Initially, I had set up 3 groups under the user settings in order to allocate students to tutors for marking, directing messages etc. But following your hint, I looked at the course settings - and groups had not been set up (to my surprise, since I had). So I selected "separate groups". Then this option appeared in the gradebook.
For the ignorant like me, it would be useful if there was a help button whenever a choice about groups appears, referring the administrator/designer to the course setting of groups. I have no idea what other aspects the course setting > groups affects, activated or not.