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Free-from Foods - UK - December  2016

OVERVIEW
What you need to know
Products covered in this Report
Excluded
EXECUTIVE SUMMARY
The market
Free-from market continues robust growth in 2016
Slowing growth predicted going forward
Figure 1: Value retail sales of free-from foods in the UK, 2011-21
Strong activity from leading brands fuels dairy-/lactose-free growth
Rise in food allergy and intolerance should underpin free-from sales
Avoidance diets remain popular
NHS cuts gluten-free prescriptions
Companies and brands
Alpro extends its lead in a fragmented market
Figure 2: Leading brands’ shares in the UK retail free-from foods market, by value, 2015/16*
Leading retailers bolster free-from ranges in 2016
Fast-growing market continues to attract mainstream brands
Specialist brands target new occasions and look to add value
Free-from continues to see growth in advertising spend
Marketing messages diverge – from intolerance awareness to taste
The consumer
Food avoidance is widespread
Figure 3: Avoidance of foods/ingredients, by respondent or household members, by reason, September 2016
Three in 10 adults eat or buy free-from food
Most buyers are able to do a one-stop free-from shop
Figure 4: Using one vs multiple shops to buy free-from foods, September 2016
Naturalness appeals to three in five, high expectations of “clean label”
Figure 5: Interest in qualities in new free-from foods, September 2016
Low sugar and fat is important to many
On-the-go/snack items garner high interest
Figure 6: Behaviours of buyers/eaters of free-from food, September 2016
Free-from foods face steep competition from scratch cooking
67% of non-users would only exclude foods on advice from health professionals
Figure 7: Behaviours of non-buyers/eaters of free-from food, September 2016
Sparking interest is crucial challenge
What we think
ISSUES AND INSIGHTS
High expectations of “clean label” in free-from
The facts
The implications
Sparking interest in non-users is crucial challenge
The facts
The implications
Free-from foods face competition from scratch cooking
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Free-from market continues robust growth in 2016
Slowing growth predicted going forward
Strong activity from leading brands fuels dairy-/lactose-free growth
Rise in food allergy and intolerance should underpin free-from sales
Avoidance diets remain popular
NHS cuts gluten-free prescriptions
MARKET SIZE AND FORECAST
Free-from market continues robust growth
Figure 8: Value retail sales of free-from foods in the UK, 2011-21
NPD and expanding distribution have been key engines of growth
Slower growth on the cards
Income squeeze stands to dampen demand
Competition should lower prices, falling Pound will raise them
NPD moves beyond essentials
Limited scope to convert new users
Market predicted to pass £950 million in 2021
Figure 9: Value retail sales of free-from foods in the UK, 2011-21
Forecast methodology
MARKET SEGMENTATION
Strong activity from leading brands fuels dairy-/lactose-free growth
Marketing looks to grow the user base
New products hope to drive spend among existing users
Figure 10: UK retail value sales of free-from food and drink, by segment, 2014-16
Gluten-/wheat-free retains robust growth as NPD continues
NPD remains a key factor in driving spend
Gluten-free lacks the wider selling points and marketing support of dairy-free
MARKET DRIVERS
Rise in food allergy and intolerance should underpin free-from sales
Coeliac disease affects one in 100
Self-diagnosed food intolerance rising
Avoidance diets remain popular
“Clean eating” contributes to wheat and dairy avoidance
FODMAP gains prominence
Healthiness of gluten-free products questioned
Industry steps up health efforts – strong consumer demand
NHS continues cuts to gluten-free prescriptions
Price remains an issue
Weakened Pound will push up prices of imports
Decline in 16-24s could limit growth
Figure 11: Recent and projected trends in population growth, by age, 2011-16 and 2016-21
COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
Alpro extends its lead in a fragmented market
Leading retailers bolster free-from ranges in 2016
Fast-growing market continues to attract mainstream brands
Specialist brands target new occasions and look to add value
Free-from continues to see growth in advertising spend
Marketing messages diverge – from intolerance awareness to taste
MARKET SHARE
Alpro extends its lead in a fragmented market
Figure 12: Leading brands’ sales and shares in the UK retail free-from foods market, by value, 2014/15 and 2015/16
First TV ad in three years fuels Lactofree
Mixed performances in gluten-free
Acquisitions affect the competitive landscape
The fast-growing market continues to attract mainstream brands
Own-brands step up the heat
LAUNCH ACTIVITY AND INNOVATION
L/N/R allergen claims plateau in food launches in 2015
Figure 13: Share of product launches in the UK retail food market featuring an L/N/R allergen claim, 2012-16
Retailers introduce allergen colour coding…
…and continue to bolster ranges
Sainsbury’s adds 140 own-brand products
Figure 14: Share of NPD in the UK free-from market, by top 10 companies (sorted by 2015), 2012-16
