Gluten-Free Foods and Beverages in the U.S., 3rd Edition

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“Are you gluten-free?” The term describes more than the sector of the food and beverage industry that has morphed from specialty niche to mainstream sensation in just a few years. “Gluten-free” has become an identity for the tens of millions of Americans who have reduced or eliminated their consumption of wheat, barley, rye, and oats. Indeed, consumer demand has driven the extraordinary surge in the market for gluten-free foods and beverages. Many people are gluten-free out of necessity, because they suffer from celiac disease or a food allergy. But a growing number are gluten-free by choice, as evidence emerges that this diet may treat medical conditions ranging from autism in children to rheumatoid arthritis in adults. Others find that living gluten-free simply makes them feel better. Packaged Facts’ own online survey conducted expressly for the report Gluten-free Foods and Beverages in the U.S. reveals the number-one motivation for buying gluten-free food products is that they are considered healthier than their conventional counterparts.

Specialty marketers like Glutino, Pamela’s Products, and Kinnikinnick Foods have exploded onto the mainstream scene, and health-oriented companies such as Bob’s Red Mill and Amy’s Kitchen have demonstrated a commitment to producing reliably gluten-free foods. Due to their growing retail presence, as well as to continual improvements in gluten-free products overall, Packaged Facts estimates the U.S. market for gluten-free foods and beverages at $2.6 billion in 2010, for a compound annual growth rate of 30% over the 2006-2010 period.

Increasing diagnoses of celiac disease and food allergies; growing awareness of these ailments among patients, healthcare practitioners, and the general public; more products, and better ones; and a trend that has friends and family members eating gluten-free to support loved ones are among the factors stimulating continuing expansion in this market. While growth rates will slow over the next five years, Packaged Facts projects that U.S. sales of gluten-free foods and beverages will exceed $5 billion by 2015.

Contents

CHAPTER 1: EXECUTIVE SUMMARY

The Products

Toward a More Inclusive Definition of Gluten

What Part of “Gluten-free” Don’t Regulators Understand?

Replacing Gluten, the Tie That Binds

Medical Conditions Relating to Gluten and the Consumer

Celiac Disease Damages the Small Intestine, Disrupts Nutrient Absorption

“The Great Masquerader” Is Staggeringly Under-diagnosed

Rates of Celiac Disease, Food Allergy Are Escalating

The Market

Packaged Facts Refines Its Definition of “Gluten-free”

How We Derived Our Sales Figures

2010 Finishes Off With $2.64 Billion in Retail Sales, Ahead of Projections

Table 1-1: Estimated U.S. Retail Sales of Gluten-free Foods and Beverages, 2006-2010 (in millions of dollars)

Food Bars the Leading GF Category at FDM, Also Boast Highest Year-to-Year Sales Gain

Figure 1-1: U.S. Mass-Market Sales of Gluten-free Foods and Beverages: Shares by Product Category, 2010 (percent)

Small Categories Show Large Gains

Incidence, Awareness Snowball: “Everyone Knows Someone” Who Lives Gluten-free

Mainstreaming: The Next Generation

More Products, and Better Ones, Promise Continued Growth

Figure 1-2: Number of U.S. Gluten-free Food and Beverage Introductions, 2006-2010 (Stock-keeping Units)

GF Products Pricey But Recession Resistant

Is Gluten-free the New Low-carb?

Sales are Projected to Approach $5.5 Billion by 2015

Table 1-2: Projected U.S. Retail Sales of Gluten-free Foods and Beverages, 2010-2015 (in billions of dollars)

The Marketers

Several Types of Marketers, Several Approaches to Gluten-free

Retail Leadership Is Extremely Fragmented — Many Marketers “Own” Their Categories

Table 1-3: Leading U.S. Specialty/Health/Natural Food Marketers of Gluten-free Foods at Food/Drug/Mass, by Category, 2010

GF Marketers Cater to Consumers With Other Food Sensitivities

Going Gluten-free Made Easy

Community Outreach Is the Most Powerful Means of Promotion

The Marketplace

Half of Gluten-free Consumers Shop at Walmart

Breads, Cereals, Grains the Most Frequently Purchased GF Food Products

Figure 1-3: Gluten-free Food Products: Types Purchased in the Past Three Months, Fall 2010 (percent)

