Will Gluten-Free Be Lucky Charms' Pot 'O Gold?

By Lauren R. Hartman, Product Development Editor

Jul 02, 2015

With sales of gluten-free foods doubling in the past four years to more than $23 billion from $11.5 billion (according to Nielsen), General Mills, Minneapolis, wants in on the action to boost slumping cereal sales. It plans to produce a gluten-free version of Lucky Charms later this summer. The news about the "Magically Delicious" but gluten-free marshmallow-spiked cereal is only a part of the company's extensive $712-million capital investment in its food-manufacturing business, which also includes adding gluten-free versions to five of its Cheerios varieties some time this summer. 

Last month, the company announced that it will remove artificial flavors and colors from the remaining 40 percent of its cereals that still contain artificial sources.

Most of General Mills' Chex brand cereals are gluten-free, and have been since 2008, when gluten-free Rice Chex became the first mainstream gluten-free cereal product available in the category.

Kendall Powell, chief executive of General Mills, notes that about 30 percent of consumers are interested in gluten-free foods, and “have left the cereal aisle as a result.” Once gluten-free Cheerios and Lucky Charms get into stores, gluten-free products will comprise more than 50 percent of Big G's cereal sales, and 17 percent of total category sales, the company estimates.

Reporting its fourth-quarter earning results July 1, the company stated that going forward, it plans to increase its core brand strength, develop strong new products and continue its cost savings initiatives. Its U.S. retail sales of cereals reportedly fell this year, even as the company's brands increased their share of the cereal market.

With gluten-free products being gobbled up by consumers who don't even have gluten issues, the company is betting that the time is right to become more involved in the gluten-free products segment.

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