David Jago FDIN Free From Seminar 2008 Free From: Market Perspective 1 ©2008 Mintel International...

David Jago

FDIN Free From Seminar 2008

Free From: Market Perspective

1 ©2008 Mintel International Group Limited. All rights reserved. Confidential to Mintel.


Today’s presentation

• Free From Foods: a growing market...

• Growing numbers of new products…

• Leading countries and categories

• Where is the focus for NPD?

• Positioning: nutritional factors versus lifestyle factors

• Market developments and the future


Back in September 2006...

• UK market estimated value £90m, with 60% value growth over previous 5 years

• Steady (not spectacular) growth in NPD

• Gluten-free products: strongest in UK; mainly held by private label and a few specialist suppliers

• Lactose-free and lactose-reduced: Scandinavia leading; emerging elsewhere

• Forecast: £195m UK market for Free From Foods by 2010

– Driven by lifestyle and wellness issues

– Increasingly mainstream (distribution and consumer uptake)

– Industry consolidation on the horizon


And now...

• The market grows…

– Estimated value now £180m (2007)

• Shifts in segmentation:

– Dairy-free overtakes wheat-/gluten-free

• NPD activity dips in latest quarters…

– The onset of the economic downturn?

• Long-term prospects are generally good…!


Source: Mintel

More awareness

Greater advertising spend (Alpro)

Wider availability

More media interest

Greater product differentiation

Dovetailing with wider health concerns

New product development

Market in growth

due to: Retail sales of free from foods, value, 2002-07

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20

40

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120

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160

180

200

2002 2003 2004 2005 2006 2007(est)

£m

UK market value


UK market segmentation

Segment value of UK retail sales of free-from foods2006 2007 % change

£m % £m % 2006-07

Gluten/wheat-free 66 46 74 41 12

Dairy-free inc. soya* 65 45 86 48 32

Other 14 10 20 11 43

Total 145 100 180 100 24

* NB: Dairy free category includes all milk alternative products, both animal and non-animal

Source: Mintel


0

10

20

30

40

50

60

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90

100

2004 2005 2006 2007

£m

Gluten/wheat-free*

Dairy-free inc. soya**

Other***

• Dairy free growth:

•health concerns•awareness of dairy hypersensitivity • ‘vegan’ lifestyle•notable success of the Alpro brand

• Wheat/gluten free growth:

•popular wheat free slimming diets•growth in IBS sufferers - trial the product in an answer to the cure

Source: Mintel

Retail value sales of free from foods, by sector, 2002-06

**NB: Dairy free category includes all milk alternative products, bothanimal e.g. goats, buffalo and non-animal e.g. soya, rice etc

*** Other includes nut-free, egg-free

UK market segmentation


“Do you buy free from foods for either you or your family?”

%

Yes - because I/member of my family have a specific food allergy 5Yes - because I/member of my family have a food intolerance 5

Yes - as part of a general healthy lifestyle 18

No - I do not buy these products 73

Source: Ciao/Mintel

2,000 Internet respondents aged 16+

The consumer


Source: Mintel

0% 20% 40% 60% 80% 100%

AB

C1

C2

D

E*

Male

Female

16-19

20-24

25-34

35-44

45-54

55+

No - I do not buythese products

Yes - becauseI/member of myfamily have aspecific foodallergy

Yes - becauseI/member of myfamily have a foodintolerance/

Yes - as part of ageneral healthylifestyle

2,000 Internet respondents aged 16+

Female ABs

The role of the healthy wealthy consumer


The consumer - frequency of purchase

Frequency of purchase, August 2007

Total

Yes – because I/member of

my family have a specific food

allergy

Yes – because I/member of my family

have a food intolerance

Yes – as part of a general

healthy lifestyle

% % % %

Frequency of usage:I buy them occasionally (less than once a week) 53 33 56 59I buy them regularly (at least once a week) 31 51 30 25

Base: 548 Internet respondents who ever buy specialist dietary productsSource: Ciao/Mintel


The consumer - attitudes

Attitudes to food for food intolerances/allergies, August 2007

Total

Yes – because I/member of

my family have a specific food

allergy

Yes – because I/member of my family

have a food intolerance

Yes – as part of a general

healthy lifestyle

% % % %

Attitudes:They are easier to find in the supermarket nowadays 41 38 36 43They are more expensive than conventional foods 39 39 45 38They are generally healthier 35 15 27 43

Base: 548 Internet respondents who ever buy specialist dietary productsSource: Ciao/Mintel


NPD and allergens, the global picture

• Europe accounts for more than 40% of all introductions globally

• Note rapid development in Latin America in last quarter, while North America declines

New product introductions of low/no allergen foods, January 2005 to September 2008


