The Greatest US Recession Proof Industry is the Gluten Free Market - Growing at 37% In the Last Year

The Gluten Global market forecast 2009

Previous research looked at the current state of Gluten free markets across the world. The Gluten Free Matrix was developed that showed how a country's wealth (GDP per person) was a very good predictor the general e-demand of gluten free products (Google searches).

This research showed that there was a logarithmic relationship for most countries, that is high wealth correlated with high Gluten free demand. It also defined market characteristics for special case outliers such as European countries (Hypo markets Germany, France etc) and over-performing hyper markets China and Russia.

New Google data releases now allows us to view trends for the Gluten Free Market between 2004 and 2009. By comparing current market states in absolute terms with the long term gluten demand trend, we are better able to understand the dynamics of gluten free markets.

This article compares four of the highest performing GF markets of: USA, Canada, UK and Australia.

These countries form a very good base for comparison as they are highly developed, high level of English speaking population (meaning no Google translation error bias), high internet penetration and high Google share (low weighting errors).

Long term trends all show a spike in demand (searches) during December for each country. It would appear that increased advertising and gluten free gift buying are the cause. A demand trough in the middle of the year occurs for the northern hemisphere countries of US, Canada and UK. Interestingly Australia (southern hemisphere) experiences a slight peak during this season. It appears that winter also causes a momentary surge in demand probably as people explore places to buy breads and visit restaurants etc.

US Summary The four year trend shows an unparalleled upward growth trend that is best fitted by an exponential trend line. Over five years the gluten free demand market has grown 230%.

Australia Summary

From previous analysis it was uncovered that of the developed nations, that Australia was the global leader in gluten free e demand with a Celiac search per month value of 4.2 searches. However unlike USA or Canada its yearly seasonal trend is seen to constantly rise rather than ramp up at the end of the year.

Long term it is seen that while the growth is stronger than the UK, it is much less than US or Canada. Over five years the Australian e-demand grew 56%.

Canada Summary

This country's Yearly seasonal trend (Jan to Dec) is VERY similar to the US. However it typically starts ramping up growth for the whole of the second half of the year. Similarly its long term trend has a very high growth too. Canada's five year growth of 97% was second only to the US.

UK Summary

The UK yearly trend is has no particular pattern. If anything it appears that there is a slightly jittery trough in the centre of the year with a slight rise at least in December of each year. The long term trend for the UK gluten free demand is VERY flat.

FOUR COUNTRY'S Seasonal (Jan to Dec) trend comparison Yearly Seasonal Linear gradients YEAR USA Australia Canada UK 2005 0.0303 0.0124 0.0192 0.0072 2006 0.0647 0.0147 0.0252 0.0082 2007 0.0915 0.0253 0.0562 0.0093

2008 0.0917 0.0219 0.0577 0.0098

The table above compares the seasonal trends of the four countries of interest (Jan to Dec). It shows the closeness of yearly growth patterns for the geographically close US and Canada. It also shows the almost linear growth of Australia throughout the year and the growth trough midyear experienced by the UK. As discussed, these trends are influenced by peaks during Christmas and winter in each country.

You can see that while the seasonal growth trend is increasing, it is doing so at a slowing rate (big difference between 2006 and 2007, smaller between 2007 and 2008). This most likely suggests either the onset of market maturity (or an inflexion point) and/ or the negative effect of the global financial crisis.

LONG TERM GF MARKET TRENDS

As this market is still closer to introduction than maturity, the demand is still very much in the growth phase. The table below shows how this long term growth compares between different countries. Many different equation trend lines can be fitted to the data, however I have chosen to compare linear trend lines and their R2 regression coefficient and the exponential R2 coefficients.

Trend 2004 - 2009 Metric US Australia Canada UK Linear gradient 0.0117 0.0029 0.0065 0.0007 Linear R2 0.8842 0.7095 0.8672 0.206 Exponential R2 0.9327 0.718 0.898 0.2043 Celiac Sch / mth 2.7 4.2 3.3 2.2

GDP/ person $48,000 $39,300 $40,200 $34,800

Very basically, an R2 value of 1.0 indicates that the regression trend line perfectly fits the data. While a value of 0 shows no correlation between data and a trend line.

I have used the linear trend lines to compare each country's trend as the slope of a line is an easy concept for anyone to understand. The bigger the slope, the bigger the linear gradient coefficient in the table. The table shows that the US slope is about four times greater than Australia (between 2004 and 2009). Which means based on this concept alone, that if the US was to continue this trend it will easily overtake Australia as the global leader for gluten free demand per celiac (Celiac Searches / month).

The Linear R2 value for the US is also the highest of any country. This means that its data fairly closely approximates a straight line, and there is little volatility in the data (spiking). While you can see that the yearly seasonal trend (Jan - dec) in the US is the most pronounced of any country, each year also closely approximates the previous yearly trend meaning that there are relatively few outliers (spikes of very low or high demand) away from the seasonal trend.

The exponential trend line for the US has an R2 value that is even higher than its linear trend line R2 value. This means that an exponential trend is an even better fit for the US data than a linear trend line, and that growth over the four years generally has been occurring at an increasing rate. However from the comparison of seasonal trend data, it is shown that the gradient of the latest year has increased the least over the past four years. The US growth is still strong but less than it was three and four years ago.

Australia has the highest 'celiac search value per month' of any country (4.2 compared to US 2.7). This suggests that per head of population that Australia is the most mature gluten free market of the countries analyzed. It's yearly season trend (2008 gradient = 0.0219) was much less pronounced than the US, (2008 gradient = 0.0917). Its four year trend was also less: Australia linear gradient = 0.0029 compared to