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April 30, 2013

Gluten free: The UK market

The UK continues to witness a rapid increase in demand for gluten-free foods. The sector represents the largest within the UK market for free-from foods, targeted at people with food allergies or intolerances, and it is a category seeing dramatic growth.

The UK continues to witness a rapid increase in demand for gluten-free foods. The sector represents the largest within the UK market for free-from foods, targeted at people with food allergies or intolerances, and it is a category seeing dramatic growth.

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What is the impact of historically high inflation on the UK consumer landscape?

The average UK consumer is experiencing a severe cost-of living crisis as inflation surges to a forty-year high and the price of goods continues to rise. This shock is the result of the sharply increasing costs of commodities, energy, and the ongoing conflict in Ukraine, and is threatening FMCG manufacturers, retailers, and foodservice operators’ ability to survive and grow. Inflation will have a profound effect on many consumer-facing industries in 2022 and beyond. Consult GlobalData’s new whitepaper, Inflation in the UK: The Impact of Historically High Inflation on the UK Consumer Landscape, to better understand shifts in consumer behavior and their impact on spending patterns, as well as the implications for UK businesses. This whitepaper covers:  
  • Why has global inflation returned with a vengeance?
  • What is the current inflation situation in the UK?
  • What impact is inflation having on UK retail sales?
  • What tactics are businesses relying on to tackle the effects of high inflation?
  • How are consumers changing their behaviors to cope with the higher cost of living?
  • Which industry sectors are most vulnerable to reduced consumer demand?
  • How is the government responding to high inflation?
  • How long will high inflation last in the UK?
  • How can your company survive and thrive in a high inflation environment?
Enter your details here to receive your free whitepaper and ready your business for these increasingly uncertain times.
by GD50 Custom
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In 2012, total free-from sales in the UK were valued by Kantar Worldpanel at GBP288m (US$446.6m). This figure has grown by more than 25% during the last year.

Although estimates vary, all agree the gluten-free sector represents one of the most dynamic within the UK food industry. According to IRI, UK sales of gluten- and wheat-free foods reached GBP114m in 2012, while Kantar Worldpanel values the sector a little higher, at GBP136m. Sales are thought to have increased by 23% within the last year.

Future predictions are optimistic. “There is no reason why current growth should not be sustainable… the number of people diagnosed [with coeliac disease] continues to rise, and future growth is also likely to come from people eating gluten-free foods for more general health reasons,” Sarah Sleet, chief executive of Coeliac UK, says.

This view is echoed by Roz Cuschieri, chief executive of gluten-free specialist Genius Foods. “We have seen great demand from consumers… we expect to generate turnover in the region of GBP50m this year, and we believe that interest in the gluten-free market will continue to grow.”

UK mainstream baker Warburtons is looking to expand its gluten- and wheat-free business, which is grouped together under its Newburn Bakehouse brand. It told just-food in January it wanted to double its free-from sales this year.

Chris Hook, director of Newburn Bakehouse, says the rate of growth in the category will slow but adds: “It is still impressive… [and] will be driven by continuous product innovation, which is widening the category’s appeal and attracting new shoppers to the free from aisle.”

The UK has a sizeable potential consumer base for gluten-free foods. Although just 1% of the UK population are thought to have been formally diagnosed with coeliac disease, large numbers of people exist who experience some degree of sensitivity towards gluten.

“Around 5-6% of the UK population have gastric-related problems related to gluten,” Sleet says.

Data from Allergy UK suggests up to 25m people (nearly 40% of the total population) suffer from some food allergy or intolerance.

Other data also indicates the appeal of gluten-free foods is extending beyond coeliacs and those who suffer from a sensitivity towards gluten. “Our research [which was undertaken by Boxclever] has identified that 16.5% of the UK population are regularly buying gluten-free products, and this has the opportunity to double in the next 12 months,” Genius’s Cuschieri says.

Bakery goods such as bread, biscuits and cakes continue to account for the bulk of the UK gluten-free foods market – this area is described by Sleet as “a core sector for gluten free.”

The continued growth of the gluten-free bakery sector has attracted attention. According to Cuschieri, “new companies are entering the category to take advantage of [growing] consumer demand.”

Warburtons’ gluten-free sales (which includes bread, rolls and muffins) rose by 143% to almost GBP6m in 2012. “NPD is a huge focus for the business as we continue to innovate and extend the range,” Hook says.

