Packaged Facts: Despite Cheerios Recall, General Mills Poised to Thrive in $38 Million Gluten-Free Cereal Market

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Oct 07, 2015, 01:05 ET

ROCKVILLE, Md., Oct. 7, 2015 /PRNewswire/ -- Back in February, General Mills proudly announced that five varieties of gluten-free Cheerios (Apple Cinnamon, Frosted, Honey Nut, Multi Grain, and Original) would be available nationwide for purchase later in the year. With the launch of gluten-free Cheerios in recent months, General Mills embarked on one of the company's largest marketing offensives for cereal in many years.

"Cheerios' move into the gluten-free category was perhaps inevitable considering the brand's popularity coupled with the allure of the growing gluten-free cereal segment," says David Sprinkle, research director for Packaged Facts which published Gluten-Free Foods in the U.S., 5th Edition. "Even excluding sales of General Mill's Chex, we estimate that sales of gluten-free cereal increased 18% between 2013 and 2014 to reach $38 million last year."

In Gluten-Free Foods in the U.S., 5th Edition, Packaged Facts reveals that year-over-year growth in the gluten-free foods market has been impressive with sales of key categories (salty snacks, cracks, pasta, bread, cold/ready-to-eat cereal, cookies, baking mixes, frozen bread/dough, and flour) experiencing a compound annual growth rate (CAGR) of 34% over the five-year period ended in 2014. With sales already exceeding $1 billion, continued consumer concern over the negative health effects of gluten will help the market approach $2.5 billion in 2019.

Despite the understandable enthusiasm surrounding gluten-free Cheerios from consumers and retailers alike, General Mills announced Oct. 5 that it would voluntarily recall 1.8 million boxes of original and Honey Nut Cheerios labeled gluten-free because they inadvertently contained wheat. The U.S. Food and Drug Administration (FDA) revealed that prior to the recall it had received 125 complaints from consumers who ate gluten-free Cheerios and experienced adverse health effects (primarily gastrointestinal problems). General Mills, which says it has determined how the gluten contamination occurred, is making efforts to prevent future incidences.

"The recall was unfortunate and will ultimately prove to be a learning experience for General Mills. But General Mills has already made considerable inroads in the gluten-free market and will undoubtedly continue to thrive and find success providing consumers with gluten-free alternatives to the brands they know and love," says Sprinkle.

"To create the gluten-free cereal initially, General Mills made big investments to remove the traces of wheat, rye, and barley that typically came in contact with the brand's whole oat supply either at the farms where the oats are grown or during transportation of the whole oats to the mill. This past February, Jim Murphy, president of the Cereal division at General Mills, declared Cheerios' dedication to producing gluten-free cereal to be the biggest news since the brand's "commitment to whole grains in every box." The successful introduction of gluten-free Cheerios comes after almost after almost a decade of planning, with the project beginning in 2007 around the same time that General Mill's Chex brand moved toward becoming the first mainstream gluten-free cereal.

For more information about Gluten-Free Foods in the U.S., 5th Edition or to purchase the report, visit: http://www.packagedfacts.com/redirect.asp?progid=87893&productid=8108350.

About Packaged Facts – Packaged Facts, a division of MarketResearch.com, publishes market intelligence on a wide range of consumer market topics, including consumer demographics and shopper insights, consumer financial products and services, consumer goods and retailing, consumer packaged goods, and pet products and services. Packaged Facts also offers a full range of custom research services. Reports can be purchased at www.PackagedFacts.com and are also available on www.marketresearch.com and www.profound.com.

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SOURCE Packaged Facts