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.

High Quality Prepared Food Departments Add Dine-in Cafes to Drive Traffic at Grocery Stores

Prepared food bar at Wegmans.  Photo Courtesy of
toujourspretamanger.com

Been to a Wegmans lately?  The Market Cafés have pizza, freshly-made sushi, burritos, Thai food, and vegetarian choices for dining in or taking home. And Kroger took out the underused salad bars to make way for prepackaged salads, sandwiches, and carnitas. My own local Harris Teeter offers chef-staffed prepared food stations.  Imagine that, a live person ready to make my perfect California roll.

As a self-proclaimed 'foodie' you would think I'd stick to the trendy new restaurants in downtown D.C. But on today’s shoestring budget that’s not possible.  Instead, I find myself eating what I want at attractive, upscale bistro area of my local grocery store.

The traditional grocery channel made 57% of retail food & beverage dollar sales in 2010, according to market research publisher Packaged Facts. Through their in-store foodservice options, traditional grocery stores stand to further grow in share of U.S. food & beverage sales.

Grocery stores are aiming to make shopping more appealing by providing upscale restaurant-like experiences to customers. In order to attract as many shoppers as possible, stores are providing a wide range of restaurant-style foods and amenities: wood-fired pizzas, made-to-order soups, sandwich and sushi bars, and dining areas. And the eager (read: hungry) shoppers who want to grab a quick meal while grabbing the groceries, take a break for lunch, or get a snack before the drive or walk back home are eating it up.

Packaged Facts analysis expects to see food retailing and foodservice channels continue to converge around fresh prepared foods, working fervently to make consumption more convenient. As a result, the competitive lines between grocery stores, restaurants, convenience stores, and other channels will continue to blur in a U.S. food & beverage retail market projected by Packaged Facts to reach nearly $700 billion by 2015.

At the end of the day, when the sushi stand has been cleaned and the fresh olive bar has closed, what else will retailers be looking to add? Besides adding to their variety of on-the-go foods, deli and prepared food departments will expand with easily accessible take-out entrances and check-out lanes; curbside pick-up and call-ahead ordering; website and smart phone apps for ordering.

Well, that’s where its heading, but for me its lunch-time and I’m heading over to the Parisian café at my local Whole Foods Market. Or maybe a grilled vegetable sub at Teeters? I could really go for some sushi-…

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Gluten-free has gone mainstream – but how long will that last?

Gluten-free has gone mainstream – but how long will that last?

WENCY LEUNG | From Wednesday's Globe and Mail

Published Tuesday, Feb. 01, 2011 1:29PM EST

In less than five years, sales of gluten-free products have nearly tripled, rising in tandem with the increasing number of new gluten-free goods. Beyond crackers, breads and pastas, it’s now possible to buy everything from gourmet gluten-free cookies at independent bakeries to gluten-free pizzas at restaurant chains such as Boston Pizza.

According to the Rockville, Md.-based research firm Packaged Facts, U.S. retail sales of gluten-free products reached $2.6-billion (U.S.) in 2010, up from $935-million in 2006. And in its 2011 Gluten Free Foods and Beverages report, the firm predicts sales will grow to $5.5-billion by 2015. A similar trend is under way in Canada, although precise national figures are not available. 

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Food Flavor and Ingredients Outlook 2010, 7th Edition

While Wall Street claims that the recession has ended, Main Street will continue to face financial challenges through most, if not all, of 2010. Frugal behaviors consumers adopted in 2009 are becoming engrained and reflect a new normal when it comes to shopping, dining and eating preferences for the foreseeable future. What constitutes value is being redefined and consumers are starting to make different choices than in years past that will drive their food and beverage purchases. Food Flavors and Ingredients Outlook 2010 describes the trends that Packaged Facts predicts will influence the flavors and ingredients that will drive food and beverage selection at retail and in restaurants and other foodservice establishments in the coming year and beyond.

 

The 2010 edition of this annual report (which was first published in 2004) includes coverage of eight primary focus areas impacting flavor and ingredient trends. To assess the shift in trends over time, predictions for last year are summarized along with Packaged Facts’ expectations for 2010 in relation to:

• International Flavors
• Redefining Healthy Eating
• Local Food Production and Sourcing
• Reenacted Flavors
• Savory Trends
• Sweet Trends

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Prepared Foods and Ready-to-Eat Foods at Retail: The New Competition to Foodservice

Wegmans Cafe

Hoping to parlay recession-based foodservice-to-retail migration into long-term gains, food retailers continue to ratchet up their prepared foods and ready-to-eat programs. Packaged Facts estimates that grocery stores and supermarkets will grow prepared- and ready-to-eat foods sales by more than 7% in 2010. Their usage imprint is already imposing:

According to Packaged Facts’ proprietary consumer research, 64% of adult consumers have gotten ready-to-eat/heat-and-eat food from a grocery store or supermarket in the last month. Moreover, in terms of total usage occasions, grocery-related prepared foods use leads both family and casual restaurant segments and trails only fast food/QSR.
 
