Corporations and entrepreneurs see an economic opportunity in food allergies. The market for products is projected to reach $3.9 billion this year. (The Washington Post)

By Annys Shin
Washington Post Staff Writer
Sunday, June 8, 2008

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, 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 Kevin 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” and Campbell 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. Heather and Brian Selwa started online store Peanut Free Planet two years ago in Cicero, Ind. Competitors Patrick Felkner and Steve Rubinstein launched, 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.

It is amazing to see how confident and competent we could become in just 7 days.

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