The changes many of us are making in our diets are not only reshaping our bodies and our outlook, they are also having an industrial and economic effect—reorganizing the way our supermarkets are set up, reallocating market share, and redirecting resources to new investments. The adoption of the gluten-free diet by a large cross-section of buyers, for instance, is affecting supermarket layouts and the types of products being produced and placed on shelves. And the paleo diet, if it continues to gain momentum, could probably lead to even more major shifts in the grocery sector. (For more, see: Evaluating Grocery Store Stocks.)
The Signs of Change
A quick look at the numbers shows why the gluten-free diet is having such an impact on the executive decisions being made at the highest levels in the food industry. The results of a 2013 survey of 2000 Americans by market research firm Packaged Facts indicated that 28% of Americans had decided to reduce their consumption of breads or baked goods because of wheat, and 23% were avoiding breads or baked goods, in an effort to not consume gluten. Packaged Facts estimated the size of the gluten-free market at $4.2 billion in 2012, but forecasted that there would be double-digit growth. Euromonitor, another research company, which classified as “gluten-free” only those foods which were specifically created as substitutes for baked goods and pastas that are typically made of flour, noted that global gluten-free food sales were $2.6 billion in 2014. Over in Britain, it has been reported that bread sales declined by 8.9% and sales of pasta by 4.2% in 2014, while dairy-free and gluten-free products have become mainstream.
In fact, CEO of Boulder Brands, Steve Hughes, has been quoted as saying that 5-10% of food in every category that involves wheat as a key ingredient will “go away or will become gluten-free.” And it seems that mainstream retailers have fully recognized the impact of this new diet, and are making an effort to adjust to the gluten-free trend, and the way it has been reshaping patterns in sales. (For more, see: The Most Profitable Grocery Stores.)
Many retailers, for instance, have been using merchandising systems and customized shelf tags to let customers know of their gluten-free products; and gluten-free sections in frozen bakery and grocery aisles are being created. Also, according to a survey conducted by the nutrition trade magazine, Today's Dietitian, the supermarket dietician is “the fastest growing job classification in grocery stores nationwide.” It's even been projected that gluten-free products will soon be sold in other segments of the food sector, including possibly drug stores and food service businesses, and some analysts have speculated that if a gluten-free burger that is sufficiently tasty is introduced at one big fast food chain, the other fast food chains will also possibly offer something similar. (For more, see: "Healthifying" The Fast Food Market.)
What's even more notable, though, is that the gluten-free trend has had an impact much further up the food industry chain – in the manufacturing sector, where careful planning must be made about the makeup of products, based on projections that extend beyond the short timelines of supermarkets and temporary offerings of fast food stores. Those businesses that are responding to the trend include large multinational corporations such as Kellogg Company (K) (Rice Krispies) and Campbell Soup Company (CPB) (various soups). It is quite possible that these companies might be drawn to the potential for higher markups and profit margins, with gluten-free foods 242% more expensive than wheat-based versions of the same product, and up to 455% more expensive in some cases in 2008, according to one study published in the Canadian Journal of Dietetic Practice and Research. (For more, see: Breakfast Still Kellogg's Most Important Meal.)
Behind the Change: Behaviors and Attitudes
What are the key underlying consumer behaviors and preferences driving such change? A new trend report from Today’s Dietician shared the results of a survey that was conducted of 500 registered dieticians to pinpoint the foods customers would be eating, as well as those that they would try to avoid in 2014. The results of the survey showed that certain food and nutrition trends that were previously seen only among buyers known for their nature-based lifestyles, are "moving into the mainstream limelight.” Dieticians are increasingly reporting that health is now a serious consideration in the grocery store. Social networking is playing a major role in driving these trends. Finally, and quite significantly, dieticians are noting that shoppers are being drawn to more eco-conscious foods.
This points to potentially more profound shifts in shopping. While those avoiding gluten are doing so for health reasons (bolstered by the theories of certain books and studies that claim humans have not adapted to process gluten and would be better off without it), eco-consciousness goes deeper and reflects concerns about the very source of foods and the processes by which they are procured. Another increasingly popular trend, the paleo diet, tends to lean toward both of these. The paleo diet tries to recreate the eating habits of pre-agricultural hunter-gatherers, and many blogs and experts in the field encourage those following the diet to purchase food from farmers markets rather than supermarkets.
The Bottom Line
What would a spreading trend like the paleo diet portend for the supermarket sector? It remains to be seen, but already, it can be noted that changing perceptions and approaches to food are affecting consumer choices and supermarkets, and manufacturers are taking note.