© 2015 Mintel Group Ltd. All Rights Reserved. Confidential to Mintel.

The evolution of the global free-from marketChris Brockman

FDIN Free From event, Oct 2015

2© 2014 Mintel Group Ltd. All Rights Reserved. Confidential to Mintel.

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........................... Global growth of free-from food

The UK market and health as a purchase driver

How launches convey wider health benefits

Key points for the future

Today’s presentation.................................................................................................................................................

© 2015 Mintel Group Ltd. All Rights Reserved. Confidential to Mintel.

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The rapid rise of allergen-free products in food & drink NPD

Fastest rising claims in food & drink product launches, Top 5 – Global

2015 is Jan-Sept

Source: Mintel GNPD

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Gluten-free and lactose-free progression in NPD

% of new food product introductions*, global, labelled as gluten-free or low/no lactose

2015 is Jan-Sept; *Note: gluten-free only covers bakery, cereals, snacks, pasta & noodles; low/no lactose only covers dairy, dairy substitutes & desserts

Source: Mintel GNPD

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2015 is Jan-Sept

Source: Mintel GNPD

NPD penetration by region – North America & Australasia the most active

Low/No/Reduced Allergen claim penetration in food & drink launches - per region

The most innovative regions by some distance

Consistent progress, led by Spain, Germany, UK, Italy

Driven by legislative requirement for gluten disclosure in Brazil

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The rise of dairy (and soya) free in NPD

Non-dairy milk innovation is on the increase. In recent years there has also been a switch away from soy-based products towards other plant variants – soy based drinks accounted for 53% of total non-dairy launches in 2010 but in 2015 represent only 22%.

2015 is Jan-Sept

Source: Mintel GNPD

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$8.8 bn market value in 2014

US, by far the largest market for gluten-free and dairy alternatives

Gluten-free food & drink

Source: Mintel Reports

Non-dairy milk

25% of adults said they eat gluten-free versions of food in June 2015, compared to 22% in June 2014

62% value growth forecast 2014-2017

$1.7 bn market value in 2014

of which $1.1bn is almond milk

46% value growth forecast 2014-2017

30% of adults in 2015 said they personally consume almond milk, 23% soy, 15% lactose-free cow’s milk, 14% rice milk

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The UK is less dynamic (than the US), but still a fast growing market

• Total UK free from market valued at £365m in 2014, forecast to grow by 50% by 2019• Both the dairy-free and gluten-free segments continue to record impressive growth (both

seeing 15% growth between 2013 and 2014)

Excludes prescription sales

Source: Mintel Reports (based on IRI/Mintel)

Gluten/wheat-free: £184m in 2014

+15.0% on 2013

Dairy/lactose-free: £181m in 2014

+15.3% on 2013

Three in 10 bought or eaten free-from food in the six months to June 2014, with gluten-free

and dairy substitutes the most commonly

purchased/eaten – by 18% & 17% respectively

9 Source: Free-from Foods - UK - November 2014

Millennials are more influenced by new ‘free from’ lifestyles

UK 16-34 year olds are 31% more likely than average to avoid red meat or poultry

They are 40% more likely than average to avoid dairy

or lactose

They are also 40% more likely than average to avoid

wheat or gluten

Source: Mintel Reports

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Gluten-free in Europe also has significant usage in 16-34 age group

In continental Europe: as many as:•15% of German•12% of Polish •11% of Italian…

…16-24 year olds report following a gluten-free diet

Source: Mintel

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Europeans beginning to embrace dairy-free milk

Dairy-free milks are finding an audience in Europe, despite consumption still ranking well below the US. The market has increasingly benefited in recent years from the perceived health and taste benefits of non-dairy products.

Source: Mintel

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Health as a driver

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The “Lifestylers” account for almost half of the ‘free from’ audience

39% of people live in households where

somebody is avoiding specific foods/ingredients

because of an allergy/intolerance

or because of a lifestyle choice

Of the avoiders,

almost half (46%) do so “as part of a

general healthy lifestyle” with the remainder having

“an allergy or food tolerance”

Source: Mintel Reports

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Types of food avoided, UK, June 2014

UK: avoidance driven as much by healthy lifestyles than intolerance

Source: Mintel Reports

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Healthy image, variety, naturalness and weight control benefits all appeal above personal allergy/intolerance

Source: Mintel Reports

Reasons for eating free-from foods, UK, September 2015

• The top reason consumers don’t eat free-from foods is because they are deemed as too expensive compared to standard foods (39%), followed by the belief that they do not taste as good as standard alternatives (22%)

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Learnings from the US

• A wide range of health-related issues influence perception of gluten-free • Uptake of non-dairy milk is driven by taste as well as a more limited, but more specific range of

health attributes

Reasons for purchasing other/non-dairy milk and/or creamer, US, February 2014

Source: Mintel Reports

Other (than intolerance/sensitivity) reasons for eating gluten-free foods, US, June 2014

