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Tuesday, March 8, 2011

Report: Gluten-Free Momentum Accelerating

Photo Source: MediaPost Publications
by Karlene Lukovitz, Friday, March 4, 2011, 5:41 PM
 
Sales of gluten-free foods and beverages, once considered specialty items, had a compound annual growth rate of 30% in the U.S. between 2006 and 2010, according to the latest report on this category from research publisher Packaged Facts.

Packaged Facts, which previously projected that sales of gluten-free foods and beverages would reach $2.3 billion by 2011, has revised those estimates, putting the market at $2.64 billion in 2010.

Moreover, despite factors such as expected falling product prices due to a greater presence of these items in mass outlets and more private-label choices, the researcher expects gluten-free products to show average annual compound growth of 14% between 2011 and 2015, to reach sales of to $5.6 billion by 2015.

The dynamics behind this growth start with growing consumer awareness of celiac disease -- a chronic autoimmune intestinal disorder in genetically susceptible individuals that causes a toxic reaction to ingesting wheat gluten and similar proteins. A Mayo Clinic study found that the rate of celiac disease has more than quadrupled in the past 50 years -- this despite the fact that it is still "staggeringly under-diagnosed," according to Packaged Facts. Recent estimates are that 1% of Americans, or about 3 million people, may be affected. Food allergies affect about 4% of U.S. adults and 5% of children, and the incidence among children, in particular, has been rising rapidly.

Currently, the only treatment for celiac disease is lifelong adherence to a gluten-free diet -- which is why, these days, "everyone knows someone" who is living gluten-free, one marketer noted to the report's researchers. In addition, there is evidence that gluten-free diets may relieve autism in children and adult rheumatoid arthritis.
Furthermore, from a broader perspective, a growing number of consumers perceive gluten-free products as being of higher quality and having a healthy "aura" -- a dynamic similar to the one that's driven sales growth of kosher foods in recent years, points out the report. "There is a demand for [gluten-free] foods and beverages that mainstream food manufacturers and retailers are increasingly happy to satisfy," observes Don Montuori, publisher of Packaged Facts.

Recognition by major brands and mass retailers of the sustainable -- non-fad -- growth of gluten-free products, and their resulting push to market/carry such products, has resulted in health food stores' share of these products' sales dropping by half in just two years, estimates Packaged Facts. The surge in the sales and number of products specifically marketed as gluten-free in supermarkets and mass merchandisers tracked by Symphony IRI has reached the point that, according to one brand marketer quoted in the report, gluten-free products are becoming "just a regular grocery item."

Dominant gluten-free product categories in food/drug/mass retailers include food/nutrition bars -- which, largely due to General Mills' acquisition of the Lärabar brand in 2008, represent about 16% of total gluten-free product sales in these outlets and showed the largest year-over-year sales growth between 2009 and 2010, according to the report. Sales of gluten-free ready-to-eat cereals declined slightly between 2009 and 2010, but that category remains in second place.

Indeed, General Mills' "transformation" of its popular Rice Chex cereal into a gluten-free product without changing its taste "stands as a milestone indicator of the breadth of impact of gluten-free products having mainstream consciousness," point out Packaged Facts' analysts. As of November 2010, General Mills reported offering 250 gluten-free products, including five varieties of Chex and numerous products under the Betty Crocker and Bisquick brands.

Meanwhile, while product categories such as hot cereal, soups and frozen pizza are still very small segments of the overall gluten-free food/beverage market, they are showing significant, double-digit gains.
Consumers on gluten-free diets are willing to pay the higher prices generally associated with gluten-free products, the report notes.
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