28/05/04 - Business section

Atkins could spell lean times for UK
Richard Thomson in New York, Evening Standard

THE British food industry is about to be hit by a tidal wave - in the shape of the Atkins low-carbohydrate diet craze.

Up to half of all Americans are said to be trying to follow the diet - and its popularity is expected to reach similar massive proportions in Britain. The theory that carbohydrates make us fat has caused the biggest change in dietary habits in the States for more than a decade.

The first sign of what is to come in Britain may be that UK catering group Compass, which has cafeteria contracts and vending machines across the US, has already launched a range of low carb products.

This gives it a head start on purely domestic European companies, which may be caught flatfooted by the diet's sudden popularity. US giants such as Kraft and General Mills found that demand for their carb-heavy products suddenly slumped and are now rushing out low-carb food.

Unilever, whose Slim-Fast diet has been hit by Atkins, has launched a range of 18 Carb Options - low-carbohydrate bars, sauces and salad dressings - in the US with new products on the cards in Europe.

Even fast-food bastions McDonald's and Burger King have had to devise low-carb alternatives to French fries and Coke, which are high on the dieters' list of no-nos. Krispy Kreme, whose sole product is sickly sweet, melt-in-your-mouth doughnuts was until recently a cult among sweet-toothed Americans.

But this week the company reported a $24.4m (£13.4m) first-quarter loss, after a $132m profit last year. Krispy-Kreme is cutting back ambitious store-opening plans and has taken a $7.5m charge for closing down some outlets.

But for every carb vendor that suffers, a protein purveyor gains. Increased protein intake is at the heart of the Atkins diet, so producers of meat and eggs are celebrating.

American demand for meat is shooting up. Shoppers are so focused on their waistlines that they are now showing no sign of concern over mad cow disease. But the biggest gainers of all could be Atkins Nutritionals, founded by the diet's late inventor, Dr Robert Atkins.

Goldman Sachs and private equity firm Parthenon Capital last year bought 80% of the company for $533m. In a move to fatten their earnings, they are understood to be planning a flotation this year or next that analysts say could be worth $2.2bn


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