Free From in Peru

Euromonitor International
February 2020
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LIST OF CONTENTS AND TABLES

Headlines ..................................................................................................................................... 1
Prospects ..................................................................................................................................... 1
Dairy Is the Most Important Category in Free From .................................................................. 1
Reformulation Is Essential To Survive New Labelling Regulation............................................. 1
Strong Potential of Free From Gluten ....................................................................................... 1
Competitive Landscape ................................................................................................................ 1
Leading Companies Come From Dairy ..................................................................................... 2
Free From Originally More Expensive Than Regular Products ................................................. 2
New Competitors Invigorate the Category ................................................................................ 2
Category Data .............................................................................................................................. 2
Table 1 Sales of Free From by Category: Value 2014-2019 ..................................... 2
Table 2 Sales of Free From by Category: % Value Growth 2014-2019 .................... 3
Table 3 NBO Company Shares of Free From: % Value 2015-2019 .......................... 4
Table 4 LBN Brand Shares of Free From: % Value 2016-2019 ................................ 5
Table 5 Distribution of Free From by Format: % Value 2014-2019 ........................... 6
Table 6 Forecast Sales of Free From by Category: Value 2019-2024 ...................... 6
Table 7 Forecast Sales of Free From by Category: % Value Growth 2019-
2024 ............................................................................................................. 7

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FREE FROM IN PERU

HEADLINES
▪ Free from grows by 6% in current value terms in 2019 to reach PEN347 million
▪ Free from meat frozen meat substitutes records the highest current value growth of 12% in
2019
▪ The average unit price contracts in current terms in 2019
▪ Grupo Gloria leads free from with a 19% value share in 2019
▪ Over the forecast period, free from is predicted to record a 6% current value CAGR (3% value
CAGR at constant 2019 prices) to reach PEN454 million in 2024

PROSPECTS

Dairy Is the Most Important Category in Free From

Free from dairy milk holds the highest value share within free from, which is why its strong
double-digit value decline over the review period negatively affected the overall category.
However, the category achieved positive growth in 2019 as consumers once again reconsidered
the importance of consuming cow's milk, with many consumers switching to vegetable milk
substitutes, such as soy milk, the only option available in Peru. However, opinions are changing
as local consumers recognise that soy milk is mainly manufactured from GMO seeds and
therefore is not as healthy as originally believed. Moreover, other free from dairy alternatives are
too expensive, making it difficult to penetrate the market. It is also important to note that free
from dairy consumption is not directly related to lactose intolerance, which is underdiagnosed in
Peru, though more people are becoming aware of it thereby boosting the consumer base.

Reformulation Is Essential To Survive New Labelling Regulation

In the coming years, reformulations in a large number of categories will emerge, to generate
products that are healthier. These innovations will be driven by healthy eating and the regulation
on labelling, but beyond this, there is growing concern amongst Peruvians with regard to
consuming healthier products that are free from allergens, gluten, dairy and lactose. Despite this
trend, manufacturers have postponed their innovations since Peru faced three years of
economic slowdown and focused more on maintaining sales than launching new products.

Strong Potential of Free From Gluten

It is estimated that approximately one in every 100 Peruvians is celiac, but the vast majority
do not know it and simply think that they suffer from isolated digestive disorders. This lack of
knowledge is a restriction to any significant demand for free from gluten in the country.
However, each year, there is greater awareness of this problem and therefore higher demand.
However, only pasta and baby food, which are imported, were present until the entry of free
from gluten breakfast cereals in the middle of the review period. Moreover, such brands suffer
from restricted distribution.

COMPETITIVE LANDSCAPE

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Leading Companies Come From Dairy

Most of the free from category is comprised of free from dairy and free from dairy products,
therefore the main competitors are dairy manufacturers. Overall leader Group Gloria lost some
value share due to the exit of its free from dairy brand Soalé towards the end of the review
period. Second ranked Laive picked up some of this share along with Laboratorios Wyeth SA,
which followed closely in third position (and dominates free from allergens).

Free From Originally More Expensive Than Regular Products

With the exception of dairy, free from packaged food used to be more expensive than regular
versions. Manufacturers indicate that production costs are higher as they offer lower quantities
and cannot take advantage of economies of scale. Therefore, local manufacturers do not
produce free from products and they must be imported, especially free from gluten, negatively
impacting unit price. However, parents who require free from allergens or free from lactose milk
are willing to pay the higher price as they recognise the specific value. Nonetheless, in general,
higher unit prices limit category expansion, which continues to target mid- to high-income
households, in a period of economic deceleration.