Foodservice: The Final Frontier

Product Trends and Opportunities

Product Quality and Packaging: Free For All

Non-allergenic Foods for Kids a Huge and Growing Opportunity

GF Foods Get (And Need) a Nutritional Boost

Consumer Trends

15% of Consumers Buy Gluten-free Food Products

Conviction That GF Foods Are Healthier Drives Usage

Figure 1-4: Gluten-free Food Products: Motivations for Purchase/Use, Fall 2010 (percent)

What GF Consumers Crave Above All (Hint: Bread)

Four Gluten-free Consumer Segments

Global Spotlight

North America and Europe Continue to Dominate Global Market

Table 1-4: Top Ten Gluten-free Food Markets by Number of Product Introductions, 2010 (Stock-keeping Units and Share of World Total)

New European Gluten-Free Labeling Standards Take Effect in 2012

GF Marketing Concentrated in Affluent Countries

Non-western Nations, Developing Economies Have Much to Gain From Gluten-free

Cultivation of GF Crops Supports Economic Development

CHAPTER 2: THE PRODUCTS

Key Points

What Is Gluten?

Toward a More Inclusive Definition

Table 2-1: Wheat, Barley, Rye, and Oat Proteins Harmful to Celiacs

Hiding in Plain Sight

Several Methods Exist for Determining Gluten Content in Foods

Table 2-2: Benefits and Drawbacks of Principal Methods of Gluten Detection

What Part of “Gluten-free” Don’t Regulators Understand?

Figure 2-1: Requirements of the Food Allergen Labeling and Consumer Protection Act of 2004

GF Advocacy Groups Establish Credentialing Programs

Celiac Sprue Association Recognition Seal

Figure 2-2: Celiac Sprue Association Recognition Seal

Table 2-3: Comparison of ""Gluten-Free"" Labeling Requirements: Codex Alimentarius, U.S. Food and Drug Administration, and Celiac Sprue Association

Gluten Free Certification Organization

Figure 2-3: Gluten-Free Certification Organization Logo

National Foundation for Celiac Awareness

Participants in the GF Market Face Various Challenges

Replacing Gluten, the Tie That Binds

Contamination: You Reap What You Sow

“Free” Doesn’t Come Cheap

Gluten-free: Low-carb, a Weight-loss Tool, Generally Healthier?

Figure 2-4: Gluten-free Food Products: Motivations for Purchase/Use, Fall 2010 (percent)

Figure 2-5: Nutritional Comparison: Amy's Regular vs. Gluten-free Macaroni & Cheese Entrees

Table 2-4: Carbohydrate Content of Selected Bob’s Red Mill Products (in grams)

Product Categories Represented in the Gluten-free Foods and Beverages Market

Sources for Gluten-Free Flour, an International Guide

CHAPTER 3: MEDICAL CONDITIONS RELATING TO GLUTEN AND THE CONSUMER

Key Points

Celiac Disease Damages the Small Intestine, Disrupts Nutrient Absorption

Figure 3-1: How Gluten Ingestion Damages the Small Intestine of a Celiac Patient

Symptoms Run the Gamut: Digestive Dysfunction to Mood Disorders to Infertility…

Table 3-1: Selected Symptoms and Consequences of Untreated Celiac Disease

…but Celiac Disease Can Also Be Asymptomatic

“The Great Masquerader” Is Staggeringly Under-diagnosed

Blood Tests, Biopsies, and Screening Are Primary Diagnostic Methods

As Many as 1% of Americans May Have CD

Incidence of CD Doubles Every 15 Years: “A Significant Public Health Issue”

Is a Culture of Clean Culpable?

Emerging Drug Treatments and Vaccines for CD

CD Research Could Have Implications for Other Autoimmune Disorders

Symptoms of Irritable Bowel Syndrome Resemble Those of Celiac Disease

Autism Diets Eliminate Casein as Well as Gluten

Food Allergies Affect 5% of Children and 4% of Adults

Figure 3-2: Children Under Age 18 Who Reported Food/Digestive Allergy in the Past 12 Months, by Age Group, 1997-2007 (percent)

CHAPTER 4: THE MARKET

Key Points

Market Definition

How Packaged Facts Derived Its Sales Figures

Awareness, Mainstreaming the Leading Market Forces from 2006 to 2010

2010 Finishes Off With $2.64 Billion in Retail Sales, Ahead of Projections

Table 4-1: Estimated U.S. Retail Sales of Gluten-free Foods and Beverages, 2006-2010 (in millions of dollars)

Food Bars the Leading GF Category at FDM, Also Boast Highest Year-to-Year Sales Gain

