Free-from 2022: Specialist diet brands hit by price squeeze

Given the economic climate, it’s little surprise own label’s share of free-from is rising. It’s up from 13.3% in 2021 to 13.9%. Value sales have grown 6.8% on volumes up 2.1% – far outpacing the overall category’s 2.1% gain in value and 4.4% loss in units.

The success for private label comes as big-name brands register wildly divergent fortunes. At the top of the chart is Alpro. Its £17.3m loss is indicative of the fortunes of several plant-based dairy alternative brands, suggests NielsenIQ analytics executive Ishita Gupta. “Loss in demand and distribution have driven the negative growth of Alpro, Koko and Rude Health.”

Number two player Oatly has kicked against the pricks, staying in the black and growing volumes by 2.8%. Interestingly, the plant-based milk maker has also seen its average price dip 0.8%. That’s another example of Oatly ploughing its own furrow, as alt-dairy rivals such as Alpro, Califia Farms, Koko and Jord all register higher prices.

“We understand when the prices of products increase, this can be frustrating for shoppers,” says a spokesman from Alpro owner Danone UK&I. “Unfortunately, like many in our industry, we have found the costs of making, transporting, and storing products have risen significantly due to inflationary pressures. This has meant we’ve had to increase our prices to retailers, who in turn set the prices for shoppers.”

Inflation is rife in grocery’s already pricey free-free from market: 13 of the top 20 brands are more expensive than last year.

Take kids’ snack maker Bear, where average prices are up just shy of a fifth. Then there’s Warburtons Gluten Free. Its portfolio – which includes loaves, bread rolls and crumpets – is worth an extra £6m, largely due to a 22.8% rise in average price.

And Warbies GF isn’t the only brand maintaining value through price hikes. Lactofree’s prices, for example, are up by an average of 9.3%, growing the brand’s value by 3.5% against a 13.2% dive in volumes.

As with Alpro, soaring input costs are to blame, explains a spokeswoman for Lactofree owner Arla. “The cost of producing milk has increased to an all-time high and our farmers are struggling to cover their costs, which is resulting in less milk being produced.”

She adds: “Cost increases are so significant, we do have to pass some of these on to ensure our farmers and production facilities can continue the supply of products.”

Some remain optimistic. A spokeswoman from Kallo notes more Brits are shopping the category for lifestyle reasons. “Similarly, the rise in veganism has presented a wealth of opportunity to innovate and introduce more ingredients with additional health benefits and premium flavours,” she adds.