tremendous pressures to lower prices on specialty foods. This may expand the market for specialty foods as they are retailed less expensively in venues that present them to more customers than ever before. But small retailers will need to recreate themselves to make gourmet and perishable virtually synonymous.