How Is Gluten-Free Faring In Europe?


Much of the commentary around the rise of gluten-free has focused on the US, a market that alone accounted for a quarter of global sales in 2014. But what about the opportunities in Europe? The UK, home to its own well developed gluten-free category, also attracts column inches and, despite some concerns about the maturation of the market still offers opportunities.

On the continent, a clutch of western European countries are home to categories at different stages of development. In the first part of our management briefing looking at Europe’s gluten-free sector, which is part of the wider free from category, we provide a run-down of the region’s major markets – and hint at the countries to watch.

Italy

When measured by retail sales, Italy is the largest market for gluten-free food in Europe.

Euromonitor International estimates sales will reach almost £209m (US$326.2m) in 2015, with a notable gap to the next biggest market, the UK, where sales are forecast to hit just shy of £136m.

A jump in the number of consumers with coeliac disease has driven the recent growth of the market in Italy. Hamish Renton, MD of gluten-free consultants HRA Marketing, says the number of diagnosed coeliacs in the country has doubled since 2007.

According to Mintel analyst David Jago, 30% of gluten-free food is sold through the modern retail channel: other outlets, including pharmacies, account for the majority of the market. However, the category is growing rapidly in grocery stores, with sales in supermarkets up 15% last year – and up 30% in discount stores.

Italy typically leads its European peers when looking at the consumer penetration of gluten-free foods, Jago says, pointing to data across four key segments – bread, cereal, pizza and pasta.

Renton notes pasta accounts for around a third of gluten-free sales in Italy and is the fastest-growing segment in the category. Local pasta giant Barilla is among those with gluten-free lines available in Italy.

Looking to the rest of the decade, total gluten-free sales in Italy are, according to Euromonitor forecasts, set to hit £251.7m, with the country remaining the biggest gluten-free market in Europe.

However, not all industry watchers are convinced Italy could offer significant opportunities to manufacturers looking to enter the country’s gluten-free sector. Bob Trice, the former MD of Dr Schär’s UK arm and now a gluten-free food industry consultant, suggests those looking at markets in Europe steer clear of the market. “Italy is pretty well covered with dominant manufacturers,” he says.

The UK

Aside from the US, the UK has been the gluten-free market in the headlines in recent years.

The second-largest market in Europe, sales in the UK rose at a compound annual growth rate of almost 11% between 2009 and 2014. According to Euromonitor, sales hit GBP140.8m last year, versus just £76.4m in 2009.

At Mintel, Jago notes 13% of the UK population say they are avoiding gluten, a percentage higher than in Germany, France, Spain and Italy.

By 2019, Euromonitor estimates the UK gluten-free food market is estimated to be worth £169.2m, a CAGR of 3.7%.

There are, according to some in the industry, signs the UK gluten-free sector is maturing. “The growth of the gluten-free category from a space perspective is probably close to topping out so it’s down to the retailers to better category manage that space,” Gareth Toms, International Commercial Director at Mrs Crimble’s, the UK’s largest gluten-free brand by sales, says.

For the full interview with Gareth Toms, in which he discusses Mrs Crimble’s plans for growth in the UK and abroad, follow the link.

Growing scrutiny over the ingredients of some gluten-free products, particularly in bakery and adjacent segments, is fuelling some anxiety and there are some concerns in the sector that, overall, the prospects for the category in the country are perhaps not quite as rosy as they once were.

However, the UK still presents openings, with the foodservice channel offering the most potential for growth. Coeliac UK says the gluten-free category is estimated to be worth £100m in the foodservice sector, although some industry watchers believe that may be a little high at present. Whatever the debate on figures, there are openings in foodservice – not just for own-label bakery or pizza manufacturers – but for packaged snacks business.

There are, of course, still opportunities in retail. While bearing in mind the challenge of a shorter shelf life, Trice insists there is an “opportunity to crack” in fresh food, with products like pasta meals and pizza, while he suggests the next stage of development for gluten-free bread could, although some way off, come from in-store bakery.

And the increasing attention on what goes into a gluten-free product could offer opportunities for manufacturers to work to develop lines containing less fat, sugar and/or salt.

Germany

Number three by sales, Germany is held up as one of the more attractive markets in Europe’s gluten-free sector.

“Germany was – is – one of the biggest, that’s seen very good growth and it’s a very promising market as it develops quite substantially,” Trice says.

Among markets on continental Europe, bread consumption stands out in Germany, with stats from Mintel showing just short of 8% of consumers eat gluten-free bread, a rate higher than in Italy, Spain and France.

Renton points to the development of the gluten-free snacks in Germany. “Snacks is a quarter of the market and it’s one of the very fastest-growing segments,” he says. Reflecting on Germany more broadly, Renton adds: “You can’t look at the European market, without looking at Germany. In many ways, Germany is where it began, Germany is huge for organic. It’s the third-largest market, the Germans have the population, they have the spending power and they have the routes-to-market as well.”

Like the UK, Germany has seen some of its major grocers enter the category. “A couple of years ago in Germany some of the big retailers decided to look at gluten-free ranges and actually went into it in a quite a big way, so that’s changed the market dynamic somewhat but has also led to quite substantial expansion,” Trice says.

