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Free-from Foods - UK - December 2017

“The free-from category’s strong sales growth in recent years now stands vulnerable to the squeeze on household incomes, as 47% of free-from buyers spend less on these products when money is tight. However, opportunities remain for premium and ‘shortcut' products to do well as people cut down on going out.”

– Alice Baker, Research Analyst

This report examines the following issues:

  • Need for companies to demonstrate good health credentials
  • Premium products can succeed even as incomes come under pressure
  • Brands must find ways to appeal beyond their free-from status

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Table of contents

  1. Overview

    • What you need to know
      • Products covered in this Report
      • Executive Summary

          • The market
            • Media buzz and increased availability boost free-from sales 2012-17
              • Inflation to continue over 2017-22
                • Figure 1: UK retail value sales of free-from food and drink, 2012-22
              • Health credentials of exclusion diets called into question
                • Companies and brands
                  • Alpro continues to lead the free-from category in 2017
                    • Retailers lead on gluten-free bakery NPD in 2016/17
                      • Plant-based milks remain the main focus of dairy-free and L/N/R lactose NPD in 2016/17
                        • Tesco leads on dairy-free and L/N/R lactose launches in 2016/17
                          • Advertising spend rises, but at a slower rate than in previous years
                            • Alpro remains the top advertiser, with a focus on permissibility
                              • The consumer
                                • Half of UK adults report avoidance in their household
                                  • Figure 2: Avoidance of foods/ingredients, by reason, September 2017
                                • Rise in reported usage of free-from products
                                  • Health is a key factor for free-from food and drink
                                    • Few non-users have actively negative views
                                      • Consumer concerns about sugar affect free-from category
                                        • Figure 3: Behaviours relating to free-from food and drink, September 2017
                                      • Shoppers are divided on in-store positioning
                                        • Figure 4: Free-from food and drink buyers’ behaviours, September 2017
                                      • ‘Shortcut’ and premium products appeal widely
                                        • Figure 5: Users’ attitudes towards free-from food and drink, September 2017
                                      • What we think
                                      • Issues and Insights

                                        • Need for companies to demonstrate good health credentials
                                          • The facts
                                            • The implications
                                              • Premium products can succeed even as incomes come under pressure
                                                • The facts
                                                  • The implications
                                                    • Brands must find ways to appeal beyond their free-from status
                                                      • The facts
                                                        • The implications
                                                        • The Market – What You Need to Know

                                                          • Media buzz and increased availability boost free-from sales 2012-17
                                                            • Inflation to continue over 2017-22
                                                              • Health credentials of exclusion diets called into question
                                                              • Market Size, Segmentation and Forecast

                                                                • Media buzz and increased availability boost free-from sales 2012-17
                                                                  • Stronger growth in dairy-/lactose-free 2015-17
                                                                    • Figure 6: UK retail value sales of free-from food and drink, by segment, 2015-17
                                                                  • Inflation to continue over 2017-22
                                                                    • Income squeeze to hinder sales
                                                                      • Limited ability to find new users
                                                                        • Slowing growth predicted going forward
                                                                          • Figure 7: UK retail value sales of free-from food and drink, 2012-22
                                                                          • Figure 8: UK retail value sales of free-from food and drink, 2012-22
                                                                        • Forecast methodology
                                                                        • Market Drivers

                                                                          • Inflation hits the market
                                                                            • Income squeeze threatens category growth
                                                                              • Government considers withdrawing gluten-free prescriptions
                                                                                • Media buzz and celebrity endorsement buoy up free-from products
                                                                                  • Media backlash against clean eating in 2017
                                                                                    • Health credentials of free-from food and drink called into question
                                                                                      • Osteoporosis Society warns young people that they risk future bone fractures
                                                                                        • Scientific group advises against gluten-free diets without a medical need
                                                                                          • University medical department warns of risk of iodine deficiency from dairy avoidance
                                                                                            • European Court rules that dairy substitute products cannot use dairy-style names
                                                                                              • Serving suggestions and in-store positioning can help to address consumer uncertainties
                                                                                                • Vegan advertising campaigns attack the dairy industry
                                                                                                  • Dairy industry mobilises its forces
                                                                                                  • Companies and Brands – What You Need to Know

