fdin free-from : global innovation and market development

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© 2013 Mintel Group Ltd. All Rights Reserved. Confidential to Mintel

FDIN

Free-From: Global Innovation and

Market Development

Chris Brockman, Senior Global Food & Drink Analyst, September 2013

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AGENDA

Free-from global innovation and market development:

•Global innovation trends: what’s new in the sector

•Which companies are leading category development now?

•UK vs US free-from market size and development

•Where next after hitting the mainstream – will free-from save the planet?

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NPD IN GLUTEN/LACTOSE FREE CONTINUES TO BUILD

New product introductions of gluten-free & low/no/reduced lactose food & drink, globally, 2009-2013

Source: Mintel GNPD3

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UK IS ONE OF THE LEADERS IN FREE-FROM NPD

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2013 year to AugustSource: Mintel GNPD

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RETAILER VERSUS BRAND LAUNCHES

Private Label share of new introductions of gluten-free & low/no/reduced lactose food & drink, globally, 2009-2013


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Coles Simply Gluten Free (Australia)

ICA Glutenfri (Sweden)

Aldi Has No... Gluten Free

(Australia, US) Launching in UK

SOME RETAILERS FOCUS ON BUILDING SPECIFIC GF RANGES

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• 34% of UK free-from consumers would like to see more supermarket own label varieties of ‘free-from’ food (July 2013)

• 30% trust supermarket own-label ‘free-from’ food as much as branded varieties (July 2013)

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Rewe Frei Von (Germany)

Tesco Free From (UK)Spar Free From (Austria/Czech Rep/Hungary)

OTHERS ON ALL ENCOMPASSING FREE FROM RANGES

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Netto Viva Vital Ohne L (without lactose)

(Germany)

Sainsbury’s Love Soya (UK)

Coop Laktos Fri (Sweden)

LF TENDS TO BE ONE-OFF PRODUCTS OR UNDER SUB-BRANDS

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New product introductions of gluten-free & low/no/reduced lactose food & drink, globally, by company, 2009-2013 (% of launches)

LAUNCHES BY COMPANY

9Source: Mintel GNPD

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General Mills gluten-free range

GENERAL MILLS HIGHLY ENGAGED WITH GLUTEN FREE

• Sees gluten-free as an incremental sales opportunity

• c300 gluten-free products in range including gluten-free Chex rice cereal, gluten-free Betty Crocker cake mixes and new Pilsbury gluten-free dough

• Dedicated ‘Gluten Freely’ consumer site merged into ‘Live Better America’ site in 2013 reflecting wider healthy eating/lifestyle positioning

• Could be construed as using gluten free as a way to build health into highly processed foods

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SOME ACTIVITY FROM OTHER MAJOR BRANDS – GLUTEN FREE

Heinz Deliciously Gluten Free Penne Pasta (UK)

Warburtons Newburn Bakehouse Gluten Free & Wheat Free (UK)

Bimbo Gluten-Free Sliced Bread (Portugal)

Nabisco Gluten Free Rice Thins (US)

Barilla Gluten Free Pasta US nationwide roll-out in 2014

Kellogg's Gluten Free Rice Krispies (US)

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SOME ACTIVITY FROM OTHER MAJOR BRANDS – LACTOSE FREE

Campina Lactose Free Milk (NL)

Bofrost Free Gluten and Lactose Free Pizza (Germany)

Emmi Good Day Cereal Yogurt (Switz)

Fruit D'Or Lactose-Free Margarine (France)

Ritter Sport Whole Milk Lactose Free Chocolate (Germany)

Danone Activia Lactose Free Natural Yogurt (Germany)

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COMMUNICATION STRATEGIES IN THE US

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Chex Seven gluten free flavorsKellogg’s Start Simple Rice Krispies

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GLUTEN FREE SPECIALISTS INTERNATIONALISE

• No.1 in Germany/ Europe

• New factory in US opened in 2012

• Products launched in around 20 countries in last 2 years

• No.1 in UK (2013 buys Finsbury’s GF business & expects t/o of £50m)

• Products launched in 7 countries in last 2 years2011: US/Can (Glutino)2012: Carrefour Spain2013: Coles Australia

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• No.1 in GF bakery in US & Canada (Udi’s & Glutino – Udi’s sales over £60m in 2012)

• Now developing UK/Europe business (2013 bought Davies Bakery)

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GF VARIANTS TAKE AN INCREASING SHARE IN NPD OF CEREAL-BASED PRODUCTS

Gluten-free penetration in launches of cereal-based products, globally, 2009-2013

Certainly more potential in pizza/prepared meals,

& beer

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THE OPPORTUNITY IN ALCOHOLIC DRINKS - BEER

Gluten free beers are growing in number

• Among UK beer drinkers, 34% agree that they would drink gluten-free beers if they tasted as good as standard varieties while another 43% neither agree nor disagree (e.g. only just over 20% disagree)

• Brands such as Green’s are not just targeting coeliacs – as the brewer does not use gelatine-based products or Isinglass in the production process, the products are also suitable for vegetarians and vegans

