Food makers trim low-carb plans as trend slows

By JANET ADAMY, The Associated Press, 7/12/04 8:42 AM

The Wall Street Journal

http://www.mlive.com/newsflash/busi...flash-financial

When Christine Conserva pitched her low-carbohydrate line of breads to a specialty-food market last month, she was politely turned away. The store, which catered to the low-carb crowd, was going out of business.

That didn't shock Ms. Conserva. After three years of strong orders, sales of her Accu-Carb breads are down by about half so far this year. Business "was excellent last year, and even the beginning of this year," says Ms. Conserva. Then in the spring, "it just started dropping."

As low-carb diet books hit the nation's best-seller lists, a raft of new food items stepped up to fill dieters' plates. But the tsunami of products -- coupled with early signs that carb-cutting may be waning -- is now creating something of a low-carb backlash: Food makers are revising their plans for new products amid disappointing sales and, in some cases, an inability to charge as much as they had planned.

Call it the food-fad effect. Past food trends show that only a fraction of new diet-driven products earn a permanent spot on supermarket shelves. When low-fat dieting became popular in the late 1980s, manufacturers took the fat out of everything from tortillas to spaghetti sauce. Low-fat varieties of some dairy products have become grocery staples, but many fat-free products didn't last because they didn't taste good, says Pete Mattson, chairman of food product-development firm Mattson & Co. As for the low-carb newcomers? In time, "a fairly significant portion of this stuff will be gone," predicts Mr. Mattson.

To be sure, sales of low-carb foods are still climbing and a number of food companies contend the trend hasn't lost steam. Manufacturers continue to roll out new products and some retailers -- especially large grocery chains like Kroger Co. -- are giving the goods more shelf space. During the first six months of this year, food companies launched 1,863 products geared to carb-watchers, according to packaged goods tracker Productscan Online. That's nearly three times the number introduced during all of 2003.

Yet sales growth of low-carb foods has slowed. For the 13 weeks ended March 13, sales of "carb conscious" products rose 95 percent to $336.1 million, according to market-research firm ACNielsen. But for the more recent period that ended June 12, they grew at less than half that rate, or 42 percent, reaching $478.3 million.

Food companies that were slow to roll out special products may have already missed the low-carb crescendo. The percentage of Americans who say they are following a low-carb regimen, such as the Atkins or South Beach diets, peaked in early February at 9 percent and hovered at 6 percent to 7 percent through early June, according to a survey by NPD Group Inc., a market-research firm in Port Washington, N.Y.

Several major food companies say their new low-carb products haven't exactly been flying off the shelves. George Weston Bakeries, a big U.S. food company owned by Canada's George Weston Ltd., recently stopped shipping some of its Atkins-endorsed Entenmann's bread products to some supermarkets after they sold poorly, according to Atkins Nutritionals Inc.

American Italian Pasta Co. had hoped that its reduced-carb versions of spaghetti, rotini and other noodles would offset sliding sales of traditional pasta. Instead, sales fell short of its expectations and the company cut the low-carb pasta's price. "It has not been the savior to the pasta erosion that has occurred," says Dan Trott, the company's executive vice president of marketing.

Industry experts say some products are struggling simply because new, better-tasting ones are displacing the first batch of low-carb goods created by tiny companies. Large food concerns that waited to launch products have had the luxury of tweaking recipes and backing their wares with big marketing campaigns.

Yet marketers are finding that consumers aren't always willing to pay a premium for reduced-carb products. Unilever Bestfoods had planned to charge as much as 25 percent more for salad dressings under its new Carb Options label, but was scuttled when Kraft Foods Inc. rolled out cheaper CarbWell dressings in March. General Mills Inc. has also cut the price of its Total Protein cereal.

On the retail side, those hardest hit are the niche players like Castus Low Carb Superstores Inc., a San Ramon, Calif.-based franchise chain that had planned to quadruple its owned outposts to 100 by the end of 2004. After recently lowering its expansion figures by about half, the company has hired a market-research firm to better understand what customers want.

Other specialty stores have been blindsided by market saturation. Three years ago, when Linda Langdon opened a low-carb market in Vancouver, Wash., lines stretched out the door of the then-novel store. Since then, 16 competitors have sprouted up within a 25-mile radius of her Simply Low Carb, causing Ms. Langdon to consider closing two of her affiliate stores in nearby Portland, Ore.

As Americans continue to tune their palates, some manufacturers are hedging their low-carb bets. General Mills, for instance, is offering foods that also address broader weight-management issues. Its Yoplait Ultra yogurts have less sugar, in addition to fewer carbs, than its regular low-fat yogurt. Carb Monitor frozen dinner rolls by the company's Pillsbury unit are both low fat and cholesterol-free. Says Chief Executive Steve Sanger: "We never thought the low-carb diet approach was necessarily a good long-term diet approach."

