Sensitive market

There is a lot that non-allergy sufferers take for granted -- the odd takeaway or meal out, for example. Hazel Gowland, food adviser for the Anaphylaxis Campaign​ and who herself has a nut allergy, says: "I won't eat out in a Chinese or Indian restaurant. So I don't mind paying a bit more for a retailer version. You know it's been checked out and you trust it."

Mintel's last available figures estimate that the overall 'free-from' market was worth £55.6m in 2002. The soya-based dairy-free sector alone was valued at £24.8m for that year, and gluten-free at £20.6m.

But there are few figures available when it comes to verifying whether the sector's dizzying growth at the beginning of the decade has been sustained. Certainly, when it comes to NPD, some of the larger players appear to be highly selective about their investment.

Greencore Cakes and Desserts has set up a nut-free production zone at its facility in Hull. But the focus on celebration cakes suggests the company sees the greatest potential among consumers who fear allergies rather than those who necessarily suffer from them.

Jonathan Grant-Nicholas, director of corporate affairs at Greencore, explains: "Nut allergy is a big issue for children. You don't know whether the kids coming to your child's birthday party may have an allergy. Even the parents may not know about it. So this gives you a much wider audience, and this is by far our largest free-from area."

For the moment, however, it is the only one. While creation of a good-tasting nut-free cake is quite feasible, other allergy-free areas pose more of a challenge, says Greencore, which trialled a range of gluten-free sandwiches in early 2004. "Frankly, they tasted different," says Grant-Nicholas. While Greencore has a watching brief when it comes to dairy-free, gluten-free and wheat-free foods, it has no immediate plans to produce in these areas. "The lack of reliable sales data in this sector is not helpful," Grant-Nicholas adds. "But our own experience suggests that we have not been setting the world alight."

Nevertheless, a raft of companies are now exploring free-from opportunities, with this month seeing a major launch in the luxury ice cream market from Fayrefield Foods, which is rolling out new gluten and lactose-free lollies at 200 Sainbsury stores. OK Foods is also developing new ranges in these sectors. In July, it will launch low-fat fruit fingers in Cherry & Coconut and Cranberry & Raisin. With less than 3% fat, they are also gluten, wheat and dairy-free. Launched at the same time will be cake slices and sponge puddings.

The company, which is part of the Bells of Lazonby group, insists that the taste and texture of its free-from products are as good as mainstream brands. The reasoning is that, if there is one coeliac sufferer in the family, the rest of the household will be able to eat the same food -- and enjoy it.

No substitute for real thing

However, other manufacturers claim the taste, texture and mouthfeel of the real thing is difficult to replicate without substituting one ingredient with a whole host of others.

Grant-Nicholas says: "The whole trend in the food industry is towards more 'natural' products and fewer ingredients. There is a danger of being dragged down the path of reproducing textures and flavours in the lab."

He suggests a compromise: "At Greencore, we're looking at product lines that could be mainstream but are also free from these ingredients.That's our Holy Grail."

In many ways, smaller producers are better-placed than larger firms to supply this particular market in the volumes it requires. Pork sausage manufacturer Musk's of Newmarket launched a gluten-free product two and a half years ago, substituting bread with rice in the recipe. Md Chris Sheen feels that the gluten-free version lacks some saltiness that the bread added, bringing out the flavour. Nonetheless, he says, it has great taste and texture and is listed with both Waitrose and Sainsbury. Gluten-free now accounts for 20% of Musk's business.

In this small-scale Efsis-accredited operation, the mincer and sausage machine are washed down every night. According to Sheen, this procedure is enough to meet requirements for gluten-free production, which takes place first thing in the morning. His biggest headache, it seems, is packaging costs for short runs of product.

The issue of clean-down is obviously of vital importance to the sector. Gowland says that much of the advisory work she does with larger manufacturers involves the practical considerations of using a mainstream product line for free-from variants.

"Clean-in-place is good, but not always possible," she says. "So a lot of the questions are to do with, for example, how many purges of saline you have to push down a line before it is fit for lactose-free production." Other key areas for the future expansion of this sector include the development of tests for allergens on the production line and within ingredients.

Where dedicated facilities are the preferred solution, the costs tend to favour the larger manufacturer. Elizabeth Lyle has her own business producing celebration cakes, both mainstream and free-from, and is about to move into new premises. One pressing decision is whether to create a separate nut, gluten, egg and dairy-free zone. Quite apart from the additional costs that this would entail, Lyle says she needs to consider carefully the legal and quality-control implications of free-from production for retail rather than for private customers.

Legal nightmare

And with a new European Union directive on allergen labelling coming into force later this year, regulatory considerations are not only hitting manufacturers. Says Grant-Nicholas: "This will have an effect on the future of NPD in this area through the tighter quality control demands it imposes on raw material suppliers. Because of these pressures, a few may opt out of supplying this sector altogether."

Greencore says it has detected signs of a similar wariness among retailers. So far, the larger chains have weighed the relatively small size of the allergy-free market against the higher prices it commands -- and the high growth rates that have been projected.

"We believe it is a challenge for the bigger retailers," says Grant-Nicholas. "They don't want to confuse their consumers and break up the normal flow through the store."

On the other hand, there are some signs that the free-from market is starting to segment itself for the supermarkets in much the same way as other mainstream categories. One manufacturer of baked goods has a mid-market brand which finds its way into some of the chains. But it also has a more premium organic range -- with the same free-from credentials -- which, says the company, is a good fit with other brands marketed by Waitrose and, to some extent, Sainsbury. The positionings and price points are quite different.

In fact, the specialist sector may end up finding its retail niche away from the multiples. Given the premium attached to shelf space and replenishment cycles, Grant-Nicholas sees the small volumes of free-from ranges becoming a problem for the big supermarkets. "The specialist health food chains are better at dealing in smaller numbers, and this is reflected in the price," he explains.

Paul Andrews has only been running the buyallergyfree.com website for five months. But with a long career at Spar behind him, he already has a feel for the potential it offers. "The sector is very disorganised, but there is an opportunity for it to become a strong niche market if it is done professionally."

So could small-scale, even dedicated, retail be the answer; bricks-and-mortar or web-based? Whatever sales channel takes up this challenge, the indications are that it will need a much broader range of products to fuel its success.

Manufacturers will be balancing the need for tighter quality control, better taste and texture, and relatively small volumes against higher price points and, potentially, rock solid consumer loyalty.FM