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Why is Gluten Free So Expensive?!

Why is Gluten Free So Expensive?!

This is another question that we get asked at least daily at the bakery. “Why is gluten free so expensive?” As much as I would like to say that it is because we are making ginormous profits on everything and are living the high life, that is unfortunately not the case. The plain and simple truth is that the cost of producing a gluten-free loaf of bread is significantly higher than a loaf made with wheat. There is a lot more to the gluten free prices story than it seems!

Ingredient prices, the technical skills required from the bakers, a lack of economies of scale, and additional supply chain and distribution costs all contribute to the higher price of gluten-free bakery products compared with their wheat-based counterparts.

Raw Ingredients – Wheat is King

Most of the wheat flour used in the US to manufacture conventional bread is made predominately from US grown wheat. Wheat production in America is a huge industry, and is even one of the most subsidized in the country. This means that farmers are given incentives to use their land to grown wheat instead of other crops, like gluten free grains. In 2011, American farmers harvested 45.7 million acres of wheat! Compare this to the only 2.9 million acres of rice harvested, and you will see why wheat can be sold at a much lower price (source).

Most of the wheat harvested is then processed in large, computer-controlled mills that can produce thousands of tons of flour per week with little human intervention. A gluten-full bakery factory will bring in multiple deliveries each day of 30 tons or more of wheat flour. This flour is very consistent and has been made to the exact requirements of the bakery.

To match the qualities that wheat brings to a loaf of bread,  gluten-free manufacturers must source their ingredients from a much wider range of crops that are produced on a much smaller scale in the U.S. Many gluten free grains must be sourced from overseas because the quantity and quality of these products in the U.S. are simply not high enough to create great gluten free breads. Depending on the product and manufacturer, these products include flours created from rice, potato, and corn – none of which are produced with the bakery industry in mind. The majority of these products are imported in small quantities making them significantly more expensive than industrially available wheat flour.

Production – Separate, Not Equal

Because of the risk of cross contamination, gluten free grains must be processed in separate facilities from wheat to remain gluten free. A great example of this is gluten free oats–the grains themselves are completely gluten free, but they are often processed in the same facility and sometimes even on the same equipment as wheat and gluten-filled grain. For a Celiac or gluten-intolerant person to consume these oats poses significant risks. However, many grain processors are not inclined to run separate plants for gluten-filled and gluten-free grains as this significantly increases their production costs. When only gluten free grains are processed in a facility, the range of business that the company can do becomes more limited. As the volume decreases, the price of the product increases.

Little Fish in a Big Pond – Small Market Share

The gluten free market is a fairly specialized market. Even as the diet grows in popularity, the number of people regularly consuming gluten free products are in the minority. Only about 30% of adults in America are interested in a gluten free diet, and less than 3% actually consume an exclusively gluten free diet (source). As interest increases, more large suppliers will start sourcing the raw ingredients in bigger bulk, lowering the production costs and therefore the end price of the products. But for now, most gluten free manufacturers are unable to purchase ingredients in the same large quantities as wheat-based producers and for that reason are forced to sell at higher prices.

Grocery Marketing Strategies – Gluten Free Loss Leaders?

The following is a story written by Laura Huffman of “Wheat Free Nutrition.” When she found out she had Celiac and dairy intolerance, she set out to create a creamy soup that was not only delicious, dairy-free, and gluten-free, but was also on par price-wise with it’s gluten-full equivalents. She quickly found out just how much a challenge that was. One year at a Gluten Free Expo, a woman came to Laura’s booth and asked, “Are your soups expensive?” Laura responded, “What do you consider expensive?” The woman answered, “Anything more than a dollar a can.” Laura was stunned. She could not believe this woman was serious, but she was. Laura had thought that she had done really well to have her gluten free, dairy free soup priced equivalently to a full price name brand can of cream soup. But the woman was used to finding traditional canned soup for under a dollar during sales.

Groceries will often sell popular or “staple” items (like bread!) at cost or less knowing that it will lead people into their stores. Once in the store, customers usually buy other things that have higher markups, which is where the store makes its profit. These reduced-price products are known as “loss-leaders.” There is not (yet) a large enough consumer base for gluten free for such products to be effective loss-leaders.

So what does that all mean?

Hopefully you now understand a little bit better why your gluten free products are more expensive than their gluten-filled counterparts. On the bright side, think of all the delicious naturally gluten free products you can enjoy! Fresh fruit and vegetables, meat, and most importantly – wine. And the price of gluten free products is continuing to decline as the cost of producing them goes down. As more and more people begin to realize the benefits of living a gluten free lifestyle, the demand for gluten free products will rise and the overall cost will decrease. Who knows, in the future it might be even cheaper to eat gluten free than it is to eat wheat!

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