Another leading gluten-free bakery brand is Mrs Crimbles, which is worth approximately GBP15m per annum. With a range including cakes, biscuits and crackers, Mrs Crimbles was one of the first to be actively promoted on a gluten-free platform.

However, Genius Foods leads the UK market for gluten-free bread, with a 48% share. And the company does not plan to take its food off the accelerator. “We have acquired two bakeries of our own [this year], in Bathgate and Hull… this will allow us to accelerate NPD, focus upon innovation and have a full category offering,” Cuschieri says. Genius bread has been used in prepared sandwiches for Waitrose and Starbucks, and the range has recently diversified to include gluten-free frozen pies.

Although sales of gluten-free bakery products remain significant, growth in demand is thought to be slightly higher for other sectors. “Gluten-free specialists are now diversifying into more areas… prepared and/or convenience foods is one such example,” Sleet says.

Within the last couple of years, growth has been especially impressive in sectors such as frozen pizza and sausage rolls.

“There’s a real demand from free-from consumers for quick and convenient meals and snacks,” Emma Herring, retail brand manager for Dr Schär, says. 

This has been illustrated by some of the recent NPD taking place – for example, Heinz launched a range of gluten free pasta and sauces earlier this year. In 2012, Red House Foods extended its Georgia’s Choice gluten-free brand with frozen Chicken Bites and Chicken Grills.

The UK’s leading food retailers have also helped to develop the UK gluten-free foods market. Together, Tesco and Sainsbury’s account for over half of the market, and both have extensive own-label interests. For example, Sainsbury’s free-from range (first launched in 2002) is now more than 250 products strong. Tesco’s free-from foods range includes over 150 products, compared with around 100 for Asda. Own brands account for around 30% of the UK gluten-free foods market, with the own-label sector having grown by around 20% in the last year.

Some of the recent NPD in the own-label sector has included the launch of pasta-based ready meals and bakewell tarts by Sainsbury’s, which now claims to supply gluten-free foods for breakfast, lunch and the evening meal.

It seems likely the influence of the supermarket chains will remain strong. “The big food retailers have invested a lot into gluten-free… attracting consumers looking specifically for gluten free products is a useful way of increasing their overall sales,” Sleet says.

One area where the presence of gluten-free foods is expected to grow significantly is the UK foodservice industry. “This is an as yet untapped market which has the potential to grow as high as GBP100m in the future,” Sleet says. “At present, gluten-free consumers have relatively little choice in this sector, and the market has been held back by the need for greater standards and training over issues such as safety in commercial kitchens.”

Dr Schär is also reported to be looking at this segment. “The foodservice market is a new channel for us, and a great opportunity for our business,” Herring says. At Warburtons, Hook adds: “Foodservice is another growth area for us.”

To address this demand, leading companies in the pizza sector such as Pizza Hut and Domino’s have been developing their ranges with gluten free requirements in mind. Pizza Hut, for example, have successfully introduced NGCI (non gluten containing ingredients) pizzas for both restaurant and takeaway customers.

Click here for part two of our management briefing, which examines gluten free in the US.

Related Companies

Free Whitepaper
img

What is the impact of historically high inflation on the UK consumer landscape?

The average UK consumer is experiencing a severe cost-of living crisis as inflation surges to a forty-year high and the price of goods continues to rise. This shock is the result of the sharply increasing costs of commodities, energy, and the ongoing conflict in Ukraine, and is threatening FMCG manufacturers, retailers, and foodservice operators’ ability to survive and grow. Inflation will have a profound effect on many consumer-facing industries in 2022 and beyond. Consult GlobalData’s new whitepaper, Inflation in the UK: The Impact of Historically High Inflation on the UK Consumer Landscape, to better understand shifts in consumer behavior and their impact on spending patterns, as well as the implications for UK businesses. This whitepaper covers:  
  • Why has global inflation returned with a vengeance?
  • What is the current inflation situation in the UK?
  • What impact is inflation having on UK retail sales?
  • What tactics are businesses relying on to tackle the effects of high inflation?
  • How are consumers changing their behaviors to cope with the higher cost of living?
  • Which industry sectors are most vulnerable to reduced consumer demand?
  • How is the government responding to high inflation?
  • How long will high inflation last in the UK?
  • How can your company survive and thrive in a high inflation environment?
Enter your details here to receive your free whitepaper and ready your business for these increasingly uncertain times.
by GD50 Custom
Enter your details here to receive your free Whitepaper.

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