Still Growing

Watching the gluten-free market in recent years has been much like watching a top fuel dragster in action — going from zero miles per hour to full speed in no time. In fact, during the five-year period ending in 2014, U.S. sales of gluten-free products in traditionally grain-based categories posted a mind-boggling compound annual growth rate of 34 percent, according to the Packaged Facts division of Rockville, Md.-based MarketResearch.com.

Driving the increased sales of gluten-free products are an escalating prevalence of health problems associated with diet; more and better-quality gluten-free food products and their increasing availability in mainstream retail channels; and favorable rulings on the definition of “gluten free” by the FDA, Packaged Facts states in “Gluten-Free Foods in the U.S.,” a January report. However, the market is seeing a slight slowdown in sales among consumers who are disappointed in the benefits derived from a gluten-free diet, although such disappointments typically are the result of misconceptions about gluten-free foods.

More growth to come

Despite the slight slowdown, the gluten-free market presents a prime opportunity for retailers’ store brands. As Packaged Facts notes, gluten-free foods are still dominated by specialty marketers, most of which compete in the salty snacks category.

“Indicators suggest the overall market may be slowing but still shows growth,” says Jonathan Walters, director of sales and marketing for Nu-World Foods, Naperville, Ill. “The opportunity for store brands, in particular, is still wide open.”

Jerry Colburn, national sales manager for Seattle-based Ener-G Foods Inc., agrees that the gluten-free market remains in growth mode. He adds that gluten-free products now can be found in distribution channels ranging from natural food stores to mainstream mass-market grocery outlets, big box stores and even convenience stores.

“We have seen steady escalation over the past several years and feel that this should continue based on market conditions,” adds Jimmy DeSisto, CEO of Venice Bakery Co., El Segundo, Calif. “Several industry reports have indicated that the $10.5 billion [U.S.] gluten-free market has not reached its peak. In fact, experts predict it will reach $23.9 billion by 2020.”

But which categories represent the best gluten-free growth opportunities for store brands? According to Walters, single-serve healthful snack foods represent one promising area.

And other opportunities can still be found in the replacement of traditional gluten-containing baked goods.

“The bakery segment is, by far, the largest segment with products containing gluten-free claims or positioning,” notes Ricardo Rodriguez, marketing manager, confectionery and bakery for Ingredion Inc., Westchester, Ill. “This category lends itself to the type of ingredients that can be used to make gluten-free claims.”

But the opportunities are not limited to shelf-stable baked goods and snacks. For example, crusts for frozen and deli pizzas also represent a store brand growth opportunity in the gluten-free space, DeSisto suggests.

No matter what the category, retailers should ensure the products meet with their shoppers’ quality expectations.

“Some of the store brands are charging a premium for these products [while] delivering on neither the added value nor the taste profile that is now expected in these types of products,” Rodriguez says.

Inform, educate

High quality and great taste are critical to the success of store brand gluten-free products. But so is the right on-pack messaging. DeSisto suggests expanding on the gluten-free packaging callout.

“Consumers are reading labels more and more,” he says. “One thing they look for is [messaging noting] that the gluten-free products they buy are manufactured and processed in a dedicated gluten-free facility.”

Because typical consumers of gluten-free products are allergen-aware and label readers, the labels for store brand gluten-free items should call out any other allergens that are not present, too, Colburn adds.

And retailers also could use the package to inform consumers of a non-food products gluten-free status, says Nancy Knight, manager of the Consumer Values Verified program of Ann Arbor, Mich.-based NSF International.

“Gluten is found mainly in foods, but may also be found in everyday products such as medicines, vitamins, personal care products, cosmetics, lip balms and toothpaste,” she says.

Set the stage

Some smart merchandising and marketing efforts also could benefit sales of store brand gluten-free products. On the merchandising front, Colburn believes that a dedicated gluten-free aisle works best, provided space is available.

“It allows the consumer a faster shopping experience,” he says.

Rodriguez agrees, noting that such products could be clustered with other natural and health-minded products that attract a specific consumer subset.

“If they are mixed in with ‘traditional’ products, the average consumer may just look at the price points and not the messaging of the product,” he says.

If space allows, though, placement in both the traditional aisles and a dedicated aisle likely would work even better to draw attention to store brand gluten-free items. And a little marketing magic also could work wonders here. Colburn points to manned demos as a particular draw.

And Rodriguez advises retailers to expand on demo efforts by hosting fairs or expos. Such events could augment sampling with product literature, coupons and giveaways.