A demand-and-supply analysis of prospects for the Australian health grains industry
by Grant Vinning and Greg McMahon, Asian Markets Research Pty Ltd
RIRDC publication no. 05/011
What the report is
Many grain and non-grain sources provide gluten-free raw ingredients. Of the grains, seven so-called ‘health grains’ were chosen for study—amaranth, buckwheat, millet, quinoa, sesame, sorghum and teff. This report provides data on the grains’ production, health attributes, use and trade, both overseas and in Australia. Five of the grains—amaranth, buckwheat, millet, sesame and sorghum—are currently grown in Australia. Buckwheat production is oriented to the Japanese soba market, and millet and sorghum production is oriented to non-human consumption.
Who is the report targeted
The recommendations in this report will assist the Australian health grains industry to position itself to a wider market.
Coeliac disease is characterised by an inability to digest gluten. People with the disease who eat products containing gluten can experience adverse reactions ranging from discomfort to bordering on life threatening. Wheat is the most common, although not the only, source of gluten. Coeliacs have learnt to avoid wheat-based products, but they have also had to learn about gluten’s pervasive presence in the entire food spectrum.
In addition to coeliacs, there are other people for whom a gluten-free diet is recommended, and there is a proportion of the population who, for various reasons, choose to consume gluten-free foods. It is estimated that the Australian market for gluten-free products amounts to about a million consumers.
This project is a market analysis of five "health grains"; amaranth, buckwheat, millet, quinoa, sesame, sorghum and teff.
Asian Markets Research was responsible for this project. In Australia, interviews were conducted with about 50 producers of health grains, primary processors (such as millers), food manufacturers and retailers. In the United States, Canada, France, Switzerland, England, Ireland and Wales, similar interviews were conducted with stakeholders along the supply chain. An important part of the North American research was attending, in March 2004, the Natural Products Expo in Anaheim, California, which is possibly the largest gathering of people involved in the natural foods industry. Many interviews were conducted at the Expo.
In Australia, as overseas, the demand for gluten-free products will continue to show strong growth.
Part of the reason for this is that increases in demand are being measured from a very low base. But the rate of growth is not even across all gluten-free products: the pattern appears to be that stronger growth—between 10 and 20 per cent annually—is associated with higher levels of value-adding. The high rate of growth also disguises a significant degree of substitution as coeliacs stop making their own foods with minimally processed gluten-free ingredients and move to higher value–added products. Annual growth in the minimally processed products is about 5 per cent.
On the basis of investigations in stores in the United States, Canada, England, Ireland, France and Switzerland, it would appear that Australian coeliacs have access to a smaller range of higher value– added gluten-free products.
It is expected that Australia will follow the trend identified overseas, where the evidence suggests that annual growth rates for sales of gluten-free foods will start to level off in the near term—say, five years. This is a result of the increasing number of coeliacs becoming ‘overt’ as a result of publicity making consumers aware that they have the disease. Improved and cheaper methods of detecting the disease will also lead to an increase in the number of ‘covert’ coeliacs becoming overt. As the number of overt coeliacs, as well as others who for medical reasons must consume gluten-free foods, reaches the estimated absolute number, the overall rate of growth for gluten-free foods will slow, eventually paralleling growth rates for the general population.
This project also involved determining where gluten-free foods can be obtained. The sources range from health product stores to pharmacies, lifestyle stores, conventional retailers and food service outlets. Lifestyles stores provide the bulk of the gluten-free foods currently available, and it is expected that this will continue in the future.
For reasons of consistency in supply and quality, the Australian food manufacturers interviewed as part of the project preferred to import amaranth, quinoa and even buckwheat. No data on precise volumes could be obtained. If production challenges can be overcome, however, there is in Australia an inherent preference for Australian-grown produce. Existing production of millet and sorghum in Australia is considered adequate to meet any induced demand for gluten-free products, even though varieties different from the current ones might be involved.
The gluten-free grain considered to have the greatest potential is quinoa. In the overseas countries studied for the project, it was most consistently mentioned by retailers as the health grain whose products are most often sought. Coeliac societies in a number of the countries also made specific reference to quinoa. The same applied in Australia. Amaranth and buckwheat were the next most commonly mentioned gluten-free grains in Australia. Spelt—whilst technically a wheat and thus not part of the study—was also often mentioned.
Implications for relevant
Three other gluten-free grains were excluded from the study—corn, rice and soy. In addition, glutenfree starch from potatoes, which is readily available, was excluded. Producers of the seven identified health grains must be aware that production from any one of these four alternative sources dwarfs the health grains’ combined production. More than half the Australian food manufacturers interviewed for the project mentioned using at least two of the alternative products. Overall, corn starch and potato starch were the most favoured non–health grain sources of gluten-free ingredients. Provided they do not contain any other gluten-containing products, products made from the health grains could readily be declared gluten free. This is not happening in Australia and overseas because of concerns about litigation.
The statement that a product is free of gluten is a declaration of purity. As noted, if a coeliac inadvertently consumes gluten the consequences can be serious. Inadvertent consumption could occur as a result of inadvertent contamination of gluten-free products with products containing gluten. Such contamination can occur all along the production chain. For example, the machinery used to harvest a gluten-containing grain might be used to harvest a gluten-free grain; when milling, inadvertent mingling of gluten-free and gluten-containing grains might occur; and in manufacture, especially at the higher levels of value-adding, there is the question of the gluten-free status of a very large number of co-ingredients. Given the legal requirement for purity, food manufacturers who deal with both gluten-containing and gluten-free products are very sensitive to the possibility of cross-contamination.
Until these manufacturers can guarantee the isolation of the two streams of products and operations, they will be unwilling to declare their products free of gluten.
A number of factors were identified as influencing the future marketing of gluten-free foods, primarily the following:
It is likely that growth in demand for the seven designated health grains will not be based solely on the fact that they are free of gluten. This is because there are a large number of products that can make that claim. In the main, though, what those other products cannot claim is the levels of nutrition contained in most of the designated health grains. It is the promotion of these values—rather than sole dependence on the gluten-free attribute—that will determine the success of the health grains.
The same advice is relevant to the marketers of gluten-free foods. The evidence from overseas is that, whilst manufacturers should state that the product is gluten free, a host of other attributes should also be declared—for example, ‘yeast free’, ‘egg free’, ‘dairy free’, ‘fat free’ or at least a defined percentage of freedom from fat, and even ‘produced in a facility free from …’ If these two broad recommendations were to be adopted, the market that will open up for the designated health grains will be much larger than that estimated as a result of work done for this project.