St Peter’s Gluten-Free Beer,

Finland

Green’s Gluten-Free Beer, USA

16Source: Mintel GNPD

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…AND EVEN SPIRITS

Blue Ice American Potato Vodka (21st Century Spirits) the first to feature a ‘Gluten Free’ designation on-pack,

US, May 2013

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• May 2012: US Tobacco Tax and Trade Bureau (TTB) permitted spirit producers to display gluten-free claims on products made from gluten-free ingredients, including potatoes

• Some disagreement over whether distillation removes all trace of gluten – Coeliac UK’s stance is that it does, thus it recommends all spirits (including barley containing malt whisky) as good for people with coeliac disease

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OTHER RECENT DEVELOPMENTS

2011 start-up, sales in Ireland €1m

Now coming to the UK

Growth in both the US and UK

Ancient grains extends non-dairy milk options (quinoa

and chia in this case)

Bfree, Ireland Amy’s Kitchen, UK Freedom Foods Quinoa Milk, Australia

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UK FREE-FROM MARKET GROWTH WILL SLOW BUT STILL IMPRESSIVE

UK retail sales of free-from foods, 2008-17

Source: Mintel Oxygen19

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CONSUMER: GROWING PURCHASE LEVELS

Types of free-from foods bought (last six months), UK, 2012 vs. 2013 (July)

Source: GMI/Mintel20

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LIFESTYLE CHOICES AS IMPORTANT AS ALLERGY/ INTOLERANCE IN AVOIDANCE OF LACTOSE AND GLUTEN

Foods/ingredients avoided, UK, July 2013

Source: GMI/Mintel21

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US gluten free sales (all products labelled gluten-free)

UK vs. US – US GROWTH HIGHER BUT MARKET DEFINITIONS AFFECT ACTUAL SIZING

UK gluten free sales(not including mainstream products labelled gluten-free

but which did not contain gluten in the first instance)

0

20

40

60

80

100

120

140

160

180

2010 2011 2012est.

£ m

illion


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‘HEALTH’ PERCEPTION DRIVES THE US MARKET

• 15% of US consumers currently eating GF food (June 2013)

• 25% among 18-24 year olds

• 72% have not been diagnosed with celiac disease

• 53% eating GF food because its healthier

Rising incidence of intolerance and health perceptions fuel growth

Source: Mintel Oxygen

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Reasons for eating gluten-free other than intolerance/sensitivity, June 2013

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US MARKET GROWTH FUELLED BY SNACKS

Sales of gluten-free products by segment, US, 2011-2013

52 weeks ending June 11, 2011; June 9, 2012; June 8, 2013Source: Mintel/SPINS/Nielsen

• All segments in the category experienced sales growth between 2011 and 2013

• Most dramatic growth was in the bread products, cookies, and snacks segment (+77%)

• Salty snacks alone +136%

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GLUTEN FREE AT FOODSERVICE

US: TOP 5 RESTAURANT MENU CLAIMS 2010-13


Issue is trust: Just 34% of US consumers trust that gluten-free restaurant offerings are not cross-contaminated with gluten (June 2013)

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WHAT WILL DRIVE FUTURE GROWTH

Numerous factors suggest further growth

Healthy lifestyle positioning•Will continue to widen user base by leveraging healthy eating consciousness and trends

Rising levels of incidence / diagnosis •Expanding core user base

Deeper penetration•e.g. into other sectors / channels such as foodservice

Wider range•Bigger offer means lower price differential and opportunity for better quality

• Technology offers scope for brands to better connect with engaged consumers

• Social media & mobile phone apps give consumers the power to seek out free from solutions

GlutenSwitch mobile phone app (Australia)

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ENVIRONMENTAL POSITIONING TO COME INTO GREATER PLAY

For non-dairy alternatives there is a case

Meat & dairy production is unsustainable to feed a growing

world population reaching 9bn by 2050. The world grain output will need to rise by 50%, and meat

production will need to double to meet the demand (UN)

“The problem is that instead of feeding crops to people, we’re

feeding most of them to livestock. And so we’re caught in an inefficient protein-delivery

system.” (Bill Gates)

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ENVIRONMENTAL IMPACT OF DAIRY

Claims to be “planet and people friendly” as it uses less water and less CO2 than protein based products

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A producer of coconut milk – so could be biased!

“Fantastic for the environment”, as it grows very fast; captures a lot of CO2; does not

need pesticides; soil friendly etc.

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GLUTEN FREE ALSO GETS ON BOARD THE TREND

Gluten free products also lead in the use of environmentally friendly product claims

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Redwood Smoky BBQ Multigrain Chips, USThe manufacturer claims to grow the rice sustainably, by conserving water resources, building soil integrity, and supporting a healthier ecosystem.

Annie's Homegrown Cookies, USPack bears the EcoBonus Collect & Earn point coupon for eco-conscious choices of earth-friendly products, which can be donated to a local non-profit organization or school.

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BUT CONSUMERS ARE NOT THAT ENGAGED – YET!

Alpro Tofu (Belgium)Meat brand Charal tackles

environmental issue head on

Only 13% British consumers who have bought vegetarian/meat-free foods have done so to reduce the amount of meat/ poultry/fish consumed because of concerns

over the environment

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