How hot is gluten-free? People are starting to bet big bucks that it’s here to stay, providing more options for consumers and more problems for conventional baking companies. Last month, Awrey’s Bakery, Livonia, Mich., announced it’s rolling out nearly 40 gluten-free products, including flour and brownie mixes, bread, buns, muffins and dinner rolls.

Competition in this segment will heat up even more when Fancy Pokket Corp. opens a 58,000-square-foot dedicated gluten-free facility in Lancaster, S.C., in a few months. The $13 million to $14 million investment is a big move for Mike Timani, president and chief executive officer of the Canadian company, which currently bakes pitas, pizza crust, bagels, tortillas and panini bread in its 32,000-square-foot bakery in Moncton, N.B.

The new Lancaster bakery, which Mr. Timani called “the second-largest facility of its kind,” has been in the planning stages for more than two years.

“It will be a first-class operation, all new machinery in place and highly automated,” he said. The bakery will produce gluten-free sandwich bread, whole grain specialty bread, buns, focaccia, cookies, pound cake, banana bread and lemon poppyseed loaves. Initial plans called for a $6 million, 30,000-square-foot plant, but Mr. Timani nearly doubled the facility’s investment in automation when he learned that projected demand for its gluten-free items would outstrip expectations.

Last year, Boulder Brands, the Boulder, Colo., baker of Udi’s and Glutino gluten-free baked goods — combined three manufacturing locations into one 187,000-square-foot operation.