                                                                                                    • Alpro continues to lead the free-from category in 2017
                                                                                                      • Retailers lead on gluten-free bakery NPD in 2016/17
                                                                                                        • Plant-based milks remain the main focus of dairy-free and L/N/R lactose NPD in 2016/17
                                                                                                          • Tesco leads on dairy-free and L/N/R lactose launches in 2016/17
                                                                                                            • Advertising spend rises, but at a slower rate than in previous years
                                                                                                              • Alpro remains the top advertiser, with a focus on permissibility
                                                                                                              • Market Share

                                                                                                                • Alpro continues to lead the free-from category
                                                                                                                  • In-store positioning gives a further boost to Alpro
                                                                                                                    • Figure 9: Leading brands’ sales and shares in the UK free-from market, by value, 2015/16-2016/17
                                                                                                                  • Genius sees values rise on flat volumes
                                                                                                                    • Improved in-store visibility and NPD help Schär to grow
                                                                                                                      • Bfree gains distribution
                                                                                                                        • Own-label raises the competition for brands as retailers expand their free-from ranges
                                                                                                                        • Launch Activity and Innovation

                                                                                                                          • Free-from claims rise over 2013-16
                                                                                                                            • Gluten-free remains the primary free-from claim in 2016
                                                                                                                              • Figure 10: New product launches in the UK retail food and drink market with selected free-from claims, by claim, 2013-17
                                                                                                                            • Non-dairy claims rise sharply, though from a low base
                                                                                                                              • Gluten-free
                                                                                                                                • Retailers lead on NPD in 2016/17
                                                                                                                                  • Figure 11: Gluten-free product launches in the UK bakery market^, by top 10 companies, 2013-17
                                                                                                                                • Tesco adds premium free-from products
                                                                                                                                  • Morrisons promotes its new launches as a good value choice
                                                                                                                                    • Sainsbury’s debuts freshly-baked gluten-free breads
                                                                                                                                      • Leading players launch on-the-go gluten-free items
                                                                                                                                        • Genius unveils new look and half loaves
                                                                                                                                          • More artisan-style products in gluten-free
                                                                                                                                            • Warburtons removes Newburn name in rebrand
                                                                                                                                              • Baking mixes/ingredients lead in gluten-free bakery in 2016
                                                                                                                                                • Figure 12: Gluten-free product launches in the UK bakery market^, by sub-category, 2013-17
                                                                                                                                              • Companies promote health benefits to add permissible element
                                                                                                                                                • Delicious Alchemy targets special occasions with new cake kit
                                                                                                                                                  • Sweet biscuits retake the lead in NPD in 2017
                                                                                                                                                    • Mr Kipling extends into gluten-free
                                                                                                                                                      • Dairy-free and L/N/R Lactose
                                                                                                                                                        • Plant-based milks remain the main focus of NPD in 2016/17
                                                                                                                                                          • Organic brands innovate with ingredients and types
                                                                                                                                                            • Figure 13: Dairy-free and L/N/R lactose launches in the UK dairy market, by sub-category (sorted by 2016), 2013-17
                                                                                                                                                          • Nut milk yogurts make their UK debut
                                                                                                                                                            • Ben & Jerry’s almond milk ice creams arrive in the UK
                                                                                                                                                              • Unilever expands its dairy-free spreads range
                                                                                                                                                                • Tesco leads on NPD in 2016/17
                                                                                                                                                                  • Figure 14: Dairy-free and L/N/R lactose launches in the UK dairy market, by top ten companies (sorted by 2016), 2013-17
                                                                                                                                                                • Alpro unveils no-added-sugar yogurts
                                                                                                                                                                  • Organic brand Rachel’s makes its debut in the free-from category
                                                                                                                                                                  • Advertising and Marketing Activity

