However, we should avoid jumping to conclusions about the target audience for gluten-free products based on consumer survey data, which can be misleading, says ConAgra Mills director of commercial insights, Dr David Sheluga.
The Forum - which was broadcast live on Wednesday morning - can be accessed on demand HERE.
To whet your appetite, here are some highlights from the debate, which was sponsored by Ingredion and featured experts from ConAgra Mills, Boulder Brands (Udi’s Gluten-Free/Glutino), Datamonitor and world-renowned pediatric gastroenterologist Dr Alessio Fasano.
QUOTE UNQUOTE: DR DAVID SHELUGA, Director commercial insights, ConAgra Mills
On the gluten-free consumer: The surveys are leading to misperceptions about the size of the audience. Most surveys find that 20-30% of consumers say they are avoiding gluten or buying gluten-free products. But we followed up with in-home interviews with many of the consumers that had that answer pattern in the surveys, and what we found when we talked to some of these people, is that they had no gluten-free products at home, they had no awareness of gluten-free products and no intent to buy such products.
What they actually say is ‘Yeah, I wanted to lose some weight so I started to avoid bread and bagels and muffins’ or ‘I wanted to eat in a more healthy manner.’ They only had a vague connection that there is gluten in these products, so avoiding gluten is not really their primary purpose.
I’m not seeing the evidence that fad dieters are buying [specifically formulated] gluten-free products - they may just be cutting down on bread and avoiding donuts and cookies.
While Mintel pegs the US gluten-free retail market at a whopping $10.5bn in 2013, that’s because it includes anything with a gluten-free label (including products that might be naturally-gluten-free).
If you limit the definition to products that have been specifically formulated to replace wheat flour such as bread and cookies, and exclude products that are naturally gluten-free, the size of the prize is more likely around $1.2bn, reckons Dr Sheluga.
On the size of the market: The multi-billion dollar market size estimates from some market researchers are just way too high. In 2012, the US gluten-free [retail] market was worth $831m.Then the market boomed in 2013 and sales went 47% higher and the market topped out at $1.2bn. That’s driven by underlying growth of 30% in existing products and then a whole lot of new product introductions adding to that.
Only 2.5% of US households are heavy buyers of gluten free products - they are spending $185 a year and they are driving two thirds of the sales of the market.
The 47% growth we saw in 2013 tells me that this is a market that has at least another three years of that 40% growth. The average gluten-free product on the market today has only 8% distribution - there’s so much upside there. If you increased that to just 10% ACV you’d have another 20% growth.
On product quality: Five years ago there was a lot of dissatisfaction with product quality of gluten-free products but I think that has pretty much gone away now. It’s unbelievable to me that 74% of the gluten-free products that were introduced to the market - or were in the market - in 2009 are still on the market today. That’s phenomenal staying power.
QUOTE UNQUOTE: DR ALESSIO FASANO, Director, Center for Celiac Research
On prevalence rates of celiac disease: The Annals of Medicine Study [penned by Dr Fasano in 2003 that established the US prevalence rate for celiac disease as one in 133 people] probably planted the celiac flag on the US territory, but it echoed the findings of European studies and we’re starting to see the same [prevalence rates] in India and China.
The trend of the epidemic of celiac disease is following the trend of other autoimmune diseases such as asthma and type one diabetes and I believe that this epidemic is driven more by a sudden change in the environment to which we cannot adapt as individuals.
The trend is now accelerating to a rate of doubling the prevalence every 15 years. In some areas in Scandinavia the prevalence of celiac disease is as high as one in 80.
[To develop celiac disease] you have to have a genetic predisposition [click HERE for details], but not everyone [with this genetic predisposition] goes on to develop it. Some people go for 50-60 years eating gluten and staying healthy and then they lose that luxury.
On gut bacteria and celiac disease: There are lots of theories [as to the environmental factors that might explain this phenomenon] but the one component that seems to play a major role is the microbiota, this civilization of bacteria living in our gut. Now there is growing evidence that the composition of bacteria in the guts of people with celiac disease is very different [from that of people without it]. Click HERE for details.