Gluten-free NPD, Europe

• Introductions peaked in Q2-2008 at over 660

• Decline in Q3-2008 but NPD levels still double what they were in 2005

New product introductions of gluten-free foods, Europe, January 2005 to September 2008



New product introductions of gluten-free foods by country (%), last 12 months



New product introductions of gluten-free foods by category (%), last 12 months


Private label

Asda Free From Mini Cheese Crackers, free from gluten and

wheat, £1.08 for a 60g pack

Asda Free From Apricot, Sultana & Cinnamon Bars, free from gluten,

wheat and milk, £1.47 for a pack of 5 x 35g bars


Private label

Sainsbury's Free From Rich Tea Biscuits, gluten- and wheat free, £1.49

for a 150g pack

Sainsbury's Free From Double Chocolate Cake, gluten-, wheat- and dairy-free, indulgent chocolate cake with Belgian chocolate chips, £1.99 for 300g pack


Private label

Carrefour Sin Gluten snack cakes, SpainCarrefour Sin Gluten (corn-based) pizza bases, Spain


Lactose-free NPD, Europe

• Introductions peaked in Q4-2007 at nearly 350

• Some decline in latest quarters but NPD levels still more than double what they were in 2005

New product introductions of lactose-free foods, Europe, January 2005 to September 2008



New product introductions of lactose-free foods by country (%), last 12 months



New product introductions of lactose-free foods by category (%), last 12 months


Brands

Alpro Soya Probiotic Yofu, 100% vegan, dairy-free alternative to probiotic yogurts, made with fermented soybeans and real

fruit pieces, free from lactose and cholesterol, Europe

Alpro Soya Macchiato, 0% cholesterol, added calcium and vitamins B2 and B12, easily

digested, low in saturated fats, contains eight essential amino acids, is a natural source of isoflavones and contains no preservatives,

artificial flavours or colours, Europe


Brands

Léa Vital’s Jardin Bio low fat organic soy-based desserts, France

Léa Vital’s Jardin Bio organic soy-based coffee flavoured drink, France


Brands have multiple values

Plamil Foods’ premium organic impulse chocolate bars, including Dark Chocolate with

Dairy Free Alternative to White Mint Chocolate, made using 100% renewable energy and free

from nuts, gluten, wheat and GMOs, UK

Stiletto Foods’ Mrs Crimble's Corn Cakes, slightly salted, low in fat, ideal for

dieters, free from wheat, gluten and dairy, UK


The lifestyle factor

Unilever’s Breyers Lactose Free All Natural

Ice Cream, USA

Monoprix Bien Vivre line of “wellness-oriented” foods,

including gluten- and egg-free chocolate chip & coconut

cookies, France

Muh Fit Milch, 1% fat lactose-reduced milk with calcium and 10

vitamins “for the whole family”, Germany


Source: Mintel

Brand positioning: lifestyle versus nutritional


A note re pricing

• The average “free from” shopping basket is 10% more expensive than conventional products (study by the Anaphylactic Society)

• But the price premium differs by category, and free from products can be priced competitively against premium or organic foods

DS

WarburtonsOrganic


Market distribution of immature market = strong growth potential.

Opportunity for product diversity

Repeat purchase rate is good

Suppliers are willing to invest in above-the-line support

Greater media exposure – increases consumer awareness

Wider health concerns - becoming more pressing

Increased (mis)diagnosis

Niche brands with strong brand values

Product differentiation is weak

Price erosion – due to private label growth

Manufacturing difficulties in achieving long shelf-life product

High price premiums

Confusion between free-from and health products.

Low consumer uptake of products amongst sufferers - & predominance of occasional buyers

Lengthy and costly NPD process with a difficult supply chain

Market summary: strengths & weaknesses


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2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

£m

Value sales at current prices

Retail value Sales of Free From Foods, 2002 - 2012

Continued growth in awareness and subsequent diagnosis will boost the market

Consumer preoccupation with healthy eating will continue unabated

Convenience and health will be the driving forces behind the market, and the

industry’s ability to satisfy these demands will define the extent of future success

Source:Mintel

UK market forecast


Points for the future

• Mintel forecasts that the “Free From” market in the UK will reach £350m by 2012

• Growth will come from “restricters”, rather than allergic or intolerant consumers

• Note continued emotional weight behind media coverage of food allergies, celebrity focus, growing self-diagnosis…

• Price is still an inhibitor to growth

• Free from is perceived as “better for you”

• Free from foods are often organic/natural, free from animal by-products - “extra” attributes are critical for mainstream appeal

• Free from foods can benefit from the general wellness trend, and become part of the “cultural fabric”, like vegetarian foods

• The market is ripe (now more than ever) for consolidation


David [email protected]

Tel. +44-207-606-4533

www.gnpd.com

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David Jago FDIN Free From Seminar 2008 Free From: Market Perspective 1 ©2008 Mintel International...

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