WP article: Food Allergies Trigger Specialty Market

[Guest guest]

Food Allergies Trigger Multibillion-Dollar Specialty Market

By Annys Shin

Washington Post Staff Writer

Sunday, June 8, 2008; A01

Kari Keaton is the sort of customer most businesses used to hate.

The Rockville mother lingers at the grocery store, poring over

ingredient labels. She calls food manufacturers and interrogates

their customer service representatives about what sorts of foods get

processed in the same facility and probes them on the meaning

of " natural flavoring. " And after all that effort, she still may not

buy their product.

The way Keaton sees it, she has little choice. Her two sons, 10 and

15, suffer from severe food allergies. Keeping them from

accidentally eating something that could trigger a fatal reaction

has become the former IBM field manager's full-time job.

But Keaton, 52, and consumers like her are increasingly coveted by

corporations and entrepreneurs who see an economic opportunity in

catering to the needs of people who have food allergies or celiac, a

condition treated by avoiding gluten. Marketing to the food-

sensitive has become so widespread that the Girl Scouts now sell

three kinds of milk-free cookies, Anheuser-Busch has a gluten-free

beer and Kellogg's makes Pop-Tarts in nut-free factories.

The market for food-allergy and intolerance products is projected to

reach $3.9 billion this year, according to Packaged Facts, a New

York research firm. And the market for gluten-free foods and drinks

is expected to hit $1.3 billion by 2010, up from $700 million in

2006, according to research firm Mintel.

An estimated 12 million people in the United States have food

allergies, and another 2 million have celiac disease, a disorder in

which the body's immune system attacks itself when exposed to

gluten, a protein found in wheat, barley and rye. Those figures are

expected to rise. The number of children with peanut allergies alone

has doubled in the past decade. Food-induced anaphylaxis, a

potentially fatal allergic reaction, causes about 30,000 emergency

room visits and 150 to 200 deaths annually, according to the Centers

for Disease Control and Prevention in Atlanta.

Medical experts don't know why the number of people with food

allergies is increasing. Theories include reduced contact with

germs, exposure to certain environmental pollutants and, in the case

of peanut allergies, the way peanuts are processed and when they are

introduced into people's diet. None of the theories is backed by

much research.

" We don't know if some of them are true or there's some truth to all

of them, " said Marshall Plaut, chief of the allergic mechanisms

section at the National Institute of Allergy and Infectious Diseases.

Until scientists learn more, the prescription for people with life-

threatening food allergies or celiac is to avoid the foods that make

them sick, a task that is getting easier.

Whereas a decade ago, the " free from " food market consisted of small

manufacturers whose products were sold mainly in health-food stores,

today it encompasses an ever-growing list of start-up companies,

mainstream retailers such as Safeway and Giant Food, and some food

industry giants such as General Mills.

The ripple effect goes beyond the grocery aisle. In April, Deep Dive

Media of Los Angeles, which runs health information Web sites, paid

an undisclosed sum to buy PeanutAllergy.com, a site started by an

affected parent. In March, Sciele Pharma paid $29 million to buy

Twinject, an epinephrine auto-injector that competes with Dey L.P.'s

Epipen. Epinephrine is used to treat anaphylaxis.

Food manufacturers have had to pay more attention to the needs of

people with food allergies since the federal government in 2006

began requiring ingredient labels to disclose whether products

contain milk, eggs, peanuts, tree nuts -- such as almonds and

cashews -- fish, shellfish, soy and wheat.

Gluten is not on that list, but many manufacturers disclose it. Some

companies, such as Stonyfield Farm, use gluten-free in their

marketing. In April, General Mills said it had reformulated Rice

Chex to be gluten-free.

" Rice Chex . . . was truly our effort to meet the needs of these

consumers, " said Farnum, director of sanitation, quality and

regulatory operations for General Mills. " We know there is a great

demand among consumers to have free-from labeling. "

Other major food manufacturers such as Kellogg's and Soup

also sell products safe for people with food allergies and celiac,

but they have been more cautious about embracing the free-from

claim. Unlike with organic products, there are no government

standards for what " free-from " means.

The steps General Mills took to insure that Rice Chex was gluten-

free also illustrate how hard it can be for a large manufacturer to

do so. In addition to tweaking the recipe, the company had to review

its production process, from the time the rice is harvested to when

the cereal is packaged, to be certain that gluten would not get into

the product.

New, smaller companies are more nimble. They don't have existing

factories to convert. They can build facilities that are peanut- and

tree-nut-free from day one. Many entrepreneurs, such as Eileen

Moriarty Silva, are doing just that. Two years ago, she started soy-

nut butter maker Simple Food in Amesbury, Mass., after selling her

first soy-nut butter company in 2000. " I wanted to get back into the

business, " she said. " I knew there was just plenty of opportunity,

and a lot of customers just needed more food out there. "

The National Association for the Specialty Food Trade, a New York

trade group, estimates that 300 of its 2,800 members offer more than

7,000 no-allergenic products, compared with five years ago, when

about 50 members did, spokesman Ron Tanner said.

Increasingly, their customers don't necessarily have food allergies

or celiac. They just think they do. " As much as 28 percent of U.S.

citizens believe they are intolerant to some foods, " said Mintel

spokeswoman Joanna Peot. " This trend towards self-diagnosis has

widened the 'free from' market from those who have to avoid certain

foods to those who make a lifestyle choice for whatever reason. "

Internet start-ups are also seeking to satisfy that demand.

and Selwa started online store Peanut Free Planet two years

ago in Cicero, Ind. Competitors Felkner and Steve Rubinstein

launched Allerneeds.com, another peanut-free retailer, in Anaheim,

Calif., four months ago.

" We were trying to jump on it before it really starts hitting [the

mainstream], " Felkner said. " There's a market opportunity, there's

no doubt about it. "

Brick-and-mortar stores are clearing space on their shelves,

too. " We've seen a dramatic increase in the number of customers

looking for these type of products really in the last few years, "

said Safeway spokesman Greg TenEyck. " We've greatly increased the

number and types of products we are offering. "

The same thing is happening at Giant and at Whole Foods Market,

which has an array of private-label products and a designated gluten-

free bakery in North Carolina.

All this is good news for food allergy and celiac sufferers, said

Anne Munoz-Furlong, co-founder of the Food Allergy and Anaphylaxis

Network in Fairfax. " They want to be able to go to the grocery store

and buy food like everyone else, " she said.