New Competitors Invigorate the Category

Free from is expected to continue growing at high rates, developing faster than regular
packaged food, as the category is still niche. Despite its small size, new brands are entering the
category attracted by its current immaturity and further growth potential. These attributes
attracted Sanúa SAC, which launched a diverse range of free from meat burgers (quinoa, sweet
potatoes or black beans, among others) in free from frozen meat substitutes, while DellaNatura
SAC also introduced new products in free from other frozen meat substitutes.
However, while other categories such as prepared baby food are attracting players such as
Jilin Eximport EIRL, which is present with its imported Baby Mum-Mum brand in free from gluten
prepared baby food, its high unit price limits its distribution to a few select supermarkets. This
thereby limits the consumer base to higher socioeconomic groups. Categories such as sweet
spreads currently commonly contain free from sugar spreads available across a number of
distribution channels, while other categories such as chocolate confectionery are only just
starting to feature free from products, such as Sugar Free Milk from La Ibérica.

CATEGORY DATA
Table 1 Sales of Free From by Category: Value 2014-2019

PEN million
2014 2015 2016 2017 2018 2019

Free From Allergens 48.8 55.3 62.4 65.6 70.1 76.3

- HA Milk Formula 48.8 55.3 62.4 65.6 70.1 76.3
-- HA Liquid Milk Formula - - - - - -
-- HA Powder Milk Formula 48.8 55.3 62.4 65.6 70.1 76.3
Free From Dairy 219.1 254.1 247.3 176.5 131.3 138.9
- Free From Dairy Ice - - - - - -
Cream
- Free from Dairy Milk 219.1 254.1 247.3 176.5 131.3 138.9
- Free from Dairy Yoghurt - - - - - -
Free From Gluten 4.1 64.9 64.6 70.2 75.4 78.8
- Free From Gluten Baby 4.1 4.5 4.7 4.9 5.2 5.5
Food

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-- Free From Gluten - - - - - -

Dried Baby Food
-- Free From Gluten 4.1 4.5 4.7 4.9 5.2 5.5
Other Baby Food
-- Free From Gluten - - - - - -
Prepared Baby Food
- Free From Gluten - - - - - -
Baked Goods
-- Free From Gluten Bread - - - - - -
-- Free From Gluten Cakes - - - - - -
- Free From Gluten - - - 1.8 1.8 2.0
Breakfast Cereals
- Free From Gluten Pasta - 60.4 60.0 63.5 68.4 71.3
- Free From Gluten - - - - - -
Ready Meals
- Free From Gluten - - - - - -
Sweet Biscuits
Free From Lactose 39.1 41.8 46.0 48.1 48.9 50.8
- Free From Lactose 6.5 7.3 8.0 8.4 8.8 9.2
Baby Food
-- Free From Lactose 6.5 7.3 8.0 8.4 8.8 9.2
Special Baby Milk Formula
- Free From Lactose Dairy 32.6 34.5 38.0 39.7 40.1 41.7
-- Free From Lactose - - - - - -
Butter and Spreads
-- Free From Lactose - - - - - -
Cheese
-- Free From Lactose Milk 25.6 27.0 29.9 31.0 30.9 31.9
-- Free From Lactose 7.0 7.5 8.2 8.7 9.2 9.8
Yoghurt
Free From Meat - 1.2 1.4 1.6 1.8 2.0
- Free From Meat Meat - 1.2 1.4 1.6 1.8 2.0
Substitutes
-- Free From Meat - - - - - -
Chilled Meat Substitutes
-- Free From Meat - 0.8 1.0 1.2 1.4 1.5
Frozen Meat Substitutes
-- Free From Meat Shelf - 0.3 0.4 0.4 0.4 0.5
Stable Meat Substitutes
- Free from Meat Ready - - - - - -
Meals
-- Free From Meat Soy- - - - - - -
based Ready Meals
-- Free From Meat Other - - - - - -
Ready Meals
Free From 311.1 417.3 421.7 362.0 327.6 346.8
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources

Table 2 Sales of Free From by Category: % Value Growth 2014-2019

% current value growth

2018/19 2014-19 CAGR 2014/19 Total

Free From Allergens 8.8 9.3 56.2

- HA Milk Formula 8.8 9.3 56.2
-- HA Liquid Milk Formula - - -
-- HA Powder Milk Formula 8.8 9.3 56.2
Free From Dairy 5.8 -8.7 -36.6

