Dr. Schär UK managing director Bradley Grimshaw has big plans to grow the gluten-free brand in the UK, and the overall market with it.
He’s got his work cut out for him. Supermarket sales levelled off for the first time in 2022 after several years of double-digit growth, while inflation and the cost-of-living crisis pose further challenges for products with already premium price points.
What’s more, the business is going up against well-funded competitors in the likes of Warburtons and Genius Foods, which is eyeing expansion after recently securing a £7.5m loan following its acquisition by Katjes Greenfood and naming a new CEO.
We’ve come a long way from when gluten free was first introduced many years ago
Grimshaw, however, seems unfazed by the increased competition, instead preferring to focus his attention to Dr. Schär’s operations.
“We’ve got some fantastic competitors that we respect a great deal. These guys have been around for some time, but we are the number one brand in the market,” says Grimshaw, who points to several factors for his ongoing optimism. These include advances in the diagnosis of coeliac disease, the ever-improving quality of new Dr. Schär products hitting shelves, and the company’s recent acquisition of its first UK-based factory.
“We’ve come a long way from when gluten free was first introduced many years ago,” he remarks from Dr. Schär’s UK headquarters in Warrington, Cheshire. “It’s been a fantastic sector to play in.”
Dr. Schär is a family business with origins in the German-speaking South Tyrol region of northern Italy. Celebrating its centennial last year, it has become an international enterprise with 18 production and distribution sites in 11 European countries and a 1,600-strong workforce.
The purchase of Glasgow-based manufacturer GDR Food Technology in February 2022 marked Dr. Schär’s first facility on British soil, with the aim to boost its presence in the fresh bread market.
According to Grimshaw, the venture allows the company to develop products more in tune with the needs of UK consumers. “We’re expecting to deliver a complementary range through Glasgow. We want that range to be reflective of what the UK consumer is looking for,” says the director.
“We’ve got what I understand to be the biggest database of coeliacs in the UK, and we invest a lot in really understanding what those needs are. So having the facility in the UK and understanding them as well as we do is an exciting way forward to hopefully bring some products that are going to really resonate with both our customers and consumers.”
Taste and quality are at the absolute core of the business, emphasises Grimshaw, noting that while Dr. Schär’s bakery products do not contain preservatives, they are packaged in a way which allows extended life beyond the seven days conventionally associated with fresh bread.
We know that there is already a premium for gluten-free products because of the cost of manufacture
Previously, this style of packaging presented British consumers with a barrier to purchase, according to the director. However, thanks to the GDR factory, it is now able to bring products to market in “very authentic UK packaging, which consumers will recognise immediately as fresh bread”.
Around 40 of the 200-plus products in Dr. Schär’s global portfolio are sold in the UK, including ambient, chilled, and frozen bakery items. Available at all major UK retailers, these include the bestselling Wholesome Loaf range (Seeded, White and Vitality varieties), along with bread rolls, burger buns, mini baguettes, pizzas, flatbreads, crispbreads, and pretzels. On the sweet side, there are brioche buns, waffles, cakes, and biscuits, as well as baking mixes.
Inflation has been the number one challenge for suppliers in the sector, says Grimshaw, with “massive increases in input costs” a major concern. Notably, Dr. Schär saw UK value sales increase by 2.2%, but volumes were down.
“It’s been difficult for everybody, but particularly in our area, where we know that there is already a premium for gluten-free products because of the cost of manufacture,” notes Grimshaw.
This referred to the elevated levels of quality control “from field to fork” that are necessary to ensure ingredients are totally safe. To eliminate cross contamination, Dr. Schär has formed long-term partnerships with trusted farmers who have a two-field radius around their farms. Ingredients are also moved in controlled transport to production sites where they are analysed on arrival.
“Trying to transcribe that message to consumers is important, so they understand the quality of our products,” says Grimshaw. A recent Dr. Schär campaign, entitled ‘Gluten-free not hmmm free’, aimed to reinforce this idea among coeliac and gluten sensitive consumers in the UK.
Diagnosing the solution
Grimshaw believes there is a lot of opportunity to drive penetration in the gluten-free market, particularly via diagnosis. Charity Coeliac UK notes that the disease affects 1% of the population, but only 36% of those with the condition have been diagnosed. This means there are currently around half a million people in the UK who have coeliac disease but don’t know it.
“There are a number of areas where we believe that it’s going to be easier for patients to become diagnosed,” Grimshaw asserts. “So, I think diagnosis is an area where we have optimism that more people are going to come into the category.”
Dr. Schär’s stated mission is to improve the lives of people with special nutritional needs. “Eating habits and patterns exist, but largely our strategy is consistent throughout the group based upon that mission,” says Grimshaw.
To support this objective, the firm has developed several services such as in-house dietitians that help consumers through their diagnosis journey.
Coeliacs and gluten sensitive people tend to be the heavy buyers and are an understandable focus for the business. “Quite a small number of consumers buy a lot of the category, with 2% of buyers accounting for 37% of spend,” claims Grimshaw. He notes company research which showed that the shoppers exiting the category were the lighter buyers, who may be more trend driven.
Dr. Schär is keen to work with retailers to improve the ease of shopping for a specialised diet, which can be a “minefield”. “With technology, we could talk to consumers in store in a way that can help them navigate the fixture and improve their shopper journey,” Grimshaw adds.
Tasty new treats
With the business striving to cater to an ever-increasing demand for products free from allergens from both retailers and consumers, there considerable attention paid to NPD.
Some of the “great, interesting, innovative new products” recently launched by Dr. Schär include foldable flatbread, pitta bread and brioche burger buns. These will help attract new individuals into the category and get those existing shoppers buying more, believes Grimshaw.
“Now we’ve got a lot to talk about and a lot of people that we want to introduce to our brand,” he comments. “That’s really our focus – it’s ensuring that we’re bringing in some great products. So pretty exciting really that we’re able to move quickly and we’ve got a really exciting pipeline of NPD.”