No longer just a fad

The gluten-free market is booming. According to “Gluten-free Foods — US,” an October 2015 report from global market research firm Mintel, sales of gluten-free foods jumped 136 percent between 2013 and 2015 in the United States.

As Kathy Milner, president and founder of Mills River, N.C.-based Ardenne Farm, explains, gluten-free foods have transitioned from being specialty items sold in natural food stores to mainstream items in conventional grocery retail stores. But gluten-free’s growth appears to be slowing down a bit.

Sarah Watson, associate brand manager for Watson Inc., West Haven, Conn., points to a 2015 report from the Packaged Facts division of Rockville, Md.-based MarketResearch.com, which forecasts the gluten-free market to grow an average of approximately 19 percent annually over the next five years.

“While there continues to be a large ‘fad’ component of this market, this segment is getting smaller due to better education addressing the misconceived notion of gluten-free as a ‘diet/weight loss’ food, as well as the natural progression of consumers as they move on to other foods,” she says. “However, this segment will continue to perform due to a variety of reasons, including the increasing incidence of diagnosed celiac disease, increased accessibility in mainstream retail channels, and the gluten-free category’s parity to the growing ‘free-from’ movement, which will attract new consumers as the prevalence of food allergies continues to rise.”

Renee Santy, a food scientist with St. Francis, Wis.-based Wixon Inc., also points to more of an emphasis on transparency and ease of identification on shelf as trends within the gluten-free space.

“When a formula is already gluten-free or contains sources of gluten that can be easily removed or replaced, we are seeing many of our customers deciding to move to gluten-free in order to be able to put the claim on their packaging,” she adds.

Identify opportunities

When it comes to store brand product development opportunities within the gluten-free arena, retailers will still find white space in the bakery segment. As Ricardo Rodriguez, marketing manager, confectionery and bakery for Bridgewater, N.J.-headquartered Ingredion Incorporated, notes, the bakery category “lends itself to the types of ingredients that can be used to make gluten-free claims.” Plus, it features a wide array of products ranging from breads to cookies and crackers.

And it’s not just ready-to-eat bakery products that spell opportunity for own brands. Baking mixes, too, are a bright spot, according to Paul Whitaker, consumer products divisional leader for Wixon.

Watson agrees, noting that gluten-free baking mixes could help retailers connect to millennials, who want to be “much more involved” in cooking/baking but don’t have time to locate unique recipes and ingredients.

“Baking mixes will soon become part of this trend,” she says. “Store brands can expand on this opportunity by creating baking ‘kits,’ in which not only the baking mix but other components such as spices, fruits, frostings and other decorations are included to create unique variations.”

Outside of the bakery segment, snack foods, cereal, pasta and pizza will continue to be gluten-free growth areas, too, Milner says.

And retailers also will find “hidden opportunities” in other categories in which wheat flour is used as a thickener, Whitaker explains. For example, the wheat flour in many canned soups and taco-type seasoning mixes can be replaced easily.

“Items that are breaded and battered are now widely available in gluten-free versions,” he adds. “Consumers seeking a gluten-free lifestyle are looking for the claim in many categories where wheat flour is a minor component.”

Retailers have an opportunity to innovate, too — tapping into what Watson calls the next generation of gluten-free products. She says the market is now seeing whole-grain versions of gluten-free offerings, and the next generation will encompass products that feature high protein, high fiber and vitamin fortification.

Of course, some North American retailers still need to enter the gluten-free space if they are to find success within it.

“In Quebec, there is no private label in gluten-free bakery products,” maintains Sylvain Deslauriers, commercial director, export and other markets for St-Methode Bakery Inc., Adstock, Quebec. “This is a huge opportunity for the retailers.”

And store brand options need to be as good as the leading brand within any particular category to succeed, Milner stresses.

There is still a pervasive opinion that gluten-free products are not good-tasting,” she notes, “which is far from the truth. Many of the current products on the market taste every bit as good as a similar product that contains wheat.”

