In 1998, the Atkins Diet began to sweep the nation as millions of Americans excitedly substituted cheese and hamburgers for bread. The low-carbohydrate, high-protein approach to weight loss spun consumers into a meat-loving frenzy, and food manufacturers followed with low-carb and no-carb versions of their best sellers.
For some folks, the gluten-free trend will cause sleepless nights. For seasoned food industry executive Joann Deturris, it’s just another fad.
A marketer with a strong nutrition background who has worked for several large food manufacturers, Deturris remembers the low-carb craze well. Now marketing director for dessert specialist Love and Quiches Gourmet, she believes the gluten-free trend is a passing whim and cautions manufacturers and retailers to assess carefully before changing product offerings.
“The gluten-free focus will abate like other health-related claims such as low-fat, fat-free and sugar-free, and doesn’t warrant a huge investment to accommodate the level of demand,” Deturris says.
Based on her experience with the low-carb/no-carb phase while working for one such manufacturer, she suspects most of the big prepared-baked-foods suppliers will not put as much effort into reformulations and new products as they might have back in the Atkins era.
The low-carb business was a billion dollar business, but many multibillion-dollar food companies poured money into new products to address this craze brought on by the popularity of the Atkins Diet—the fad of the 21st century,” she says. “And the opportunity just wasn’t big enough to support the investment and product. I don’t think the big companies will be investing to that extent in a diet trend again.”
While Deturris applauds consumers’ increasing concern for how food affects their health, she says the number of people who must eat gluten-free for serious health reasons, such as celiac disease, is simply not significant.
A study by research firm Packaged Facts moderately challenges Deturris’ assertions, suggesting that while gluten-free may not be a menu changer, it does serve a vital niche.
The Gluten Effect
Data supports that vast numbers of consumers are at least consciously scaling back breads, baked goods and other traditionally gluten-laden items for health reasons.
Deturris says this is due to the growing belief that gluten is bad for everyone, not just those with a specific health condition, which she says is “not necessarily true.”
While consumers may not be going 100% gluten-free, they are being influenced by the increased focus and expansion of gluten-free products. In fact, while consumption of all ready-to-eat snack cakes (regular, light/low-fat, fat-free/nonfat) has declined since 2004, core demand for gluten-free products rose from 7.26 million consumers in 2013 to a projected 9.8 million this year (4.2% of U.S adults), according to Packaged Sweet Baked Snacks and Desserts, a report released in December by Rockville, Md.-based Packaged Facts.
In 2013, 46% of consumers said they eat ready-to-eat snack cakes, down from 52% in 2004. More than 40% said they eat regular versions, as compared to extremely small percentages who eat light/low-fat or fat-free/nonfat versions.
The research suggests quite a few consumers plan to purchase less bread and baked goods due to concerns about wheat flour and gluten. Twenty-eight percent strongly agree or somewhat agree that they are cutting back because of wheat flour and 23% due to gluten, and 56% say they are cutting back on consumption of white breads. They say they are buying shelf-stable products less frequently and purchasing from stores’ in-store bakery departments more often.
Also, 44% of adults somewhat or strongly agree that food restrictions, food allergies or ingredients they avoid play a role in their food choices. A hefty 61% claim to be conscious of the ingredients in the foods they buy.
While the adage “want healthier but buy indulgent” remains true when it comes to baked sweets, the report’s findings indicate a rise in consumer awareness of the relationship between food and health.
“Dieting has clearly given way to nutritional management,” says Susan Viamari, editor of the Times & Trends newsletter for Chicago-based IRI. “Launches that provide better-for-you nutrition by removing/limiting less desirable attributes racked up more than $1.6 billion during their collective year one.”
David Sprinkle, Packaged Facts’ research director and publisher, says, “Food retailers with more focus on natural, specialty and premium food products have been growing their customer base. ... It’s still the specialty marketers leading the way in developing ‘free-from’ foods and beverages.”