On non-celiac gluten sensitivity: Today there is a general agreement that gluten sensitivity exists, but we don’t have biomarkers, so all I can tell you is what it is not [it’s not celiac disease and it’s not wheat allergy]. As to how many people have it, if you google it, you see figures from 0.5% of the population to 100%.
The only thing I can tell you is that our 6% figure [the percentage of people that might have gluten sensitivity] is an estimate based on what we’ve seen in our celiac center, but without a biomarker it’s just an approximation, an estimate, and only time will tell.
QUOTE UNQUOTE: TJ MCINTYRE, EVP, Natural Brands, Boulder Brands
On market growth prospects: We think that this category will grow 40% or more for the next two-to-three years at least - it’s difficult to measure beyond that, but we remain very bullish. We think shelf space allocated to gluten-free products will continue to grow from a planogram perspective and over time it may become integrated as opposed to segregated. There is an enormous amount of white space.
Our research showed that in 2013, over 70% of gluten-free consumers were purchasing more products than they did in 2012. Only 4% were purchasing less.
On fads vs lasting trends: There were some yogurt manufacturers that thought Greek Yogurt was going to go away and all of a sudden, a third to 50% of the market was taken away from them because they were asleep at the wheel. In gluten-free there is a lot of growth still to come.
On new channels: The drug channel is beginning to embrace gluten free and there has been an explosion of gluten-free products in the club channel.
Foodservice is also a big opportunity - mostly bread, rolls, pizza crusts and so on. There are some burger and pizza chains we’re working with that when they add a gluten free burger or pizza [to the menu], not only are they adding 5% growth on top of a flat or slightly growing business, but it’s [generating] more profitable sales.
Big chains like McDonald’s and Burger King are going to need to see gluten-free proved out by mid-sized quick casual restaurants before they drop in and make a change. It’s a considerable investment from an operations perspective to prevent cross-contamination, so at the moment, everyone is watching and waiting. But I think it’s only a matter of time [before big fast-food chains take the plunge].
On innovation: We’re very serious about frozen; we’ve had tremendous success not just with baked goods that are sold 70% of the time in the freezers, but things like pizza. Our gluten-free pizza has outperformed the leading gluten-full pizzas coming out of the natural foods trade. Retailers are coming to us because they want a gluten-free solution with a brand of scale. Udi’s will go from having a handful of items in gluten free frozen to as many as 50 next year.
QUOTE UNQUOTE: TOM VIERHILE, Innovation insights director, Datamonitor
On gluten-free claims: Only about 4.5-5.5% of products that make a ‘gluten-free’ claim on pack actually use the word ‘gluten’ in the branding or the product name, so most gluten-free products are not actually dedicated to the gluten-free market or consumer exclusively, it’s more of a secondary claim.
I think a lot of it [the market growth of gluten-free] is consumers seeing gluten-free as a shorthand for ‘less processed’ or something that could help me lose weight.
Gluten-free is almost a tale of two markets… You have hardcore consumers that are buying gluten-free products because they have celiac disease or gluten sensitivity and then you’ve got people that are almost looking at it as a license to snack, where gluten-free makes them feel better about indulging.
On the gluten-free ‘bubble’: There is a bubble mentality to this particular market. There is a core of consumers for gluten-free [that need to avoid gluten for medical reasons], but the potential for this thing to get blown out of proportion is very high as it’s reached a popular culture status; celebrities are talking about it and it’s all over social media.
It’s almost like stock tips. The great saying there was when your shoe shine boy starts giving you stock tips it’s time to get out of the market, and when people are talking about gluten-free in this way, I just worry about whether it could potentially pop, and we’ll only recognize this after the fact.
Click HERE to listen to the debate - sponsored by Ingredion - on demand.
(If you haven’t already registered to attend, you will need to fill in the registration form to register for the debate in order to access the playback.)