While convenience stores have also relied heavily on prepared foods and foodservice sales for sales and higher margins, increasing competition extends to supercenters, warehouse clubs, convenience stores and drug stores. At a time when food value is so closely associated with low cost and convenience—and when consumers increasingly perceive private label food retail brands as competitive with name brands on cost and quality—prepared and ready-to-eat foods programs that deliver on quality, taste and convenience can not only compete with foodservice fare, but can also help food retailers adapt to modern consumer lifestyles.

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New Market Research: Fresh Convenience Foods in the U.S.

During 2008 and 2009, as the “Great Recession” took hold, many consumer product marketers and retailers acted as if the walls were closing in on them, in many cases resorting to rampant price-slashing. But not fresh convenience food marketers and retailers, who instead saw an opening. Wisely gauging their main competition as coming from the restaurant industry instead of less costly unprepared food, they continued the innovations in quality and convenience that had been underway in the market for several years, and simultaneously began aggressively competing on price with the foodservice industry in an effort to woo customers away.

According to Packaged Facts, these efforts proved successful, spurring a shift by many consumers from restaurant meals to prepared food purchased at retail outlets. As a result, the market for fresh convenience foods grew by 5.1% in 2009 to reach sales of $22.3 billion. Packaged Facts expects these marketing and merchandising efforts to continue to prove successful over the short term, driving sales of fresh convenience foods up another 28% by 2014 to $28.5 billion.

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New sandwiches meet consumer interests, values

Sandwiches aren't just an important part of the American diet; they are essential to it. And lucky for hungry consumers, sandwiches are undergoing exciting flavor and quality upgrades on every level -- carriers, fillings and condiments.

New sandwich trends are driven by artisan and sustainable ingredients, American regional and global flavor profiles, and even better nutrition, according to the "Sandwiches: Culinary Trend Mapping Report" from the Center for Culinary Development (CCD) and market research publisher Packaged Facts.
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Competition on Aisle Five

A new study finds consumers are flocking to grocery-store prepared meals for two reasons. And restaurants should be worried.

By Daniel P. Smith - QSR Magazine

Quick-service restaurants feeling more intense competition for the consumer’s dollar might not only look at their dining rivals across the street, but their supermarket down the block.


A growing array of prepared and ready-to-eat foods at retail outlets such as Walmart and Kroger are attracting consumers and threatening to put a dent in quick-service business, says a new report from Packaged Facts titled “Prepared Foods and Ready-to-Eat Foods at Retail: The New Competition to Foodservice.”

The report surveyed 1,881 U.S. adult consumers and found that half of respondents were more likely to eat dinner at home than they were three months ago, while 64 percent reported purchasing ready-to-eat or heat-and-eat food from a grocery store within the last month. The study predicts that supermarket prepared foods will grow to $14 billion by 2011, largely motivated by consumers migrating away from restaurants during the recession in search of value and one-stop-shop convenience.

“We see a lot of momentum here and expect growth of 7 percent from 2010 to 2011, which is a pretty monumental surge in a supermarket industry that has been accustomed to losing share,” says David Morris, the report’s chief analyst.

The study cites two distinct groups gobbling up supermarket-prepared foods: those who seek low-cost, quick alternatives out of necessity or convenience and those who see the prepared foods as an alternative to home cooking. Both groups have long been primary clientele for the quick-service category, heightening restaurant concerns in an already challenging environment.

“This is not a new trend, but we do see this as the year that grocery stores put this strategy at the forefront, which should be a competitive concern for restaurants,” Morris says.

Suzanne Long, a grocery retail analyst with New York–based SSA & Company, says grocery stores began stocking prepared meals more aggressively in 2005–2006. Noting a consumer conscious of price and time, the industry saw an opportunity to modernize its decades-old business model and push into new areas. Offering prepared meals was supposed to generate additional in-store purchases.

“There’s been a huge trend toward this for years now, but the retailers are looking far more at sales and market share over profit,” Long says.

Although still in its formative years, the prepared-meals trend is gaining momentum, particularly as the recession lags. Grocery chains continue to experiment with more diverse offerings, portion size, and operational efficiencies to better compete with restaurants and draw customers.