CONTINUED: Boost for C-Stores?
Boost for C-Stores?
In a potentially ironic twist, David Bishop, managing partner for Balvor LLC, Barrington, Ill., says the gluten-free trend could actually boost c-store sales of prepared baked goods that contain gluten. CSP contacted several research firms to find sales data of gluten-free products specific to the c-store channel, but none was available. Most likely, it’s too soon in the gluten-free wave, or the level of participation among retailers too narrow, to compile such information.
“The more popular brands from the larger manufacturers have the potential to benefit,” he says. “Consumers may turn to the c-store to find the products they seek.”
Put differently, the convenience channel’s single-serve mindset positions the industry for an advantage, according to Bishop. While retail formats with a focus on take-home or packaged food products are most vulnerable to sways in consumer purchasing habits based on ingredient avoidance, the convenience channel could become a more appealing destination for those seeking individual packages of packaged baked brands such as Little Debbie, Hostess and Bon Appetit.
While operators should not dismiss better-for-you opportunities, the channel is somewhat immune to the typical health fads and trends because it is designed to appeal to individuals rather than an entire family or household.
IRI’s New Product Pacesetters 2013 report says “healthy variety drives sales; convenience remains critical.” In fact, seven out of the top 10 food and beverage launches in 2013 took a healthier-for-you approach in dominating the retail shelves, says IRI’s Viamari.
“A key driver of new product purchases in food is whether the product will help the consumer meet their nutritional goals,” she says. “Consumers seek new food and beverage products that offer a trifecta of benefits: their appetite for indulgence, excitement and nutrition.”
Teresa Voelter, product director for grocery/beverage/supplies/regulated beverage for McLane Co. Inc., Temple, Texas, says many retailers in convenience are not yet focusing on gluten-free as a category within their stores because they are selling items that are naturally gluten-free, such as some snack bars, packaged snacks and popcorn.
“Many items are now labeled ‘gluten-free’ since they are naturally that way, but that does not necessarily mean they are certified,” she says. Voelter points out that consumers with celiac disease look for a certified label to meet the 10 ppm (parts per million) requirements they need for strict dietary needs. “The largest category of opportunity for convenience is snacks and fresh whole fruits.”
Not Easy Being Gluten-Free
Dunkin’ Donuts planned to launch a gluten-free line of doughnuts late last year, but rather than a rollout, the plan was reeled in this past February. Celiac.com features this company statement: “In 2013, we tested a gluten-free Cinnamon Sugar Donut and Blueberry Muffin in select markets. We are currently assessing the results of this test, as well as feedback from our guests and franchisees, and we do not have plans to launch these products nationally at this time. We are continuing to develop additional gluten-free products for future tests, and we remain committed to exploring ways to offer our guests gluten-free choices.”
The rumor is the taste and quality of the gluten-free doughnuts were not as good as the standard flavors. Tweets such as “New donut isn’t too tasty! Falls apart like gluten free bread and the flavor is blah!” can be found all over social media. So it seems that making the switch to gluten-free production is complicated.
Gluten-free dough doesn’t hold together as well as wheat, production facilities must be 100% certified gluten-free, the product goes stale faster, and baking with gluten-free flours can be “like switching from cow’s milk to rice milk,” according to Businessweek.com.
Deturris says getting the products’ taste to a palatable level requires substitute ingredients to replace the wheat. In the case of Dunkin’ Donuts, gum is substituted to keep the doughnuts together, yet maintaining the rounded shape is a challenge.
If a company produces any portion of product with gluten, it can’t manufacture gluten-free in the same facility due to the slightest chance of contamination. Love and Quiches, for example, offers a few gluten-free packaged baked items, but it can’t label the products that way because the manufacturing facility also makes
products that contain gluten. And building a 100% gluten-free facility is often not cost-effective, Deturris says.
Some retailers have committed to providing more healthful choices, including Walgreens, a partner with Michelle Obama’s “Let’s Move” campaign. The retailer offers a selection of bread and baked goods including the Walgreens Good and Delish and Nice! brands.