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- Free From Dairy Ice Cream - - -

- Free from Dairy Milk 5.8 -8.7 -36.6
- Free from Dairy Yoghurt - - -
Free From Gluten 4.5 81.0 1,841.1
- Free From Gluten Baby Food 6.4 6.4 36.5
-- Free From Gluten Dried Baby Food - - -
-- Free From Gluten Other Baby Food 6.4 6.4 36.5
-- Free From Gluten Prepared Baby Food - - -
- Free From Gluten Baked Goods - - -
-- Free From Gluten Bread - - -
-- Free From Gluten Cakes - - -
- Free From Gluten Breakfast Cereals 9.3 - -
- Free From Gluten Pasta 4.2 - -
- Free From Gluten Ready Meals - - -
- Free From Gluten Sweet Biscuits - - -
Free From Lactose 3.9 5.4 30.0
- Free From Lactose Baby Food 4.2 7.3 42.0
-- Free From Lactose Special Baby Milk 4.2 7.3 42.0
Formula
- Free From Lactose Dairy 3.8 5.0 27.7
-- Free From Lactose Butter and Spreads - - -
-- Free From Lactose Cheese - - -
-- Free From Lactose Milk 3.1 4.4 24.2
-- Free From Lactose Yoghurt 6.2 7.0 40.5
Free From Meat 11.4 - -
- Free From Meat Meat Substitutes 11.4 - -
-- Free From Meat Chilled Meat - - -
Substitutes
-- Free From Meat Frozen Meat 11.5 - -
Substitutes
-- Free From Meat Shelf Stable Meat 11.1 - -
Substitutes
- Free from Meat Ready Meals - - -
-- Free From Meat Soy-based Ready Meals - - -
-- Free From Meat Other Ready Meals - - -
Free From 5.9 2.2 11.5
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources

Table 3 NBO Company Shares of Free From: % Value 2015-2019

% retail value rsp

Company 2015 2016 2017 2018 2019

Gloria SA, Grupo 22.5 30.8 28.0 19.4 18.8

Laive SA 5.1 7.9 10.2 11.4 15.4
Laboratorios Wyeth SA 6.5 7.4 10.2 12.0 12.0
E Wong SA 4.1 4.7 6.0 6.0 6.0
Mead Johnson Nutrition 2.3 2.6 3.5 4.3 4.5
Peru SRL
Pastificio Classico SAC 2.2 2.5 3.2 4.0 4.0
Inti Peru SAC 0.8 1.0 1.5 1.8 1.9
Jilin Eximport EIRL 1.1 1.1 1.3 1.6 1.5
Brands of The Americas 0.4 0.6 1.0 1.3 1.2
SAC
Terrafertil SA 0.9 0.9 0.6 0.9 0.6
Nestlé Perú SA 0.3 0.3 0.4 0.5 0.5
Pfizer Perú SA 0.4 0.4 0.6 0.5 0.3
DellaNatura SAC 0.1 0.1 0.2 0.2 0.2

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King David Delicatesses - - 0.1 0.2 0.2

del Perú SAC
Lafrancol Perú SA 0.1 0.1 0.1 0.1 0.1
Alicorp SAA 21.1 11.3 - - -
Cencosud SA 0.1 0.1 - - -
Others 31.9 28.1 33.1 35.8 32.8
Total 100.0 100.0 100.0 100.0 100.0
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources

Table 4 LBN Brand Shares of Free From: % Value 2016-2019

% retail value rsp

Brand (GBO) Company (NBO) 2016 2017 2018 2019

Laive Laive SA 7.9 10.2 11.4 15.4

Soy Vida Gloria SA, Grupo 10.1 13.4 13.7 13.5
Isomil (Abbott Laboratorios Wyeth SA 7.4 10.2 12.0 12.0
Laboratories Inc)
Misura (Colussi E Wong SA 4.7 6.0 6.0 6.0
Group SpA)
Gloria Gloria SA, Grupo 3.2 5.9 5.7 5.2
Schär (Dr Schär AG/ Pastificio Classico SAC 2.5 3.2 4.0 4.0
SpA)
Nutramigen (Reckitt Mead Johnson Nutrition - 2.3 2.7 2.8
Benckiser Group Plc Peru SRL
(RB))
Nutricia Nutrilon Inti Peru SAC 1.0 1.5 1.8 1.9
(Danone, Groupe)
Enfamil (Reckitt Mead Johnson Nutrition - 1.2 1.6 1.7
Benckiser Group Plc Peru SRL
(RB))
Baby Mum-Mum (Want Jilin Eximport EIRL 1.1 1.3 1.6 1.5
Want Holdings Ltd)
Natura (Healthy Brands of The Americas 0.6 1.0 1.3 1.2
Valley Co, The) SAC
Nature's Heart Terrafertil SA - - 0.9 0.6
(Nestlé SA)
Nan (Nestlé SA) Nestlé Perú SA 0.3 0.4 0.5 0.5
S-26 (Lactalis, Pfizer Perú SA - - - 0.3
Groupe)
Della Natura DellaNatura SAC 0.1 0.2 0.2 0.2
Almond Breeze (Blue King David Delicatesses - 0.1 0.2 0.2
Diamond Growers) del Perú SAC
Ensoy Niños (Abbott Lafrancol Perú SA 0.1 0.1 0.1 0.1
Laboratories Inc)
S-26 (Aspen Pfizer Perú SA 0.4 0.6 0.5 -
Pharmacare (Pty) Ltd)
Soalé Gloria SA, Grupo 14.7 7.5 - -
Pura Vida Gloria SA, Grupo 2.8 1.2 - -
Nature's Heart Terrafertil SA 0.9 0.6 - -
(Terraholding Group
LLC)
Soyandina Alicorp SAA 11.0 - - -
Nutramigen (Mead Mead Johnson Nutrition 1.6 - - -
Johnson Nutrition Co) Peru SRL
Enfamil (Mead Mead Johnson Nutrition 1.0 - - -
Johnson Nutrition Co) Peru SRL
Soyavena Alicorp SAA 0.3 - - -

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Blue Diamond (Blue Cencosud SA 0.1 - - -

Diamond Growers)
BioLaive Laive SA - - - -
S-26 (Nestlé SA) Pfizer Perú SA - - - -
Others Others 28.1 33.1 35.8 32.8
Total Total 100.0 100.0 100.0 100.0
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources

Table 5 Distribution of Free From by Format: % Value 2014-2019

% retail value rsp

2014 2015 2016 2017 2018 2019

Store-Based Retailing 100.0 100.0 100.0 100.0 100.0 100.0

- Grocery Retailers 100.0 100.0 100.0 100.0 100.0 100.0
-- Modern Grocery 95.4 95.2 95.1 94.9 94.8 94.8
Retailers
--- Convenience Stores - - - - - -
--- Discounters - - - - - -
--- Forecourt Retailers - - - - - -
--- Hypermarkets 50.0 50.0 49.9 49.9 49.9 49.8
--- Supermarkets 45.4 45.2 45.1 45.0 45.0 44.9
-- Traditional Grocery 4.6 4.8 4.9 5.1 5.2 5.2
Retailers
--- Food/drink/tobacco - - - - - -
specialists
--- Independent Small 3.5 3.5 3.6 3.7 3.8 3.8
Grocers
-- Other Grocery 1.1 1.3 1.3 1.4 1.4 1.5
Retailers
- Non-Grocery Specialists - - - - - -
Non-Store Retailing - - - - - -
- Vending - - - - - -
- Homeshopping - - - - - -
- E-Commerce - - - - - -
- Direct Selling - - - - - -
Total 100.0 100.0 100.0 100.0 100.0 100.0
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources

Table 6 Forecast Sales of Free From by Category: Value 2019-2024

PEN million
2019 2020 2021 2022 2023 2024

Free From Allergens 76.3 81.1 86.7 93.0 100.2 108.2

- HA Milk Formula 76.3 81.1 86.7 93.0 100.2 108.2
-- HA Liquid Milk Formula - - - - - -
-- HA Powder Milk Formula 76.3 81.1 86.7 93.0 100.2 108.2
Free From Dairy 138.9 138.3 138.6 139.4 140.1 140.9
- Free From Dairy Ice - - - - - -
Cream
- Free from Dairy Milk 138.9 138.3 138.6 139.4 140.1 140.9
- Free from Dairy Yoghurt - - - - - -
Free From Gluten 78.8 81.0 83.9 86.7 89.8 93.0
- Free From Gluten Baby 5.5 5.7 5.9 6.1 6.3 6.5

