Free-from Foods - UK - December 2017

OVERVIEW
What you need to know
Products covered in this Report
EXECUTIVE SUMMARY
The market
Media buzz and increased availability boost free-from sales 2012-17
Inflation to continue over 2017-22
Figure 1: UK retail value sales of free-from food and drink, 2012-22
Health credentials of exclusion diets called into question
Companies and brands
Alpro continues to lead the free-from category in 2017
Retailers lead on gluten-free bakery NPD in 2016/17
Plant-based milks remain the main focus of dairy-free and L/N/R lactose NPD in 2016/17
Tesco leads on dairy-free and L/N/R lactose launches in 2016/17
Advertising spend rises, but at a slower rate than in previous years
Alpro remains the top advertiser, with a focus on permissibility
The consumer
Half of UK adults report avoidance in their household
Figure 2: Avoidance of foods/ingredients, by reason, September 2017
Rise in reported usage of free-from products
Health is a key factor for free-from food and drink
Few non-users have actively negative views
Consumer concerns about sugar affect free-from category
Figure 3: Behaviours relating to free-from food and drink, September 2017
Shoppers are divided on in-store positioning
Figure 4: Free-from food and drink buyers’ behaviours, September 2017
‘Shortcut’ and premium products appeal widely
Figure 5: Users’ attitudes towards free-from food and drink, September 2017
What we think
ISSUES AND INSIGHTS
Need for companies to demonstrate good health credentials
The facts
The implications
Premium products can succeed even as incomes come under pressure
The facts
The implications
Brands must find ways to appeal beyond their free-from status
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Media buzz and increased availability boost free-from sales 2012-17
Inflation to continue over 2017-22
Health credentials of exclusion diets called into question
MARKET SIZE, SEGMENTATION AND FORECAST
Media buzz and increased availability boost free-from sales 2012-17
Stronger growth in dairy-/lactose-free 2015-17
Figure 6: UK retail value sales of free-from food and drink, by segment, 2015-17
Inflation to continue over 2017-22
Income squeeze to hinder sales
Limited ability to find new users
Slowing growth predicted going forward
Figure 7: UK retail value sales of free-from food and drink, 2012-22
Figure 8: UK retail value sales of free-from food and drink, 2012-22
Forecast methodology
MARKET DRIVERS
Inflation hits the market
Income squeeze threatens category growth
Government considers withdrawing gluten-free prescriptions
Media buzz and celebrity endorsement buoy up free-from products
Media backlash against clean eating in 2017
Health credentials of free-from food and drink called into question
Osteoporosis Society warns young people that they risk future bone fractures
Scientific group advises against gluten-free diets without a medical need
University medical department warns of risk of iodine deficiency from dairy avoidance
European Court rules that dairy substitute products cannot use dairy-style names
Serving suggestions and in-store positioning can help to address consumer uncertainties
Vegan advertising campaigns attack the dairy industry
Dairy industry mobilises its forces
COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
Alpro continues to lead the free-from category in 2017
Retailers lead on gluten-free bakery NPD in 2016/17
Plant-based milks remain the main focus of dairy-free and L/N/R lactose NPD in 2016/17
Tesco leads on dairy-free and L/N/R lactose launches in 2016/17
Advertising spend rises, but at a slower rate than in previous years
Alpro remains the top advertiser, with a focus on permissibility
MARKET SHARE
Alpro continues to lead the free-from category
In-store positioning gives a further boost to Alpro
Figure 9: Leading brands’ sales and shares in the UK free-from market, by value, 2015/16-2016/17
Genius sees values rise on flat volumes
Improved in-store visibility and NPD help Schär to grow
Bfree gains distribution
Own-label raises the competition for brands as retailers expand their free-from ranges
LAUNCH ACTIVITY AND INNOVATION
Free-from claims rise over 2013-16
Gluten-free remains the primary free-from claim in 2016
Figure 10: New product launches in the UK retail food and drink market with selected free-from claims, by claim, 2013-17
Non-dairy claims rise sharply, though from a low base
Gluten-free
Retailers lead on NPD in 2016/17
Figure 11: Gluten-free product launches in the UK bakery market^, by top 10 companies, 2013-17
Tesco adds premium free-from products
Morrisons promotes its new launches as a good value choice
Sainsbury’s debuts freshly-baked gluten-free breads
Leading players launch on-the-go gluten-free items
Genius unveils new look and half loaves
More artisan-style products in gluten-free
Warburtons removes Newburn name in rebrand
Baking mixes/ingredients lead in gluten-free bakery in 2016
Figure 12: Gluten-free product launches in the UK bakery market^, by sub-category, 2013-17
Companies promote health benefits to add permissible element
Delicious Alchemy targets special occasions with new cake kit
Sweet biscuits retake the lead in NPD in 2017
Mr Kipling extends into gluten-free
Dairy-free and L/N/R Lactose
Plant-based milks remain the main focus of NPD in 2016/17
Organic brands innovate with ingredients and types
Figure 13: Dairy-free and L/N/R lactose launches in the UK dairy market, by sub-category (sorted by 2016), 2013-17