Table 4-2: U.S. Mass-Market Sales of Gluten-free Foods and Beverages: Shares by Product Category, 2010 (percent)

Figure 4-1: U.S. Mass-Market Sales of Gluten-free Foods and Beverages: Shares by Product Category, 2010 (percent)

Smallest Categories Show Large Gains

Figure 4-2: U.S. Mass-Market Sales of Gluten-free Foods and Beverages: Sales Growth by Product Category, 2009-2010 (percent)

Retail Distribution Shifts Dramatically Toward Mainstream Channels

Table 4-3: U.S. Share of Sales of Gluten-Free Foods and Beverages, by Retail Channel, 2010 (percent)

Figure 4-3: Sales of Gluten-free Foods and Beverages, by Retail Channel, 2008 vs. 2010

Factors Promoting Future Market Growth

Incidence of Celiac Disease and Other Food Disorders Is Growing

Awareness Snowballs: “Everyone Knows Someone” Who Lives Gluten-free

Mainstreaming: The Next Generation

Activists and Advocacy Groups Agitate

Let Food Be Your Medicine

More Products, and Better Ones, Promise Continued Growth

Figure 4-4: Number of U.S. Gluten-free Food and Beverage Introductions, 2006-2010 (Stock-keeping Units)

Figure 4-5: Gluten-free Food Consumers: Opinions and Shopping Behaviors, Fall 2010 (percent)

Free to Be… Gluten-free (Or Not)

Nearly One-Third of Gluten-free Consumers Buy GF for Other Reasons

Recession? What Recession?

Potential Impediments to Market Growth

GF Products Pricey…

…But Are They Overpriced?

It Isn’t Easy Being Free

Fad or Fixture?

Is Gluten-free the New Low-carb?

Sales are Projected to Approach $5.5 Billion by 2015

Table 4-4: Projected U.S. Retail Sales of Gluten-free Foods and Beverages, 2010-2015 (in billions of dollars)

CHAPTER 5: THE MARKETERS

Key Points

Overview of Marketers

Four Basic Types

Specialty Marketers

Health Food/Natural Food Marketers

Supermarket Store Brands

Mega-marketers

Three Basic Approaches

Dedicated

Committed

Accommodating

Methodology for Determining Market Share

Retail Leadership Is Extremely Fragmented — Many Marketers “Own” Their Categories

Table 5-1: Leading U.S. Specialty/Health/Natural Food Marketers of Gluten-free Foods at Food/Drug/Mass, by Category, 2010

Food Bars

Cold Cereal

Fresh Bread and Rolls

Pasta and Noodles

Frozen Dinners and Entrees

Cookies

Crackers

Baking Mixes

Salty Snacks

Frozen Bread and Dough

Shelf-stable Dinners

Frozen Pizza

Baking Needs

Marketing Trends and Opportunities

Marketing in the Spirit of the Law — When There Is No Law

GF Marketers Also Cater to Consumers With Other Food Sensitivities

Going Gluten-free Made Easy

Ask For Us By Name

Community Outreach Is the Most Powerful Means of Promotion

Competitor Profiles

Amy's Kitchen, Inc. (Petaluma, CA)

Andre Prost, Inc. (Old Saybrook, CT)

Barbara's Bakery (Petaluma, CA)

Bob’s Red Mill Natural Foods, Inc. (Milwaukie, OR)

Ener-G Foods, Inc. (Seattle, WA)

Enjoy Life Natural Brands, LLC (Schiller Park, IL)

General Mills, Inc. (Minneapolis, MN)

Glutino Food Group (Laval, Quebec, Canada)

Kinnikinnick Foods, Inc. (Edmonton, Alberta, Canada)

Pamela’s Products (Ukiah, CA)

The Hain Celestial Group, Inc. (Melville, NY)

CHAPTER 6: THE MARKETPLACE

Key Points

Different Types of Retail Channels

Conventional Channels

Gluten-Free Specialty Stores

E-stores Make Distribution Easy as Gluten-free Pie

Figure 6-1: E-tailers Carrying Amy’s Kitchen Products

Distribution Shifts From Specialty Stores to Supermarket Chains

Table 6-1: U.S. Share of Sales of Gluten-Free Foods and Beverages, by Retail Channel, 2008 (percent)

Table 6-2: U.S. Share of Sales of Gluten-Free Foods and Beverages, by Retail Channel, 2010 (percent)

Figure 6-2: Sales of Gluten-free Foods and Beverages, by Retail Channel, 2008 vs. 2010

