GRAND RAPIDS — What started as a business serving a niche of natural food aficionados has moved into the mainstream.
In many ways, Grand Rapids-based The Gluten Free Bar’s growth has paralleled the evolution of the specialty food sector in recent years, in which companies like Dunkin’ Donuts and Starbucks now offer gluten-free products.
As the manufacturer of gluten-free bars and other foods matures, it must continue to adapt to changes in the market, as gluten-free foods make up more of consumers’ diets.
“It is still growing, but I think the growth has plateaued a little bit in terms of it’s not growing as fast,” co-founder Marshall Rader said of the industry. “It’s kind of like our business. The gluten-free market was nothing seven years ago.”
While many considered gluten-free food a diet fad that would soon fizzle out, the segment has proven its staying power among consumers.
The gluten-free market in the U.S. grew to $1.6 billion in 2015, as the food’s popularity drove high double-digit growth rates, according to a recent report from Packaged Facts, a Maryland-based market research firm for the food and beverage industry. Experts predict the gluten-free food market will reach approximately $2 billion by 2020, as the growth rate slows into the single digits in coming years.
To stay ahead of that market, GFB needs to strike a balance between appealing to those customers who truly rely on gluten-free foods in their diet to avoid allergies, and others who perceive gluten-free foods as a healthier option.
“I think the challenge for us, as the market evolves, is to continue to show that we’re the Gluten Free Bar,” Rader said. “We care a lot about gluten free, gluten intolerant, celiac people or other special dietary needs and continue to service them at the same time that we show that this is a healthy snack food for anybody who is looking to feel good about what they’re eating.”
Rader does note that not all gluten-free foods are healthier than their traditional counterparts. However, GFB does adhere to a philosophy of making its products with simple, healthy ingredients.
As natural food trends have grown in popularity in recent years, GFB has seen increasing competition in the nutrition bar market for the limited shelf space at retailers. To move forward with its growth strategy, GFB plans to introduce new products that focus on health and convenience. Among them is Gluten Free Bites, a high-protein, vegan snack product.
The company also will launch its Gluten Free Power Breakfast brand of oatmeal, which is packaged in a flat cardboard container that can be folded into a cup. GFB designed the product for people on the go, Rader said.
While oats are naturally gluten free, they’re often harvested and processed near wheat, which can result in allergic reactions from people intolerant of gluten, Rader said. GFB’s oatmeal is made from certified gluten-free oats.
“I think we’re seeing the gluten-free market is really blurring with a lot of the other food trends like non-GMO, simple ingredients, plant-based and high-protein,” Rader said.
While GFB has a presence across the U.S. and Canada, it plans to increase its saturation in Western states through a handful of larger customers.
However, as GFB’s reputation and popularity has grown, it has needed to develop a different go-to-market strategy compared to its early days in business.
“Now, as we become a more mature company, we can no longer sell as the new guy on the block,” Rader said. “We need data to show the customers. ‘This is the type of return you’re going to get for bringing in the GFB. Here’s how many bars we expect to sell here.’”
Ultimately, GFB plans to increase its annual sales by 150 percent in the next 18 months, Rader said. The company currently generates between $5 million and $10 million in annual sales.
“The thing is, when you get this size and start working on some of the bigger accounts, all of a sudden (the growth) becomes meaningful,” Rader said. “Where Kroger or Costco wouldn’t talk to us two years ago, now they will.”
In addition to growing its business organically, GFB also is considering bringing on investors in the near future.
“As we’ve grown, things that are important now weren’t important two years ago,” Rader said.
Specifically, he points to being able to offer his workers competitive health insurance and other corporate structures that could be built with an injection of capital. However, Rader said the capital raise is contingent on the company finding the correct investor who fits with the business.
Rader is considering two routes. The first involves bringing on a high-net-worth, yet passive investor who “wants to trust the management team and be involved from a board level but not in the day-to-day,” Rader said.
The other option involves bringing on someone with “deep industry connections” who can assist GFB in entering new markets, he said.
Rader declined to disclose how much capital the company wants to raise.
“We don’t want to spend our time distracted from our business to manage an investor,” he said. “We want to keep our focus on the business.”
Made in Michigan: After years of operating as a scrappy upstart, Grand Rapids-based The Gluten Free Bar (GFB) is entering the second phase of its growth. As a more mature company, GFB plans to introduce new products into the market that cater to people suffering from gluten allergies and those wanting a healthier food option. The company generates between $5 million and $10 million in annual sales and expects to grow 150 percent in the next 18 months.