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Free-from launches convey health

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Food launches by selected health/natural claim: GF vs. Non-GF

• A gluten-free product is much more likely to be organic, low in sugar and fat, with no additives or preservative than a ‘regular’ product

Gluten-free vs. Non-Gluten-free, Europe, Oct 2012 – Sept 15

% of launches by selected claim

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Riding the protein craze

High protein claims are increasingly coming into mainstream products but free-from has already been riding the craze

Source: Mintel GNPD

Orgain Organic Protein Unsweetened Vanilla

Almond Milk (US)

Melkunie Breaker High Protein Coconut Yogurt

(NL)

Wholesome Chow Organic Gluten Free Hi-

Protein Pancake & Baking Mix (US)

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Ancient grains continue to see growth in usage

Ancient grains are also coming into mainstream products but are a great way for free-from products to talk about health

Source: Mintel GNPD

Smart Flour Foods Uncured Pepperoni Pizza made with sorghum, amaranth and teff

(US)

Enjoy Life Brownie Mix with Ancient Grain made

with teff and flaxseed (US)

Felicia Bio Multigrain Tortiglioni Pasta made with

quinoa, corn, rice and buckwheat (Italy)

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Nuts for coconuts and almonds

On-trend coconut and almond are appearing in healthy free-from products across the board, often in combination with each-other

Source: Mintel GNPD

Sweet Rebellion Dairy-Free Frozen Dessert, made with coconut cream/milk, with no added sugar (UK)

Van's Simply Delicious Gluten Free Cranberry Almond Soft

Baked Grain Granola Clusters with 12g nutrient dense whole

grains (US)

Sanitarium So Good Unsweetened Almond

Coconut Milk, source of calcium and vitamin E, low in saturated fat (Australia)

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Bread brands work harder to convey health

• Genius adapts its bread recipes – now boasting low levels of saturated fat and high levels of fibre, as well as no artificial preservatives and additional vitamins and minerals (some lines containing omega-3 or iron)

• Dr. Schär USA revamps with a new line of Artisan Baker breads, baked with ancient grains

Silver Hills Gluten Free Omega Flax Bread contains high fibre omega 3 flax seeds (US)

PureBred Bakery Multigrain Farmhouse Loaf is a gluten-free, five grain high fibre loaf with omega 3 rich seed mix (UK)

Source: Mintel GNPD

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Ice cream provides the inspiration here

Taste credentials can be boosted by positioning at inter-section of health and indulgence

Qoobee Organic Almond Ice Cream with

Orange Pieces, Germany

Perfect World non-dairy ice cream: with coconut milk, nut pastes and egg, made using stevia instead of sugar, UK

Lily & Hanna's Raw! Chocolate Love Energy Rawfood Ice Cream with

cashew nuts, Sweden

Source: Mintel GNPD

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•Criticism of typical western diets being highly dependent on refined processed grains has contributed to a negative stigma attached to grains

•Grain-free is starting to emerge as the next generation of (and healthier alternative to) gluten-free with Paleo and other ‘raw’ food diets entering the mainstream

•Nut, fruit and vegetable ingredients are gaining use instead. Almond and coconut flours/ingredients are particularly trendy

Simple Mills Naturally Gluten-Free Chocolate Muffin & Cake Almond

Flour Mix (US)

Paleonola Pumpkin Pie Grain Free Granola (US)

What’s next – watch for grain-free

Source: Mintel GNPD

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New protein sources - Prolupin attacks with new brand “Made with Luve”

“Made With Luve” is the new umbrella brand under which Prolupin is aiming to makes inroads into the wider dairy sector. Lupine Yogurts, drinks, ice creams and other desserts are made with lupine protein following a process developed by the Fraunhofer Institute.

Made with ‘luve’ yogurts and ice creams, Germany

Source: Mintel GNPD

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Key points for the future

• Foods bearing a free-from claim appear increasingly relevant to a wider number of consumers

• These foods, in consumers’ eyes, are closely tied to health – whether their own, their family’s, or the planet’s

Health halo of “free-from” is key

• Health hooks such as high protein, ancient grains, fruit/nuts are ways to boost free-from health benefits

There are more ways to ‘sell’ health

• Taste leads in the appeal of non-dairy milk and taste concerns hold back gluten-free• The more taste appeal that can be brought in, the more likelihood of success for

individual products

But taste remains key

© 2015 Mintel Group Ltd. All Rights Reserved. Confidential to Mintel. mintel.com

Chris Brockman

Research Manager, Mintel Food & Drink - EMEA region

cbrockman@mintel.com

Thank you!