Half of Gluten-free Consumers Shop at Walmart

Figure 6-3: Gluten-free Food Products: Consumer Retail Channel Preferences, Fall 2010 (percent)

Breads, Cereals, Grains the Most Frequently Purchased GF Food Products

Figure 6-4: Gluten-free Food Products: Types Purchased in the Past Three Months, Fall 2010 (percent)

Range of GF Food Products Has Increased, But May Not Motivate Shoppers

Figure 6-5: Gluten-free Food Consumers: Opinions and Shopping Behaviors, Fall 2010 (percent)

Figure 6-6: Gluten-free Food Consumers: Satisfaction With Product Selection and Availability, Fall 2010 (percent)

At In-store Bakeries, GF is Selling Like Hotcakes

Gluten-free at Walmart: An Insider’s Perspective

Foodservice: The Final Frontier

American Culinary Federation Chefs Pronounce GF a Hot Trend

Table 6-3: Selected Rankings From National Restaurant Association’s “Chef Survey: What’s Hot in 2010” (share)

Canadian Chef Survey Names GF a Top 10 Menu Trend

National Foundation for Celiac Awareness Trains Restaurants in GF Food Prep

Who is the Gluten-free Restaurant Patron?

Two Steps Forward, One Step Back

Figure 6-7: Gluten-free Menu Entrees, P.F. Chang's China Bistro

Figure 6-8: Gluten-free Menu, The Old Spaghetti Factory

Figure 6-9: Gluten-free Menu, The Great Impasta

GF Diners “Thrilled” by Safe Menu Options

GF Is No Menu Fad

Gluten-free Showcase Pavilion Debuts at Restaurant Show

GF Consumers Dine Out on Restaurant Directories

Emerging Opportunities for Gluten-free in Foodservice

CHAPTER 7: PRODUCT TRENDS AND OPPORTUNITIES

Key Points

U.S. Gluten-free Product Launches Grow to Nearly 2,700 in 2010

Table 7-1: Number of U.S. Gluten-free Food and Beverage Introductions, 2006-2010 (Stock-keeping Units)

GF Food Bars a Leader in Product Introductions, As in Sales

Table 7-2: Number of U.S. Gluten-free Food and Beverage Introductions, 2010, by Category (Stock-keeping Units)

Wegmans is Far and Away the New GF Product Leader — Again

Table 7-3: Number of U.S. Gluten-free Food and Beverage Introductions, 2010, Selected Companies (Stock-keeping Units)

Figure 7-1: Wegmans Web Page for Gluten-free Foods

Bora Bora Is a Leading “Dedicated” GF Marketer

Product Development and Opportunities

Packaging: Strive for Transparency, Familiarity

Free For All

Non-allergenic Foods for Kids a Huge and Growing Opportunity

Introductions of GF Baby Snacks More Than Triple in Two Years

HappyBaby a GF Pioneer

Table 7-4: Selected New Gluten-free Product Introductions for Kids

GF Foods Get (And Need) a Nutritional Boost

Figure 7-2: Gluten-free Food Products: Motivations for Purchase/Use, Fall 2010 (percent)

Hain Celestial Group’s Dedicated GF Lines Are Specially Formulated to Address Nutritional Imbalances

Ancient Grains: Everything Old Is New Again

Table 7-5: Examples of Products Containing Gluten-free Ancient Grains

Researchers Seek the “Holy Grail” of GF Breads

Therapies As Close As Your Grocer’s Shelf

Can Probiotics Treat Celiac Disease?

What About Prebiotics?

CHAPTER 8: CONSUMER TRENDS

Key Points

Methodology

15% of Consumers Buy Gluten-free Food Products

Figure 8-1: Gluten-free Food Products: Usage Rates, Fall 2010 (percent)

Conviction That GF Foods Are Healthier Drives Usage

GF Foods Considered Higher Quality

Many Shop GF to Treat a Health Condition

Figure 8-2: Gluten-free Food Products: Motivations for Purchase/Use, Fall 2010 (percent)

Grain-based Foods #1 on GF Shopping List

Figure 8-3: Gluten-free Food Products: Types Purchased in the Past Three Months, Fall 2010 (percent)

Half of GF Shoppers Head to Walmart

Figure 8-4: Gluten-free Food Products: Consumer Retail Channel Preferences, Fall 2010 (percent)

Figure 8-5: Consumer Retail Channel Preferences, GF Shoppers vs. All Shoppers, Fall 2010 (percent)

