Do I Really Have to Lose an Arm and a Leg to Save My Intestines?
This article was inspired by the question, “Why is gluten-free food so expensive?” The price of eating gluten free is shocking at first, but there are many factors that go into the higher prices. Understanding them might help take some of the bite out of the expense.
Separate, but Not Equal
Due to cross-contamination issues, grain products need to be handled in separate facilities to remain gluten free. Most Celiac patients only buy certified gluten-free oatmeal for this very reason. Oats are grown in the same fields, harvested by the same equipment, and processed in the same granaries as wheat products. This makes sense economically. They are similar grains and by using the same facilities for both costs are reduced. When only gluten-free grains are processed in a plant, the range of business that a company can do is limited. The volume decreases so the price increases.
Not all products that are labeled gluten free are tested for cross-contamination, but if they are, it adds significant cost. Every ingredient must be tested. This adds up quickly and is factored into the price.
Small Market Share
Gluten-free food is a niche market. With only about 3% of the people in the US interested in gluten-free products, they automatically become specialty food. Gluten-free products were initially produced predominantly by small companies. Small producers incur high costs developing new and needed products, but lack the size to manufacture on large, efficient scales. As awareness of Celiac disease and other gluten-related health issues grow, desire for gluten-free products becomes more mainstream. With a larger market, gluten free becomes more profitable for larger companies which can manufacture more efficiently. This is already causing some prices to drop.
Some consumers have unrealistic price expectations. At the Vivian’s Live Again booth at the Gluten Free Expo held in Salt Lake City, a woman asked, “Are your soups expensive?” When asked what she considered expensive she answered, “Anything more than a dollar a can.” We were stunned. We thought we had done very well to have the retail price equivalent to a full-price, brand-name can of cream soup. This woman was used to finding traditional canned soup for under a dollar during sales.
Understanding grocery pricing practices would have changed this consumer’s expectations. Grocers sometimes sell popular items at their cost or less knowing that it will lead people into their stores. While shopping, consumers buy other things that are marked up more so the store still makes a profit overall. This practice is sometimes referred to as loss-leader. Gluten free does not have a big enough customer base to be attractive to loss-leader deals.
Grocers also set price margins in part based on how quickly a product sells. Retailers can afford to take a smaller profit on items that sell in larger volumes. Gluten free sells more slowly therefore the cost must be higher.