Gluten-free sales in Germany stood at £116.8m in 2014, according to Euromonitor, which forecasts the market will rise to £143.4m in 2019.

France

In relative terms, gluten free took longer to take root in France than in other European markets. The Euromonitor data for 2009 sees France ranked outside the top nine markets, behind Austria, Finland and Norway.

Renton says the relatively small size of France’s gluten-free category, compared to some of its European neighbours, is a curiosity. “This is fairly surprising considering the potential for high end, health foods in a relatively strong economy. The French love of organic products also makes it surprising with so many gluten-free products also organic.”

However, in the five years to 2014, gluten-free sales more than trebled, taking France to fourth spot. Renton says: “Gluten-free bakery is a particularly strong growth area with ancient grains such as amaranth, spelt and quinoa gaining popularity. There is a lot of NPD ongoing in gluten-free with many food manufacturers offering gluten-free alternatives to their original products and private label in retailers such as Casino Group and Carrefour.”

For Trice, France has not realised its potential – “there are not many manufacturers that I’ve seen in France that have the sort of credibility Dr Schär has across a variety of products” – and insists, while retailers have started to get involved in private label, “I don’t see it being very, very successful yet”.

However, he adds: “France is to me the sleeping giant. I think there’s definitely some room there because there are some big retailers in France.”

According to Euromonitor, sales in France are set to double again by 2019, hitting £108.5m.

Spain

Growth in Spain has been solid but not quite at the rates of its peers in Europe’s top four gluten-free markets; in fact, according to Euromonitor, the country was the sixth largest in the region in 2014, with Sweden fifth.

Spain’s gluten-free category generated a compound annual growth rate of 3% from 2009 to 2014 – compare that to the 6% in Germany or 5% in Italy – let alone the 24% in France or 11% in the UK.

“There has been steady growth in the Spanish market. One of the themes that’s holding back the Spanish market is there’s not enough good products on sale. We need more brands to come on to the Spanish market and Spanish consumers will respond,” Renton says.

Euromonitor contributing analyst Simone Baroke says “anti-gluten awareness is growing” but suggests traditional eating habits are perhaps more entrenched in Spain than in markets like the UK and Germany. “Ham is considered a health food here, and that’s no exaggeration. With regards to gluten-containing foods, bread is served with every meal. It’s not only hard for people to let that habit go, but most will simply not accept that this could be in any way bad, because people have eaten like this for generations, and it’s not done them any harm.”

However, growth is forecast to accelerate and Euromonitor predicts Spain will usurp Sweden by 2019, with sales of £48.2m

Spain’s largest grocer, Mercadona, has invested in gluten-free, rolling out an extensive own-label range. It is a sign, industry watchers say, of the prospects of the category in Spain. “When a retailer like that takes it seriously, the whole market starts to pick up,” Trice says.

Beyond Western Europe’s Major Markets

Norway

In 2009, Norway’s gluten-free market was half that of Sweden but sales had more than doubled by the end of 2014, closing the gap significantly with its neighbour.

Euromonitor forecasts Norway’s gluten-free sales will almost double again by 2019 to £70.4m, making the country the fifth largest in the sector in western Europe.

A sign of the development of Norway’s gluten-free category came last year when domestic food giant Orkla, which had sold gluten-free bakery lines in the country since the 1970s, extended its range into meals. Orkla launched a gluten-free pizza under its Grandiosa line and a lasagne under its Toro brand.

Stefan Anbro, a Euromonitor analyst covering the Nordic markets, says the entry of Grandiosa will drive the category’s growth. “Grandiosa is an extremely well-known mainstream brand in Norway, ranking first in total ready meals. As such the entry of this brand into a niche category like gluten-free food is expected to be a strong driver for the whole category. More launches can be expected over the forecast period. Consequently, the major part of the forecasted growth for gluten-free food in Norway stems from gluten-free ready meals.”

As with other markets in Europe, the demographics suggest the gluten-free category has age on its side. According to Norway’s national institute for consumer research, 17% said they had tried a gluten-free diet in 2013. Among respondents aged 15-24, the proportion was 32%.

Poland

Eyes are turning to eastern Europe as a region. Gluten-free remains in its early stages; according to stats from VisionGain, sales stood at US$200m in 2014. However, it forecasts sales will rise to $333m in 2019 – and $500m by 2020.

Poland, the Czech Republic and Hungary have been touted as markets to watch but it is Poland that a number of industry watchers specifically point to.

Close to one in ten Polish consumers – the same level as in Italy – say they follow a gluten-free diet, according to Mintel’s Jago, giving some indication of the promise of a market still in its nascent stages.

Trice says the development of gluten-free in Poland reminds him of when he was introducing breakfast cereals into the market. “There was a tiny, tiny local market and, once the bigger international brands started coming in, the market rocketed – and it’s starting to see the same in gluten free,” he says. “There are a couple of local bakers in Poland that are producing good quality products. The issue that manufacturers have got in Poland is price. It’s a very, very low price market and being able to produce good quality bread, especially, at such prices is always a challenge.”

If you wish to open up a conversation about how gluten-free is faring in Europe, contact us by email, phone or by filling out an online form.

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