“Grocery stores feel as if they haven’t come close to achieving their goal of grabbing greater market share, so there’s absolutely a continued push,” Long says.

The study predicts that supermarket prepared foods will grow to $14 billion by 2011.While the threat of increased competition in an already heated foodservice field brings concern to some restaurant brands, others see the rise of grocery stores in the prepared-foods arena as a complement—not a competitor—to business.

In June, Canadian chain Tim Hortons announced it would add 48 self-service coffee kiosks to new Tops Friendly Markets locations in the northeast U.S. The partnership adds to Tim Hortons’ already strong relationship with the grocer, which includes existing kiosks in 82 Tops outlets in upstate New York. Each of the locations serves Tim Hortons’ signature blend coffee, Timbits donut holes, hot chocolate, and tea.

“We’re taking the brand to the people,” says Tim Hortons COO David Clanachan. “The key thing is convenience. People are time-starved and they want what they want. If we make our products available and win loyal customers, then it feeds our brand.”

Whether competitor or complement, there remains little question that grocery’s major players intend to challenge restaurants. While grocery stores might succeed and expand in the short term, Morris sees a ceiling to their market share.

“The grocery stores cannot be ignored, but they still cannot recreate the restaurant experience unless they build out and create their own branded restaurant-like setting,” he says. “That’s one thing the restaurant world has going for it, even as the competition grows.”

For information on Prepared Foods and Ready-to-Eat Foods at Retail: The New Competition to Foodservice click here.

Food service lunch spending forecast to rise

FoodBusinessNews.net, September 8, 2010
by Keith Nunes
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Consumer spending on lunch served in restaurants is forecast to rebound 2% in 2011 and reach $114 billion following two years of recession-related declines, according to “Lunch Trends in the U.S. Foodservice Market,” a report produced by research publisher Packaged Facts. After rising to $119 billion in 2008, lunch daypart sales declined 4% in 2009, and sales are projected to fall another 3% in 2010 to $112 billion.

“This has been a very tough climate for lunch food service and its counterparts, and that won’t change overnight although change is coming," said Don Montuori, publisher of Packaged Facts. “Growth in the lunch daypart still faces a few near-term challenges, including the impact of unemployment on work-driven restaurant routines, bargain-minded consumers who weigh the cost of a bagged lunch against the indulgence of eating out, and an industry environment in which players are chasing foot traffic at the expense of guest check through the extreme push of value meal deals.”

A survey of consumers conducted by Packaged Facts showed that interest in lunchtime meals priced under $5 and under $10 is stable across household income brackets, suggesting price sensitivity among a large segment of diners regardless of their personal wages. Respondents aged 18 to 24 are 60% more likely than average to choose a restaurant because it offers meals for under $3.

Limited time offers and menu options that allow consumers to bundle their meal components for a set price are two menu strategies that have proven attractive to consumers, according to Packaged Facts. Examples cited in the report include Taco Bell’s $2 Meal Deal and Jack in the Box’s Pick 3 for $3 customizable limited time offer value meal.
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Lunch Trends in the U.S. Foodservice Market

To help foodservice industry participants face challenges unique to the lunch daypart, Lunch Trends in the U.S. Foodservice Market provides insight on the lunch goer’s decision-making process. By putting a finger to the lunch goer’s pulse, we provide insight on two keys factors to lunch-time foodservice: how and why the consumer decided on a specific restaurant from which to obtain lunch, and how and why that consumer decides what to order from the menu.

Introductory findings include the following: When deciding on a restaurant from which to obtain lunch, 37% of lunch goers cite a favorite menu item as influencing their choice, and some 36% cite a different menu item than what they have at home. But low cost has become the industry mantra—and is also important to many consumers. About 35% cite a meal priced under $5 as an influence when selecting a restaurant, and 31% say that a meal priced under $10 has influenced them to select a restaurant for lunch.

With proprietary consumer research laying the foundation, this report weaves consultative insight with analysis of lunchtime limited-time offer and value trends; current lunchtime guest check averages; planned restaurant spending; and guest traffic patterns at selected brands. We also shine a light on leading lunch-centric brands, by outlining menu strategies and related innovations, and then tying them to demographic analysis of the brand users’ diet, health, and food attitudes; and usage patterns. The report also trends lunch daypart sales by demographics such as income, age, region, and race/ethnicity. Analysis also focuses on consumers particularly important to the lunch daypart, such as the full-time and part-time employed.


While the restaurant industry is the primary focus of the report, consumer survey assessment incorporates prepared foods at grocery stores and convenience stores, and trend analysis incorporates both restaurants and food retail.

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