'Gluten-free' is the way to go for food companies and retailers

Retailers and food companies are realizing it makes business sense to address the needs of millions of people who cannot tolerate gluten, a protein found in wheat and some other grains. Gluten-free versions of many foods are usually expensive, but sales are soaring.

Two-and-a-half years ago, Pam Hildebrandt of Roseville stopped eating or using anything that contained wheat or other grains with gluten. Or at least she tried to.

"I get very sick when I have the smallest amount," she said.

Hildebrandt is gluten-intolerant, as are her youngest son and father-in-law. That means they cannot enjoy the bread, pizza, pasta, cakes, cereal and many other foods that most people take for granted -- not if the foods contain wheat or other grains.

"Wheat is everywhere," Hildebrandt said. "It's amazing. My lip balm had wheat in it."

So Hildebrandt does a lot of shopping here at Tailor Made Nutrition in Woodbury. The small store stocks about 4,000 packaged and prepared foods free of gluten, far more than most stores carry.

"The main reason we put this together was to really address the growing need for a wide selection of healthy gluten-free foods," said Mark Norman, one of the owners of the store, which opened about four years ago. "We saw an explosion in referrals from practitioners who put their patients on gluten-free diets."

But Hildebrandt says mainstream grocers are also stocking more things she can eat.

"Gluten-free foods have become a lot more available," she said. "Some of the major companies have got into it. You can find things in regular grocery stores, at Target and elsewhere."

Medical experts say many, perhaps most, people giving up gluten at this point have no medical reason for doing so. They're just following a fad diet. By some estimates, that may be as many as 35 million people.

But the diet is medically essential for people who can't tolerate the protein -- at least 7 percent of Americans. More people are learning they cannot eat gluten as physicians become better at detecting when the ingredient is making patients sick. That's giving food businesses confidence that demand won't fade after the fad does.

"We know there's a growing market," said Rebecca Thompson, marketing manager for GlutenFreely.com, which sells gluten-free products produced by General Mills and other companies. "We try to serve mainly the people who have the diagnosed condition, people who have to eat gluten-free lifestyle on a daily basis."

Retailers are responding to the market as well. Target stores with full-service grocery departments carry hundreds of gluten-free foods.

Gluten-free sales are soaring at Cub Foods stores. The grocery chain has a website that helps shoppers create shopping lists of items that don't contain gluten. Spokesman Luke Friedrich says almost every Cub now has a section dedicated to the category.

"We've seen sales increase consistently the last few years between 30 and 50 percent in that product category," he said. "So, a major customer segment for us and certainly something that we want to address."

A recent report by the Frost & Sullivan consulting firm estimates retail sales of packaged foods free of the protein are approaching $2 billion a year in the U.S. Anjaneya Reddy, an analyst with the firm, says sales are growing at a double-digit pace annually, much faster than the growth rate for the lactose-free and diabetic foods market.

"It is market where you see a lot of action happening right," he said. "But every market has its own challenges. Getting the same sensory or taste for the consumer is a lot tougher."

Gluten makes baked goods soft, chewy and moist. The protein is also used as a thickener, binder or flavor enhancer in soups, salad dressings, marinades, ice cream and many other foods. Traditionally brewed beers also contain gluten.

Gluten-free packaged foods are selling fast despite their generally higher cost, both for producers and consumers. Substitute flours and other ingredients can be more expensive, and production costs tend to be higher as well. As a result, a small loaf of bread, for instance, may cost $6 or more.

"The mere fact you see more and more labels 'gluten-free' on products would suggest people who have put their money there have made some pretty careful assessments about the fact that there is a growing market for this kind of product," said University of Minnesota professor Benjamin Senauer, who teaches courses in food marketing and consumer behavior.

He says niche markets can be very profitable, at least early on.

"They may not be that large," he said. "But you are able in these niche markets to typically charge a price premium, like with organic."

But as the market grows, prices will likely fall.

"The more you produce of something, the less it costs in general in an industrial society, if you're talking about processed products," Senauer said. "And there's going to be increased competition."

Some 23 million Americans have no choice right now but to pay up when it comes to gluten-free foods.

Gluten can clearly make them sick. And 3 million to 4 million of them have celiac disease, which causes the immune system to attack the body itself.

Dr. Alessio Fasano, a University of Maryland expert on gluten-related health problems, founded the university's Center for Celiac Research.

He says celiac disease can manifest itself in many ways including severe weight loss, fatigue and abdominal pain. Those symptoms could stem from any of a number of problems. But if a person with celiac disease doesn't get treatment, the disease can slowly kill him or her.

"They [people with the disease] can develop serious consequences all the way to cancer and death," he said. At General Mills, employees and customers with celiac disease helped spur the company to develop baking mixes and versions of Chex cereal without gluten.

Liz Mascolo, the associate marketing director for Chex, said: "The No. 1 reason people were calling us was to ask if our products are gluten-free. We looked at the business opportunity, and we decided to go for it."

Chex sales rose 13 percent in the past year or so, as more gluten-free versions of the cereal debuted. General Mills' brownie, cake, cookie and baking mixes are also among the nation's top 10 selling gluten-free packaged foods.

The company won't disclose sales for its approximately 300 gluten-free products. But the food giant says more are in development, given the appetite consumers have for them.

"We do a lot of surveying of what products are doing well in the marketplace, and we're looking to replicate those," said Helen Kurtz, General Mills' marketing director for baking. "We also really listen to what our consumers are asking for. What is so gratifying for me to see every month -- when I read the consumer comments -- is how grateful consumers are. They can have a birthday cake like everybody else. They can have Sunday morning pancakes like everybody else."

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