Consider the message

Although the gluten-free market is still in growth mode, trust in gluten-free product claims has decreased slightly the Mintel report noted, with 45 percent of consumers trusting that products bearing a gluten-free claim are actually gluten-free, down from 48 percent in 2014. Another 45 percent of consumers agree manufacturers should not label products as gluten-free if they never contained gluten in the first place. Industry experts are divided on the latter subject.

Milner believes retailers should market own-brand foods as gluten-free only when they are targeting customers specifically seeking products free from wheat, barley or rye.

“It seems slightly disingenuous to market bottled water as gluten-free,” she says. “I also believe that if a product is labeled gluten-free, it should be certified and tested to the government standard of 20 parts per million or less of gluten.”

Watson also believes retailers should avoid labeling naturally free products such as water and fruit as gluten-free, despite the fact that FDA allows it. Studies have shown that overuse of the term can actually backfire, as consumers end up confused about which products are “safe” to eat and also feel as if they are being conned.

“Best practice in the industry is to only include gluten-free labeling if the product has been specially formulated to remove gluten,” she says. “This will include not only gluten-free grain-based products such as crackers, baked goods and pastas, but also products like oatmeal, soy sauce, certain spices, powdered drinks, etc., that often contain gluten due to cross-contamination during manufacturing.”

As Deslauriers notes, the addition of gluten-free statements to products that normally do not contain gluten could also make consumers believe that taste-related changes have been made to those products.

However, Santy makes a case for the inclusion of gluten-free labeling on such products.

“Consumers want to easily be able to identify the products that contain gluten versus those that are gluten-free,” she says. “It’s valid to label naturally gluten-free consumer packaged goods in order to help consumers quickly and easily make decisions.”

Rodriguez agrees with Santy. After all, not all consumers are educated as to which ingredients are gluten-free, he says, and labeling naturally gluten-free items would provide clarity and assurance.

But Santy notes that to make such claims, retailers typically will need to ensure that certain handling practices and testing are in place to minimize cross-contamination risks.

Showcase the goods

To make it easy for consumers to locate own-brand (and national brand) gluten-free and other free-from items, Watson recommends that retailers merchandise the products both in a separate gluten-free section and within the traditional product assortment. A dedicated gluten-free section within a free-from aisle or area makes it easy for shoppers of gluten-free items to locate the products, while placement within traditional aisles encourages other shoppers to try such items for the very first time.

Although dual placement can bring greater attention to store brand gluten-free products, Santy recommends that retailers clearly label and group together any gluten-free products that are merchandised with their traditional counterparts.

“The consumers who suffer from celiac disease look for a gluten-free section with products that have certificates that go beyond the FDA requirement of no more than 20 parts per million,” she adds. “These certifying agencies require as low as 10 parts per million testing for gluten.”

And Deslauriers suggests that retailers will want to tread carefully here.

“For bakery products, mixing gluten-free products with traditional products would be risking … product contamination with gluten and could potentially be dangerous for the consumers,” Deslauriers says, “unless the bakery can ensure that its gluten-free product packaging is entirely safe in order to prevent contamination.”

Outside of thoughtful on-shelf merchandising, retailers could attract attention to own-brand gluten-free offerings through promotions and events, Watson says. Product sampling helps to “engage and educate” consumers here, as do “quick and healthy gluten-free cooking classes” that showcase an assortment of store brand products.

“According to Mintel, millennials are 58 percent more likely to participate or take advantage of additional in-store offerings, including cooking classes, recipes and delivery,” she adds. “In addition, many of those who are newly diagnosed with celiac disease have a hard time navigating safe ingredients and meals and are looking for accessible sources of information.”

Rodriguez says in-store fairs and expos work, too, allowing consumers to taste gluten-free products and giving retailers an opportunity to share literature, coupons and more.

Pricing also warrants consideration.

“Avoid the trap of developing a substantial premium price for gluten-free products,” Whitaker advises retailers. “You will limit the broad appeal that the product would normally have.”