When asked to comment about plans to adjust grocery offerings based on dietary concerns of consumers, a Walgreens spokesperson replied that the retail chain “offers gluten-free options in select stores based on consumer demand” and that store product selection “offers choices for customers and reflects consumer demand in the communities we serve.”
CONTINUED: Know Your Customer
Know Your Customer
Perhaps that statement from Walgreens is the moral of the story: You need to know your customers. Some markets may justify a display of gluten-free snacks, for example. And if you do embark on gluten-free, experts urge you to make sure you get that message out to the customer.
Consumers with celiac disease or gluten intolerance are becoming much savvier about these products, seeking out operators and manufacturers that are certified gluten-free, according to Voelter.
“My advice would be for stores considering a gluten-free selection to start by labeling their current plan-o-grams with shelf labels, calling out the items that are gluten-free,” she says. “Many large retailers spearheaded this initiative in the last few years, so the gluten-free consumer is used to utilizing that system to purchase items. Starting with the shelf labeling will make them more comfortable with purchasing additional items they previously may not have considered.”
One convenience wholesaler, Harold Levinson Associates, has found great success with a gluten-free and organic snack multivendor endcap, as reported in the 2014 CSP Category Management Handbook. The endcap features two rows of pegs and six shelves of healthful, organic and gluten-free snacks.
Marty Glick, vice president of sales for Farmingdale, N.Y.-based Harold Levinson, says he could probably sell an 8- by 12-foot endcap of all gluten-free snacks. “But the way to start off is with a multivendor endcap,” he says.
CONTINUED: Shopping Behaviors of Gluten-Free Consumers
Shopping Behaviors of Gluten-Free Consumers
Wondering if gluten-free is right for your store? The key is whether your consumer base is the right fit. Consider these facts about the typical gluten-free shopper before you launch:
- 55% spend 30% or more of their grocery budget on gluten-free foods.
- 68% shop at three or more stores per month to fi nd gluten-free foods.
- Product selection is the most important factor, followed by low price, convenience, good service, proximity to work and/or home, and knowledgeable/friendly staff.
- The majority (71%) agree it is hard to fi nd good-tasting gluten-free foods.
- More than half (57%) have tried 10 or more new gluten-free products in the past year.
- When asked if they could find the same products at all the following stores, where did they most prefer to shop for gluten-free?
- 71% grocery store (where they shop for most of family’s groceries)
- 9% independent natural or health-food store
- 8% mass merchandiser (e.g., Walmart, Target)
- 7% natural food chain (e.g., Whole Foods)
- 4% club store (e.g., Sam’s, Costco)
- 1% drug store
Source: Packaged Facts
Gluten-Free: To Sell or Not to Sell
For many c-stores, offering gluten-free products may not be worth the investment. Yet others may have the ideal audience. Here are some considerations:
- If the gluten-free craze is for many a passing fad, is it worth the time and money to add these products to your set?
- Think about your target customer. What is the likelihood he or she will seek out foods with specific dietary goals in mind at your c-store?
- Is your location upscale, lower-income, transient, community-centric, etc.?
- You have only so much square footage. Is there another category that is more deserving of expansion?
- What have your experiences been in the past with nutrition-specific products? Do low-carb, low-fat and similar products appeal to your audience?
- Consider a customer taste test before you offer gluten-free products.
David Bishop, managing partner for Balvor LLC, Barrington, Ill., says retailers can begin their research by asking suppliers for examples of what’s working with other convenience retailers relative to marketing and merchandising gluten-free products.
“If the retailer thinks the opportunity resides in foodservice, then it makes sense to look outside the channel at competitors to see what they are doing,” Bishop says. “If the retailer elects to pursue a gluten-free strategy, then the keys are to identify what products offer the best fi t, how the customer shops the store, and how to promote [the products’] availability to help drive sales.”
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