Delicatessen sector trends

(last updated July 2019)

What has been happening in the delicatessen sector

Over the last twenty years or so the popularity of delicatessen, speciality and fine foods has grown enormously, as people's tastes have become more sophisticated and adventurous. Delicatessens were often originally set up to cater for local Polish, German, Italian or other European communities which had become established in the UK. Their customer base then expanded to include British people keen to buy products they had sampled on holiday abroad, or in continental restaurants.

The mid 2000s saw a rise in the number of Polish delis around the UK offering traditional food due to an influx of Polish workers after the expansion of the European Union. Polish food also appears to have grown in popularity among non-Poles who are willing to try new foods.

Demand has also increased for organic, locally-sourced, additive-free and Fairtrade products, and many delicatessens have added these to their ranges. A report in 2015 revealed that shoppers were leading an ethical spending boom, with spending on ethical foods up by 8 per cent. The report found that there had been a 19 per cent growth in sales of free-range eggs and a 17 per cent growth in sales of sustainable fish.

Although increases in demand for speciality foods are good news for delicatessens, they've also prompted the big supermarkets to:

  • open in-store deli counters
  • expand their ranges of pre-packed salamis, patés, cheeses and so on
  • import tinned, bottled and dried fine foods from overseas
  • introduce a wide range of traditional Polish food and drinks
  • produce continental and far eastern ready-meals
  • introduce speciality breads such as ciabatta, focaccia, bagels and so on
  • introduce their own ranges of locally sourced, Fairtrade and organic products

Now even many small convenience stores sell a range of products which, only a few years ago, would only have been available from a specialist delicatessen. For this reason many delicatessens have diversified to target the lunch time trade - for example by selling take away sandwiches and hot drinks.

A delicatessen with a knowledgeable and enthusiastic staff can nevertheless hold its own against supermarket competition. As well as helping customers find what they want, they can take the opportunity to suggest other items they may like. Talking to customers can also provide ideas for new lines to stock. The mere fact of having a person to serve customers is also an advantage - Sainsbury's has announced that it is reducing the number of self-service checkouts and increasing the number of check-out staff.

The food scene is fast moving and difficult to keep pace with so forecasts need to be treated with care. However, it's important to be aware of what the experts are saying and the trends forecast for 2018 that could have an impact on delicatessens include:

  • the now well established concern to eat healthily is forecast to remain a strong influence during 2018. Healthy food and drink is no longer seen by many as a luxury but as part of everyday life and it is expected that there will be a strong trend towards healthy snacks and low sugar drinks
  • the growing preference for simple, natural, organic, plant-focussed foods, including grains and sea vegetables, is expected to continue into 2018 as the interest in vegetarian and vegan food continues to increase (it is estimated that there are now some half a million vegans in the UK). It is worth noting that in 2017 sales of organic food grew twice as quickly in independent shops as in the multiples, due in part to the specialist knowledge of the staff
  • there is a trend towards zero-waste and sustainability, which could see an increase in the popularity of lines such as jams made from reject fruit. Delicatessens could also aim to exploit the way they sell to avoid plastic packaging, another major and growing concern amongst consumers
  • as people's lives become busier and more pressured there continues to be a need for short food preparation times, which could see an increase in the popularity of healthy ready-meals
  • people are becoming more interested in low or non-alcoholic drinks, with reports that millennials are drinking far less alcohol than their parents' generation

When deciding on new lines to stock, you might want to take into account these trends that are forecast for the food industry generally.

e-Commerce

Niche products like speciality foods are well suited to e-commerce (including mobile commerce), which can reach a much wider audience than a traditional shop. Even perishable foods can be sent through the post or by courier if they're suitably packaged and delivered promptly. Unsurprisingly, the delicatessen and fine food sectors have embraced e-commerce and many delis now sell goods online. Of course, the internet is a source of competition as well as an opportunity - many producers use e-commerce to sell their goods direct to the consumer. There's even a 'virtual farmer's market'.

Delicatessens can benefit from online sales particularly at Christmas time. Presentation hampers of speciality food, either pre-selected or made up by the customer themselves, can provide an attractive and interesting present, with the opportunity to adjust the value as required. The delicatessen can help with this by providing attractively printed boxes to hold the selected goods.

The early 2010s saw the rise of several 'daily discount' and voucher websites like Groupon, which enable participating retailers to reach customers by holding discount promotions and special offers.

The economy

After several years of benefiting from a strong economy, delicatessens in the UK were hit hard by the sharp economic downturn which began in 2008 and persisted during the early 2010s. Almost everything stocked by a typical deli is a non-essential or luxury item, and unfortunately it's just these sorts of things that shoppers cut back on when they need to save money. So the industry had a tough time.

It was not all bad news though. While some cash-strapped shoppers stopped shopping in delis to save money, others cut out restaurant visits but still wanted to treat themselves to delicious food from time to time. So opportunities arose to target people who want an occasional taste of luxury, but at an affordable price.

Things started to pick up during 2013, and the recovery continued throughout 2014 and into the first half of 2015. The economy slowed again, however, in the second half of 2015 and into 2016. The vote in June 2016 to leave the EU added a degree of economic uncertainty and this, together with the fall in the value of the pound and rising inflation, led to slower growth during 2017, which is expected to continue throughout 2018 and into 2019. The increased cost of imports due to the fall in the value of the pound and people's reduced spending power may need to be taken into account when deciding what items to stock in your delicatessen business. Aiming to stock more local produce can be a good solution as it avoids the cost of imported goods and gives customers the popular option of buying products from local producers. There are also fears that increased border controls will result in delays which will adversely affect the freshness of imported food and that increased tariffs will increase costs even further.

Keeping up to date with developments

Joining a trade association is an excellent way of staying up to date with developments in your industry.

The Guild of Fine Food Retailers represents delicatessens and offers a range of services to members, including a subscription to Fine Food Digest magazine. The Guild also runs an accredited supplier scheme. This provides deli members with a searchable database of over 10,000 fine food and drink products which are only sold in independent outlets and which are not available in supermarkets. The Guild organises the annual Fine Food Show held in Harrogate. To find out more visit the Fine Food World website.

Other trade exhibitions for the sector include Farm Shop and Deli Show, held annually in Birmingham.

Although they're focused mainly on large retailers like supermarkets, the Institute of Grocery Distribution (IGD) produces a huge range of articles, fact-sheets and reports covering many aspects of the UK food and grocery industry. And it's never a bad idea to keep in touch with what the supermarkets are up to. You can find out more on the IGD website.

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