When I first started LCing, I bought lots and lots of LC products. But with the grocery bill and the high priced LC items, it just got to be too expensive. I have really slowed down with the LC products. If they were priced more appropriately, I would probably buy or use them more often. I also hate trying a New LC product, paying a good buck for it, and I end up throwing it out because it tastes disgusting. It's a real turn off to try new items, for this reason.

I agree, most LC products are way too high, why should we have to pay 25% more just because the manufacturers leave the sugar out or replace it with Splenda?

also, some LC products are lower in carbs, but not necessarily low-carb, meaning they aren't really suitable for Induction or OWL

the few LC products I've bought have sometimes strange tastes/textures, one main example being the first Atkins rye bread, the kind that had to be frozen/refrigerated. The slices were too dense and small although the taste wasn't bad. The current Atkins rye bread is much better, doesn't have to be kept frozen, althouth I keep it and all bread in the fridge.

one final comment re the article above: several people were quoted as saying that if you go off the diet, you gain the weight back. Well duh, the same is true of low-fat diets. If you go off, you gain the weight back!

that's never been used as an indictment against low-fat though, but used as just another reason to stay on low-fat! the bias is incredible

What happened to the specialty LC store is exactly what I expected when the big stores started carrying LC foods. And as for the rest of this article, "Well, gee, Americans don't want to pay twice as much for food that tastes like c**p? Who wudda thunk it?"

It would probably be for the best if the phoney low carb junk did disappear from grocery shelves. This way of eating was never about artificial foods.

Yeah, I know, there are a few good things. Sigh.

I eat LC ice cream, when I can find one that doesn't affect me (;-)). I have moved away from ALL wheat products, so I'm not affected by anything in that aisle. MOST salad dressings are naturally LC, so why would I buy anything new? Sigh.

Plus, there's a certain amount of hard work involved. LC alone won't fix the problem. You still have to eat less, and there's just something about pasta that doesn't lend itself to eating less (in my experience).

I, for one, am glad their plans to charge more were sunk. Some products are really junk, and I won't miss them. Just DON'T touch my LC Tostitos.

<tosses away her Tostitos and replaces them with LC Garcia chips w/ flax>

Here, try these instead.

<snarls menacingly> MY frankenfood!!!

Doesn't matter. All that food is garbage, all processed, and no better than the food it replaces.

Well, meat is processed, vegetables are processed...not as highly as Tostitoes, maybe, but still processed nevertheless.

For me, part of the attraction of the low carbohydrate WOE is that you get rid of most processed foods from your diet, since processed foods tend to be grain-based or high in sugar and starch with trans fats. Naturally, the food processing industry tried to cash in on the low carb wave, but it hasn't worked since serious low-carbers avoid processed foods and the not-so-serious have dropped out.

It's not surprising that a lot of the low-carb stores have suffered the same fate. Frankly, I felt that these stores were based on the wrong concept. They specialized in substitution products which don't interest the serious low-carber, and send the message about everything that we've given up to follow this WOE. I would love to see a store based on the concept of one-stop-shopping for the low carbohydrate WOE. It would feature high quality meats, fish, poultry, cheese, low carbohydrate fruits and vegetables, and naturally low carb gourmet and specialty items (pickled octopus, anyone). It would be a celebration of the low carb lifestyle and feature all the wonderful foods we get to eat.

My biggest love before low-carb was bread. I don't eat bread or bread substitutes anymore and I don't miss it. However, I've always felt that grilled eggplant tastes a lot like toast, which was my favorite form of bread. And last night I had grilled eggplant with dinner and enjoyed it as much as I used to enjoy my toast.

I would much rather stick with "minimally processed" meats and vegetables, like steak, eggplant and cauliflower, instead of trying to preserve my addiction to highly processed starches like bread and even some "minimally processed" vegetables like corn (I know, it's acutally a grain) and potatoes.

The two substitute foods I still buy are the LC Garcia chips and some LC tortillas. These are not the best food choices in an objective sense, but they are a great help to me in giving me the variety I need to stick to this WOE. I eat them only on weekends and then only in carefully controlled amounts. The weight is still melting off, and I feel great, so I'm happy.

So I can't be a "serious" low-carber and enjoy my Splenda-sweetened ketchup, an occasional sf candy or scoop of ice cream and snack on LC Tostitos once in a while? I'll take them over pickled octopus any day... seriously.

Sorry, ceberezin - I think my tossing her chips may have made her cranky.