Alpro targets snacking and on-the-go with NPD…
…and expands into dairy-free ice cream
Arla Lactofree launches Natural Yogurt
Coconut trend going strong in dairy alternatives
More activity in yogurts/desserts
Coconut moves into cheese and flour
Gluten-free bakery brands expand portfolios
Cereal brands continue free-from NPD
Non-specialist brands continue to expand free-from offerings
Leading pizza brands enter gluten-free
Free-from fish fingers from top frozen players
McVitie’s looks to gluten-free to expand its appeal
Free-from drinks NPD growth halts
Figure 15: Share of L/N/R allergen product launches in the UK retail drinks market, 2012-16
Brewers look to leverage gluten-free interest
ADVERTISING AND MARKETING ACTIVITY
Free-from continues to see growth in advertising spend
Figure 16: Total above-the-line, online display and direct mail advertising expenditure on free-from foods, by top advertisers (sorted by 2015), 2012-16
Alpro retains position as top advertiser…
…but gets caught in a Twitter storm
Tesco highlights gluten-free range in Christmas ad
Morrisons follows Tesco with its first free-from TV ad
Arla Lactofree invites consumers to join the real dairy revolution
Unilever supports Flora Freedom launch
Genius becomes first gluten-free brand to advertise in UK cinemas
M&S partners with Coeliac UK
Nielsen Ad Intel coverage
THE CONSUMER – WHAT YOU NEED TO KNOW
Food avoidance is widespread
Three in 10 adults eat or buy free-from food
Most buyers are able to do a one-stop free-from shop
Naturalness appeals to three in five, high expectations of “clean label”
Low sugar and fat is important to many
On-the-go/snack items garner high interest
Free-from foods face steep competition from scratch cooking
67% of non-users would only exclude foods on advice from health professionals
Sparking interest is crucial challenge
AVOIDANCE OF FOODS/INGREDIENTS
Food avoidance is widespread
Figure 17: Avoidance of foods/ingredients, by respondent or household members, by reason, September 2016
Figure 18: Types of foods/ingredients avoided by respondent or household members, September 2016
Healthy lifestyle most important reason for dairy/lactose and wheat/gluten avoidance
TYPES OF FREE-FROM FOODS BOUGHT AND EATEN
Three in 10 adults eat or buy free-from food
Figure 19: Types of free-from food bought and eaten, September 2016
One in five buy or eat gluten-free food
Dairy substitutes have a lead over lactose-free
Disparity between avoidance and uptake of free-from
Buying without avoiding
Avoiding foods without buying the substitutes
16-24s and Londoners are core user groups of free-from food
Figure 20: Free-from food purchasing and usage, by age, September 2016
SHOPPING FOR FREE-FROM FOOD
Most buyers are able to do a one-stop free-from shop
Availability of free-from has improved in recent years…
…but a quarter of shoppers need to shop around
A strong free-from offer can sway Christmas shoppers
Figure 21: Using one vs multiple shops to buy free-from foods, September 2016
Supermarkets are most widely used outlet for free-from food
Figure 22: Types of outlets used when shopping for free-from foods, September 2016
Convenience stores have growth potential
Younger shoppers more likely to use other outlets than supermarkets
INTEREST IN FREE-FROM INNOVATION
Naturalness appeals to three in five, high expectations of “clean label”
Natural claims remain rare in the market
Figure 23: Interest in qualities in new free-from foods, September 2016
Low sugar and fat is important to many
Fat and sugar a challenge for gluten-free, NPD remains rare
“Superfood” ingredients appeal to under-35s
Churn of new “superfoods” ensures newness but requires timely NPD
Tapping other healthy eating trends could attract non-users
BEHAVIOURS OF USERS
On-the-go/snack items garner high interest
Figure 24: Behaviours of buyers/eaters of free-from food, September 2016
Free-from foods face steep competition from scratch cooking
Many families do not eat the same free-from meals
BEHAVIOURS OF NON-USERS
67% would only exclude foods on advice from health professionals…
…but there is high openness to trying a free-from diet
Figure 25: Behaviours of non-buyers/eaters of free-from food, September 2016
Uncertainty about symptoms suggests growth potential for free-from
Recent initiatives look to raise awareness
Sparking interest is crucial challenge
Price is a deterrent for most non-users
Negative perceptions linger
Greater in-store visibility is needed
A third are put off by the “gluten-free” label
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology
APPENDIX – MARKET SIZE AND FORECAST
Figure 26: Best- and worst-case forecast of value retail sales of free-from foods, 2016-21
Forecast Methodology
APPENDIX – LAUNCH ACTIVITY AND INNOVATION
Figure 27: L/N/R allergen claims’ share of new food product launches, by category, 2012-16
Figure 28: L/N/R allergen claims’ share of new drink product launches, by category, 2012-16
Figure 29: NPD featuring L/N/R allergy claims in the UK retail food market, branded vs own-label, 2012-16
Figure 30: New food product launches with L/N/R allergen claims, by top claims, 2012-16

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