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Free-from Foods - UK - December 2016

“The free-from market continues to see impressive growth. NPD has been a key part of recent growth, enabling the market to gain share of users’ spend through unlocking new occasions and encouraging trading up. High interest in products delivering on health, naturalness and portability highlight areas of innovation going forward.”

–    Anita Winther, Research Analyst

This report will cover the following areas:

  • High expectations of “clean label” in free-from
  • Sparking interest in non-users is crucial challenge
  • Free-from foods face competition from scratch cooking

Free-from foods are defined as foods that are manufactured and targeted specifically at consumers who suffer from food intolerances and/or food allergies or who are following avoidance diets. Foods that have been specially manufactured (eg pasta, bread) to cater for a gluten-free diet, for instance, are included within this definition.

Foods targeted at intolerance and allergy sufferers include:

  • Gluten-free: Gluten is found in a range of cereals, including wheat, barley, rye and spelt. Gluten-free products can contain other allergenic proteins from wheat.
  • Wheat-free: Wheat-free products can contain gluten from other cereals such as barley or rye.
  • Despite these exceptions, the majority of wheat-/gluten-free products are marketed as being both wheat- and gluten-free, as gluten is present in wheat.
  • Dairy-free/lactose-free: This category includes all cow’s milk alternative products, including lactose-free dairy products and non-mammalian milk alternatives (eg soya-based, rice-based and others).

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Table of contents

  1. 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

                                                                                                                                                                                                                                                                                Companies Covered

                                                                                                                                                                                                                                                                                To learn more about the companies covered in this report please contact us.

                                                                                                                                                                                                                                                                                Free-from Foods - UK - December 2016

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