                                                                                                                                                                    • Advertising spend rises in 2016, though rate of growth slows
                                                                                                                                                                      • Figure 15: Total above-the line, online display and direct mail advertising expenditure by companies operating in the free-from food/drink market (sorted by 2016), 2013-17
                                                                                                                                                                    • Alpro retains its advertising lead
                                                                                                                                                                      • Go On yogurts reference health credentials to add permissibility
                                                                                                                                                                        • Breakfast campaign aims to appeal to variety seekers
                                                                                                                                                                          • Ice cream advert calls out the product’s reduced-sugar proposition
                                                                                                                                                                            • Continued emphasis on environmental credentials
                                                                                                                                                                              • Unilever continues to support Flora Freedom
                                                                                                                                                                                • Adverts for flavoured variants emphasise health and versatility
                                                                                                                                                                                  • Online advertising continues to focus on the environment
                                                                                                                                                                                    • Genius appeals to the senses in new online campaign
                                                                                                                                                                                      • Tesco puts emotional focus on fish fingers advert
                                                                                                                                                                                        • Sainsbury’s credits social media buzz as key to success of its cheese alternatives
                                                                                                                                                                                          • The Coconut Collaborative makes its outdoor advertising debut
                                                                                                                                                                                            • Nielsen Ad Intel coverage
                                                                                                                                                                                            • The Consumer – What You Need to Know

                                                                                                                                                                                              • Half of UK adults report avoidance in their household
                                                                                                                                                                                                • Rise in reported usage of free-from products
                                                                                                                                                                                                  • Health is a key factor for free-from food and drink
                                                                                                                                                                                                    • Few non-users have actively negative views
                                                                                                                                                                                                      • Consumer concerns about sugar affect free-from category
                                                                                                                                                                                                        • Shoppers are divided on in-store positioning
                                                                                                                                                                                                          • ‘Shortcut’ and premium products appeal widely
                                                                                                                                                                                                          • Avoidance of Foods/Ingredients

                                                                                                                                                                                                            • Half of UK adults report food/ingredient avoidance in their household
                                                                                                                                                                                                              • Figure 16: Avoidance of foods/ingredients, by reason, September 2017
                                                                                                                                                                                                            • Under-35s are particularly likely to report avoidance
                                                                                                                                                                                                              • Figure 17: Repertoire of foods/ingredients avoided in the household, September 2017
                                                                                                                                                                                                            • Dairy avoidance unchanged despite pro-vegan advertising campaigns
                                                                                                                                                                                                              • Red meat avoidance slips as media spotlight fades
                                                                                                                                                                                                                • Figure 18: Avoidance of foods/ingredients, by type, September 2017*
                                                                                                                                                                                                            • Types of Free-from Food and Drink Used and Bought

                                                                                                                                                                                                              • Labelling helps to drive increase in reported usage
                                                                                                                                                                                                                • …but some products enjoy notable usage outside of exclusion diets
                                                                                                                                                                                                                  • In-store positioning boosts visibility of free-from products
                                                                                                                                                                                                                    • Figure 19: Usage and buying of free from food and drink, September 2017
                                                                                                                                                                                                                  • Families are key users of free-from food and drink
                                                                                                                                                                                                                    • …as are under-35s
                                                                                                                                                                                                                      • Avoidance diets do not always help free-from products
                                                                                                                                                                                                                        • Ethical labels and meal deals are promising means to appeal to non-user avoiders
                                                                                                                                                                                                                          • Figure 20: Types of Free-from Food and Drink Used and Bought, September 2017
                                                                                                                                                                                                                        • Media and advertising buzz fuels rise in dairy substitutes
                                                                                                                                                                                                                          • Concerns around animal welfare and the environment are key motivations for dairy substitutes users
                                                                                                                                                                                                                          • Reasons for Eating/Drinking Free-from Food and Drink