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Food
-- Free From Gluten - - - - - -
Dried Baby Food
-- Free From Gluten 5.5 5.7 5.9 6.1 6.3 6.5
Other Baby Food
-- Free From Gluten - - - - - -
Prepared Baby Food
- Free From Gluten - - - - - -
Baked Goods
-- Free From Gluten Bread - - - - - -
-- Free From Gluten Cakes - - - - - -
- Free From Gluten 2.0 2.1 2.2 2.4 2.5 2.6
Breakfast Cereals
- Free From Gluten Pasta 71.3 73.2 75.7 78.2 81.0 83.9
- Free From Gluten - - - - - -
Ready Meals
- Free From Gluten - - - - - -
Sweet Biscuits
Free From Lactose 50.8 51.6 53.0 54.9 55.5 56.3
- Free From Lactose 9.2 9.3 9.4 9.5 9.6 9.8
Baby Food
-- Free From Lactose 9.2 9.3 9.4 9.5 9.6 9.8
Special Baby Milk Formula
- Free From Lactose Dairy 41.7 42.4 43.6 45.3 45.9 46.5
-- Free From Lactose - - - - - -
Butter and Spreads
-- Free From Lactose - - - - - -
Cheese
-- Free From Lactose Milk 31.9 32.2 33.1 34.4 34.5 34.7
-- Free From Lactose 9.8 10.2 10.5 10.9 11.4 11.9
Yoghurt
Free From Meat 2.0 2.2 2.3 2.5 2.6 2.8
- Free From Meat Meat 2.0 2.2 2.3 2.5 2.6 2.8
Substitutes
-- Free From Meat - - - - - -
Chilled Meat Substitutes
-- Free From Meat 1.5 1.6 1.7 1.8 1.9 2.1
Frozen Meat Substitutes
-- Free From Meat Shelf 0.5 0.5 0.6 0.6 0.7 0.8
Stable Meat Substitutes
- Free from Meat Ready - - - - - -
Meals
-- Free From Meat Soy- - - - - - -
based Ready Meals
-- Free From Meat Other - - - - - -
Ready Meals
Free From 346.8 354.2 364.5 376.3 388.3 401.2
Source: Euromonitor International from trade associations, trade press, company research, trade interviews,
trade sources

Table 7 Forecast Sales of Free From by Category: % Value Growth 2019-2024

% constant value growth

2019/2020 2019-24 CAGR 2019/24 Total

Free From Allergens 6.3 7.2 41.8

- HA Milk Formula 6.3 7.2 41.8
-- HA Liquid Milk Formula - - -
-- HA Powder Milk Formula 6.3 7.2 41.8

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Free From Dairy -0.4 0.3 1.4

- Free From Dairy Ice Cream - - -
- Free from Dairy Milk -0.4 0.3 1.4
- Free from Dairy Yoghurt - - -
Free From Gluten 2.8 3.4 18.1
- Free From Gluten Baby Food 3.6 3.4 18.2
-- Free From Gluten Dried Baby Food - - -
-- Free From Gluten Other Baby Food 3.6 3.4 18.2
-- Free From Gluten Prepared Baby Food - - -
- Free From Gluten Baked Goods - - -
-- Free From Gluten Bread - - -
-- Free From Gluten Cakes - - -
- Free From Gluten Breakfast Cereals 6.0 5.2 28.9
- Free From Gluten Pasta 2.7 3.3 17.7
- Free From Gluten Ready Meals - - -
- Free From Gluten Sweet Biscuits - - -
Free From Lactose 1.6 2.1 10.7
- Free From Lactose Baby Food 0.9 1.2 6.4
-- Free From Lactose Special Baby Milk 0.9 1.2 6.4
Formula
- Free From Lactose Dairy 1.7 2.2 11.7
-- Free From Lactose Butter and Spreads - - -
-- Free From Lactose Cheese - - -
-- Free From Lactose Milk 1.1 1.7 8.8
-- Free From Lactose Yoghurt 3.6 3.9 20.9
Free From Meat 7.7 7.1 40.9
- Free From Meat Meat Substitutes 7.7 7.1 40.9
-- Free From Meat Chilled Meat - - -
Substitutes
-- Free From Meat Frozen Meat 7.1 6.2 35.1
Substitutes
-- Free From Meat Shelf Stable Meat 9.5 9.7 58.9
Substitutes
- Free from Meat Ready Meals - - -
-- Free From Meat Soy-based Ready Meals - - -
-- Free From Meat Other Ready Meals - - -
Free From 2.1 3.0 15.7
Source: Euromonitor International from trade associations, trade press, company research, trade interviews,
trade sources

© Euromonitor International