The specialty food industry continues to be a bright spot in the U.S. economy, and is now a $120.5 billion dollar industry, according to a new report by the Specialty Food Association, New York, and produced in conjunction with research firms Mintel International, Chicago, and SPINS/IRI, also based in Chicago.

The report, “The State of the Specialty Food Industry 2016,” tracks U.S. sales of specialty food through supermarkets, natural food stores and specialty food retailers.

Largely fueled by the growth of small businesses, retail specialty food sales grew to $94 billion in 2015, a 19.7% jump since 2013, driven by product innovations and wider availability of specialty foods through mass-market outlets.

Sales through foodservice outlets grew at a faster clip—27% to hit $26.5 billion—as U.S. consumers continue to make specialty food a part of away-from-home meal purchases.

The supply chain has also embraced the importance of e-commerce as a way to sell directly to consumers. Eighty-five percent of manufacturers sell via their own website and 49% use a third-party platform like Amazon. Importers cite online sales as one of their fastest-growing channels.

The Top 10-selling categories in the industry are similar to last year. Cheese and cheese alternatives remain at the top, growing 14.7% over the past two years, but frozen and refrigerated meat, poultry and seafood (up 23.1%) inched up to the No. 2 spot. Refrigerated entrées and prepared meals joined the Top 10 after experiencing a 34.5% sales increase in two years. Categories with the biggest sales growth are refrigerated ready-to-drink tea and coffee; eggs; and jerky and other meat snacks. Unit sales of specialty foods grew 13.7% overall to 15.6 billion.

"American consumers continue to move toward specialty foods and away from mass," says Ron Tanner, vice president of philanthropy, government and industry relations for the Specialty Food Association. "Consumers are looking for foods with fewer and cleaner ingredients and products that are made by companies with values they care about. All of these define specialty food."

Many in the supply chain believe non-GMO will be a product claim of growing importance to consumers, with 49% of manufacturers planning to introduce products that are non-GMO in 2016. Local products also continue to remain an important way retailers differentiate their offerings.