                                                                                                                                                                                                                            • Media buzz strengthens free-from products’ health halo
                                                                                                                                                                                                                              • Companies must ensure their nutritional credentials are sound
                                                                                                                                                                                                                                • Figure 21: Reasons for eating/drinking free-from food and drink, September 2017
                                                                                                                                                                                                                              • Desire for variety is a key reason for using free-from food/drink
                                                                                                                                                                                                                                • Meal deals and discount vouchers should allow companies to tap into consumer interest in variety
                                                                                                                                                                                                                                • Barriers to Eating/Drinking Free-from Food and Drink

                                                                                                                                                                                                                                  • ‘Functional’ image lingers around free-from food and drink
                                                                                                                                                                                                                                    • Various options for companies looking to grow usage of free-from food and drink
                                                                                                                                                                                                                                      • Figure 22: Barriers to eating/drinking free-from food and drink, September 2017
                                                                                                                                                                                                                                    • Few non-users have actively negative views of free-from products
                                                                                                                                                                                                                                      • Weakened household incomes likely to hinder free-from products’ ability to find new users
                                                                                                                                                                                                                                        • Promotions could allow companies to overcome the price barrier
                                                                                                                                                                                                                                        • Behaviours relating to Free-from Food and Drink

                                                                                                                                                                                                                                          • Consumer concerns around sugar affect free-from products
                                                                                                                                                                                                                                            • Figure 23: Behaviours relating to free-from food and drink, September 2017
                                                                                                                                                                                                                                          • Opportunities for expansion in L/N/R sugar versions
                                                                                                                                                                                                                                            • Premium products can capitalise on consumer interest in meal deals
                                                                                                                                                                                                                                              • Meal deals can allow companies to attract ‘missing’ potential users
                                                                                                                                                                                                                                                • Ethical labels have wide appeal
                                                                                                                                                                                                                                                • Free-from Food and Drink Buyers’ Behaviours

                                                                                                                                                                                                                                                  • Opinions are divided on in-store positioning
                                                                                                                                                                                                                                                    • Dedicated aisles can help supermarkets to showcase their free-from ranges
                                                                                                                                                                                                                                                      • Figure 24: Free-from food and drink buyers’ behaviours, September 2017
                                                                                                                                                                                                                                                    • Weakened household incomes are a threat to category growth
                                                                                                                                                                                                                                                      • Opportunities remain for ‘shortcut’ and premium products
                                                                                                                                                                                                                                                      • Users’ Attitudes towards Free-from Food and Drink

                                                                                                                                                                                                                                                        • Short ingredients lists are favoured
                                                                                                                                                                                                                                                          • Opportunities for clean label products
                                                                                                                                                                                                                                                            • Explaining unfamiliar ingredients should give extra reassurance to consumers
                                                                                                                                                                                                                                                              • Figure 25: Users’ attitudes towards free-from food and drink, September 2017
                                                                                                                                                                                                                                                            • ‘Shortcut’ products for cooking/baking appeal to many
                                                                                                                                                                                                                                                              • Products seen as close to homemade should especially benefit
                                                                                                                                                                                                                                                                • Premium prepared meals can step in where restaurants are seen to fail
                                                                                                                                                                                                                                                                  • …and can do well even where incomes are squeezed
                                                                                                                                                                                                                                                                    • Premium products are rare within free-from
                                                                                                                                                                                                                                                                    • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                                                                                                                                        • Abbreviations
                                                                                                                                                                                                                                                                          • Consumer research methodology
                                                                                                                                                                                                                                                                          • Appendix – Market Size and Forecast

                                                                                                                                                                                                                                                                              • Figure 26: Forecast of UK retail value sales of free-from food and drink, best- and worst-case, 2017-22
                                                                                                                                                                                                                                                                            • Forecast methodology

                                                                                                                                                                                                                                                                            Free-from Foods - UK - December 2017

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