The near-absence of low-carb products at the recent Natural Products Expo East trade show in Washington, DC, has confirmed what many industry observers have been saying for some time — the US low-carb phenomenon has peaked. It may be at other points of its evolution in other markets, but in the US at least, the facts speak for themselves.
The year 2004 will go down as a record year for American low-carb product launches with something like 2,500 introductions, or 17 per cent of all food launches, according to New York-based researcher Productscan Online. However, most of these occurred in the first half of the year and SKUs (stock keeping units) in retail outlets have been falling ever since. SKUs dropped by more than two-thirds between June and August, according to Productscan Online.
Natural food retailers in Washington told FF&N the demand for low-carb products had fallen as early as February this year. Several ingredients suppliers said revenues in low-carb lines were down in recent months.
However, mainstream outlets continue to carry major food company low-carb lines. A Unilever spokesperson said the food giant was retailing about 30 low-carb products in the US and reported steady sales on most lines.
Will low-carb lifestyle succeed?
Tom Vierhile, executive editor of Productscan Online, said while a low-carb diet would maintain a niche core constituency, the majority found it too difficult to adhere to and the available foods unsatisfactory in taste. He said the low-carb industry has also been tainted by confusion and controversy over the meaning of ?net carb? labelling, which has been under Food and Drug Administration scrutiny and will be banned in Canada in January 2005.
Some consumers may be pursuing low-carb dieting but in a more informal fashion than the regimes proposed by the likes of Atkins and other low-carb methodologies.
?It won?t die completely, but 2005 is going to be a very quiet year for the low-carb industry,? Vierhile predicted. ?The problem with the low-carb diet is people go off the wagon, so to speak, after three to six months. Atkins has pushed it as a lifestyle — not a diet — but consumers have felt it was a diet and that is why interest has waned.?
?Atkins is beyond what?s sustainable, but the physiology of high-protein, low-carb works,? observed Steve Snyder, vice president, sales and marketing, Cargill Health & Food Technologies. ?It might not be called Atkins or low-carb, but protein is a neat place to be.?
Vierhile said the low-carb surge has focused attention on the difference between good and bad carbs and the need to eat healthier foods but noted, ?The fickleness of consumers should never be underestimated. Anything that spikes like low carb should always be viewed with suspicion. Frozen yoghurts are another example. It?s the trends that grow slowly that tend to have sustenance. Look at bottled water.?
Some see low carb rising
Jim Haun, president of Oregon-based low-carb pioneer CarbSense Foods, said his company had notched reduced sales in the second half of the year but noted demand had begun to surge again. He sees consumers coming back to the dedicated low-carb brands after experimenting with mainstream offerings from the likes of Kraft, Unilever and Pepsi/Frito-Lay. ?2005 is going to be a good year for us,? he said.
Patrick Rea, research director at San Diego-based Nutrition Business Journal, also believes low carb will continue to be successful. ?The data I have seen tells me low carb isn?t dead and buried but experiencing a market share shift from the first-mover core brands like Atkins, Keto Foods and CarbSense to the second coming of brands from the conventional food companies such as Kraft and Pepsi.?
NBJ estimates the low-carb market will be worth more than $2.7 billion in 2004 — almost double 2003 figures — and grow by 30 per cent to $3.5 billion in 2005.