Nut milk yogurts make their UK debut
Ben & Jerry’s almond milk ice creams arrive in the UK
Unilever expands its dairy-free spreads range
Tesco leads on NPD in 2016/17
Figure 14: Dairy-free and L/N/R lactose launches in the UK dairy market, by top ten companies (sorted by 2016), 2013-17
Alpro unveils no-added-sugar yogurts
Organic brand Rachel’s makes its debut in the free-from category
ADVERTISING AND MARKETING ACTIVITY
Advertising spend rises in 2016, though rate of growth slows
Figure 15: Total above-the line, online display and direct mail advertising expenditure by companies operating in the free-from food/drink market (sorted by 2016), 2013-17
Alpro retains its advertising lead
Go On yogurts reference health credentials to add permissibility
Breakfast campaign aims to appeal to variety seekers
Ice cream advert calls out the product’s reduced-sugar proposition
Continued emphasis on environmental credentials
Unilever continues to support Flora Freedom
Adverts for flavoured variants emphasise health and versatility
Online advertising continues to focus on the environment
Genius appeals to the senses in new online campaign
Tesco puts emotional focus on fish fingers advert
Sainsbury’s credits social media buzz as key to success of its cheese alternatives
The Coconut Collaborative makes its outdoor advertising debut
Nielsen Ad Intel coverage
THE CONSUMER – WHAT YOU NEED TO KNOW
Half of UK adults report avoidance in their household
Rise in reported usage of free-from products
Health is a key factor for free-from food and drink
Few non-users have actively negative views
Consumer concerns about sugar affect free-from category
Shoppers are divided on in-store positioning
‘Shortcut’ and premium products appeal widely
AVOIDANCE OF FOODS/INGREDIENTS
Half of UK adults report food/ingredient avoidance in their household
Figure 16: Avoidance of foods/ingredients, by reason, September 2017
Under-35s are particularly likely to report avoidance
Figure 17: Repertoire of foods/ingredients avoided in the household, September 2017
Dairy avoidance unchanged despite pro-vegan advertising campaigns
Red meat avoidance slips as media spotlight fades
Figure 18: Avoidance of foods/ingredients, by type, September 2017*
TYPES OF FREE-FROM FOOD AND DRINK USED AND BOUGHT
Labelling helps to drive increase in reported usage
…but some products enjoy notable usage outside of exclusion diets
In-store positioning boosts visibility of free-from products
Figure 19: Usage and buying of free from food and drink, September 2017
Families are key users of free-from food and drink
…as are under-35s
Avoidance diets do not always help free-from products
Ethical labels and meal deals are promising means to appeal to non-user avoiders
Figure 20: Types of Free-from Food and Drink Used and Bought, September 2017
Media and advertising buzz fuels rise in dairy substitutes
Concerns around animal welfare and the environment are key motivations for dairy substitutes users
REASONS FOR EATING/DRINKING FREE-FROM FOOD AND DRINK
Media buzz strengthens free-from products’ health halo
Companies must ensure their nutritional credentials are sound
Figure 21: Reasons for eating/drinking free-from food and drink, September 2017
Desire for variety is a key reason for using free-from food/drink
Meal deals and discount vouchers should allow companies to tap into consumer interest in variety
BARRIERS TO EATING/DRINKING FREE-FROM FOOD AND DRINK
‘Functional’ image lingers around free-from food and drink
Various options for companies looking to grow usage of free-from food and drink
Figure 22: Barriers to eating/drinking free-from food and drink, September 2017
Few non-users have actively negative views of free-from products
Weakened household incomes likely to hinder free-from products’ ability to find new users
Promotions could allow companies to overcome the price barrier
BEHAVIOURS RELATING TO FREE-FROM FOOD AND DRINK
Consumer concerns around sugar affect free-from products
Figure 23: Behaviours relating to free-from food and drink, September 2017
Opportunities for expansion in L/N/R sugar versions
Premium products can capitalise on consumer interest in meal deals
Meal deals can allow companies to attract ‘missing’ potential users
Ethical labels have wide appeal
FREE-FROM FOOD AND DRINK BUYERS’ BEHAVIOURS
Opinions are divided on in-store positioning
Dedicated aisles can help supermarkets to showcase their free-from ranges
Figure 24: Free-from food and drink buyers’ behaviours, September 2017
Weakened household incomes are a threat to category growth
Opportunities remain for ‘shortcut’ and premium products
USERS’ ATTITUDES TOWARDS FREE-FROM FOOD AND DRINK
Short ingredients lists are favoured
Opportunities for clean label products
Explaining unfamiliar ingredients should give extra reassurance to consumers
Figure 25: Users’ attitudes towards free-from food and drink, September 2017
‘Shortcut’ products for cooking/baking appeal to many
Products seen as close to homemade should especially benefit
Premium prepared meals can step in where restaurants are seen to fail
…and can do well even where incomes are squeezed
Premium products are rare within free-from
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology
APPENDIX – MARKET SIZE AND FORECAST
Figure 26: Forecast of UK retail value sales of free-from food and drink, best- and worst-case, 2017-22
Forecast methodology