Business closures, product withdrawals and severely scaled-down sales forecasts have been flying faster than the product launches that characterised the low-carb sector a mere 18 months ago. Yet while low-carb continues to turn in lacklustre figures, few are predicting its total demise.
In Europe, Atkins Nutritionals UK went into administration after poor sales and mounting debt forced it to pull the plug. In the US, New Jersey-based Keto Foods shut shop amid plummeting sales, while other players are reported to be on the rack.
Food giants have also reduced lines with Unilever Australia admitting they got it wrong when they embarked on one of Australia?s largest food launches last year. It has since reduced its CarbOptions range and is scaling back annual sales forecasts almost tenfold — from $50 million to as low as $5 million. Others like Pepsi and Nestle have followed suit and pulled back from their low-carb commitment.
Despite claims of a significant market share in the UK (25.6 per cent of the slimming market), Atkins UK called in administrators in March, and as FF&N went to press was seeking buyers for the going concern that includes sales in the UK and other European markets such as Scandinavia, Belgium and the Netherlands. Matt Wiant, chief marketing officer for Atkins Nutritionals US, acknowledged that ?while the UK market remains viable, the swift entry of major new competitors, including the introduction of own-label products, requires that we find more efficient ways to operate.?
Jeremy Willmont, a representative of the administrator, confirmed sales of Atkins products were strong and would continue indefinitely or until a buyer was found. Atkins US was not liable for any debts incurred by the UK company, he said. ?We are doing everything we can to assure continuity of supply because there is demand.?
He blamed ?the costs of launching and supporting a brand? for the closure rather than any fall-off in demand for low-carb products, a view echoed by Atkins? chief rival, Carbolite Europe, which markets a range of 17 low-carb products under the brand CarboRite in the UK.
?Our brand is going extremely well,? its marketing manager, Mary Young, said. ?We?re looking at expanding into mainland Europe at the moment, starting with Germany. We have built Carbolite on a taste profile platform, and that is why we are continuing to grow,? she said.
US market ?ailing?
The director of New York-based researcher Productscan Online, Tom Vierhile, observed the US market was ?ailing but not quite dead.? Productscan Online reported 196 new low-carb or no-carb food and beverage launches in the US in January — an increase on December, followed by 330 introductions in February. However, by presstime, there had been only 44 launches into the second half of March.
After attending Natural Products Expo West in Anaheim in March, Vierhile told FF&N, ?the pipeline of new products coming into the low-carb/no-carb niche is very thin.?Companies have moved on from low-carb into other areas including whole grain.
?One of the stories coming out of the show is that bread is back. Nobody is apologising for it anymore. While some companies are talking about low-glycaemic index products, it is not a huge number as yet, and I think the concept is way too complicated for the average math-challenged American consumer to grasp.?