From the April 2005 issue of Entrepreneur

For the 11 million-plus Americans who suffer from food allergies, finding great-tasting food products that meet their needs is a challenge. Still, as the demand for allergen-free foods rises among consumers, so does the opportunity for health-minded entrepreneurs. In fact, sales of food allergy and intolerance products jumped 17 percent in 2004 and are projected to reach $3.9 billion by 2008, according to Packaged Facts, a division of MarketResearch.com, which publishes reports on a range of consumer industries. Though children are more likely to have food allergies, entire families often adopt the allergen-free diet, in turn growing the market, says David Lummis, a project manager for MarketResearch.com.

The founders of Enjoy Life Natural Brands, Bert Cohen, 33, and Scott Mandell, 34, have watched the market grow since they launched their food manufacturing and marketing company in 2002. Selling only foods free of the most common allergens (eggs, fish, milk, peanuts, shellfish, soy, tree nuts and wheat are responsible for 90 percent of all allergic reactions in the United States), these Chicago entrepreneurs say their most popular products are granola cereals and cookies. But their bagels and snack bars do well in their online store and the specialty and health-food markets they distribute to, which are located throughout most of the country as well as Canada. Getting distribution for their specialty products is a challenge, says Cohen, but they're steadily growing with annual sales in the low seven figures.

And because their customers' lives are on the line--food allergies account for about 30,000 emergency room visits as well as 150 to 200 deaths each year, according to the Food Allergy & Anaphylaxis Network (FAAN)--Cohen and Mandell are meticulous about testing and monitoring cross-contamination in their facilities. "From a business perspective, there are three critical things," says Terry Furlong, COO of FAAN, based in Fairfax, Virgina. "An absolute knowledge of ingredients used, prevention of cross-contact in manufacturing and, perhaps most importantly, accurate labeling." The tiniest nut particle, for example, can cause severe allergic reactions, he says, so adhering to the strictest health, safety and contamination guidelines is vital. In fact, since the 2004 passing of the Food Allergen Labeling and Consumer Protection Act, all food manufacturers are required to indicate on the label the presence of any of the eight most common allergens.

Though it takes more diligence and probably more startup capital to launch an allergen-free food business compared with a regular food business, say experts, the rewards are tremendous. Just ask Kelly Koeller, whose Buffalo Grove, Illinois, store, the Gluten-Free Market, sells more than 670 gluten-free products to people who have celiac disease (a disorder where the body can't digest gluten, a protein found in grains such as wheat).

Founded in 2002 after his young son was diagnosed with celiac disease, Koeller's brick-and-mortar store attracts consumers from all over the nation. Though he also sells online, Koeller, 46, notes that most of his company's $400,000 in annual revenue comes from the store. "People walk in and have a story to tell," says Koeller. "People say, 'I don't have to read labels for the first time in my life.'" For those with food allergies, it's music to their ears.

Itching to Get Started?

Check out these online resources for more information about allergen-free products and businesses:

  • Celiac.com: A gluten-free resource page and directory

Also check out these gluten-free businesses: The Gluten-Free Pantry, The Gluten-Free Mall and Glutino.