Many GF Shoppers See Improvements in Variety and Quality

Figure 8-6: Gluten-free Food Consumers: Opinions and Shopping Behaviors, Fall 2010 (percent)

Most GF Consumers Are Buying More GF

Figure 8-7: Gluten-free Food Consumers: Changing Usage Rates, Fall 2010 (percent)

One in 10 GF Shoppers Want What’s Not There

Figure 8-8: Gluten-free Food Consumers: Satisfaction With Product Selection and Availability, Fall 2010 (percent)

What GF Consumers Crave Above All (Hint: Bread)

Figure 8-9: Gluten-free Food Consumers: Satisfaction With Product Quality, Fall 2010 (percent)

GF Not Perceived as a Gimmick or Fad

Figure 8-10: Gluten-free Food Products: Overall Consumers’ Perceptions and Opinions, Fall 2010 (percent)

Four Gluten-free Consumer Segments

Figure 8-11: Four Gluten-free Consumer Segments

CHAPTER 9: GLOBAL SPOTLIGHT

Key Points

Food Allergies a Growing Problem Around the World

North America and Europe Continue to Dominate Global Market

Table 9-1: Top Ten Gluten-free Food Markets by Number of Product Introductions, 2005-2010 (Stock-keeping Units and Share of World Total)

North American National Spotlight: Canada

Proximity and Trade Relationship Mean Canada and U.S. Share Many Gluten-free Marketers

Table 9-2: Top 10 Gluten-free Product Introductions in Canada by Category and Marketer, 2010 (Stock-keeping Units)

GF Advocacy in Canada More Evolved Than in U.S.

Health Canada Considers Revising GF Labeling Regulation to Allow Oats; Marketers Balk

CCA Trademarks Standard for “Pure Uncontaminated Oats”

U.S. Now the Primary Market for Canadian GF Pioneer Glutino

Kinnikinnick Foods a Leading Producer of GF Baked Goods

New European Gluten-Free Labeling Standards Take Effect in 2012

European National Spotlight: Spain

A Strong and Growing GF Force

Table 9-3: Top 10 Gluten-free Product Introductions in Spain by Category and Marketer, 2010 (Stock-keeping Units)

Meat Processors, Retailers Tops in Product Launches

Asociación de Celiacos de Madrid Advises Travelers on Eating Gluten-free in Spain

Table 9-4: Typical Gluten-free Spanish Cuisine

European National Spotlight: United Kingdom

A Robust and Growing Gluten-free Market

Supermarkets Put Their Money on Private-label GF

Table 9-5: Top 10 Gluten-free Product Introductions in United Kingdom by Category and Marketer, 2010 (Stock-keeping Units)

Coeliac UK Vigorously Promotes the GF Market

Survey: One-quarter of Celiacs Wait 11-plus Years for Diagnosis

In UK, Gluten-free Foods Are Prescribed, Subsidized

Table 9-6: UK Prescription Gluten-free Food Manufacturers

Genius Bread Delivers a Brilliant Performance

Snapshot: Gluten-free Product Launches in Italy, Germany, and France

Table 9-7: Top 10 Gluten-free Product Introductions in Italy by Category and Marketer, 2010 (Stock-keeping Units)

Table 9-8: Top 10 Gluten-free Product Introductions in Germany by Category and Marketer, 2010 (Stock-keeping Units)

Table 9-9: Top 10 Gluten-free Product Introductions in France by Category and Marketer, 2010 (Stock-keeping Units)

Oceana Spotlight: Australia and New Zealand

New Zealand Company Tops GF Product Intros in Australia

Table 9-10: Top 10 Gluten-free Product Introductions in Australia by Category and Marketer, 2010 (Stock-keeping Units)

Coeliac Society of Australia Endorses Products; New Zealand Poised To Do So

Table 9-11: Manufacturers Endorsed by Coeliac Society of Australia

Gluten-free Regulation is a Two-tiered Affair

But Advocates Say Standards Are Too Rigid

Snapshot: Other Regions

GF Marketing Concentrated in Affluent Countries

Non-western Nations, Developing Economies Have Much to Gain From Gluten-free

Snapshot: Asia

India’s Celiac Society Ramps Up Advocacy Efforts

Researchers Recommend Active Investigation of CD in China

Snapshot: Middle East

Rate of CD May Exceed 1 in 100 Israelis

New Israeli Labeling Regulations Will Advance Domestic Market

Cultivation of GF Crops Supports Economic Development

Appendix

Marketers

Organizations — U.S

Organizations — Outside U.S.

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