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    COVER STORY: A lot to lose

    Low-carb mania is sweeping the nation, but is it a lifestyle change or just another oat bran-style fad?

    By Richard Turcsik

    A & P has a case of the low-carb blues. For starters, there's the endcap full of Unilever Bestfoods' new Carb Options line of mayonnaise, peanut butter, and salad dressings decked out in a baby-blue label. Then there are the blue "Low Carb" triangular shelf danglers. They're everywhere -- under an eclectic bunch of groceries including Haddon House roasted peppers, Mt. Olive relish, Bookbinder's stone-ground mustard, and just about the entire Del Monte canned vegetable line, along with the Ragu cheese-based pasta sauces, Old El Paso salsa, Wesson oil, private label America's Choice cream of chicken soup, and Smart Balance and Imperial margarines, various brands of ricotta cheese, and Philadelphia cream cheese in the dairy case. There's even one under the Cross & Blackwell ham glaze.

    Cream cheese and ham glaze positioned as diet foods? Welcome to the wacky world of low-carb diets.

    The merchandising tactics practiced in A & P can be witnessed in thousands of supermarkets across the United States, as consumers embrace Atkins and other low-carb diets that offer a promise of melting the pounds off with a diet rich in red meats, chicken, cheese, and other dairy products, while fruit, potatoes, breads, and other starchy yet highly nutritious foodstuffs are no-nos. That's why retailers have come up with shelf tags, tapes, static clings, special low-carb shelf sets, freezer doors, special sections in their weekly circulars, and a host of other ideas.

    As we enter National Nutrition Month, a.k.a. March, it's a good time to peer into the future of the low-carb food phenomenon. It's too soon to tell if it will permanently alter the way we eat, or if it's destined to be a short-term fad, like oat bran, low-fat, and scores of other diets. But one only has to stroll to the front end and thumb through Newsweek, U.S. News & World Report, Fortune, and dozens of other magazines to see that the low-carbohydrate diet is big. Depending on which study one looks at -- and there are dozens -- anywhere from 17 million to 50 million Americans are currently on a low-carb diet, with thousands more joining every day, and millions more are reading labels and cutting back on some carbs.

    Permanent lifestyle

    "Low-carbohydrate eating is clearly a trend, which will create a new segment," says Matt Wiant, chief marketing officer at Atkins Nutritionals, Inc. in New York. "Some consumers use low-carb to lose weight, but over half appear to be adopting this nutritional approach as a permanent lifestyle."

    The food industry has definitely taken notice. Restaurant chains Applebee's, TGI Friday's, Charlie Brown's Steakhouse, and others have developed new low-carb menus, while hamburger joints Hardee's, Carl's Jr., and Jack-in-the-Box have developed low-carb cheeseburgers wrapped in giant lettuce leaves in lieu of buns. Industry giants McDonald's and Burger King have gone one step further, offering their signature Quarter Pounder with Cheese and Whopper, respectively, without any kind of covering at the same price as their higher-carb versions with buns.

    In the grocery channel low-carbohydrate manufacturers and distributors, such as Keto and Atkins, continue to roll out new products, while mainstream manufacturers, including Unilever Bestfoods, Heinz, Hershey, Monterey Pasta, and Perdue, have either come out with new low-carb lines, reformulated existing products, or changed packaging to reflect their low-carb status.

    "Atkins launched over 50 new SKUs in 2003, including breakfast bars, muffin mixes, breads, ice creams, and decadent chocolate items," Wiant says. "Many supermarkets are merchandising these new items together in Atkins sections to make them easier for consumers to find, and to promote cross-purchases."

    Wiant isn't worried about the competition from the multinationals. "It validates the health benefits of the Atkins Nutritional Approach, and more food choices will make it easier for people to enjoy a controlled-carbohydrate lifestyle, which is a fundamental part of our company's mission," he says.

    But with every company and its wholly owned subsidiary getting in on the action, there are concerns that the low-carb bubble will burst.

    "I think everybody in the industry has the same question: 'How long is this going to last?'" asks Janet Tenney, manager of nutrition programs at Giant Food, Inc. in Landover, Md. The answer, she says, is simple: "Nobody knows." Tenney draws parallels to the low-fat diet craze of the 1990s. "It's misunderstood, and when people don't continue to lose weight and they find out that the taste of the products is often not that wonderful, the combination is going to cause a backlash," she says. "How soon that occurs, nobody can predict." Nonetheless, Giant is addressing the issue. The chain is carrying more low-carb products and is developing some marketing concepts.

    Those poor-tasting low-carb products really stick in Arnie Bey's craw. The chairman and c.e.o. of Tinton Falls, N.J.-based Keto Foods, the originator of the low-carbohydrate Keto Shake in 1998, is ticked off by unpalatable products from mainstream manufacturers looking to capitalize on a hot trend. Keto manufactures 140 SKUs covering a wide range of grocery products, including cereals, pasta, and ice cream. "Retailers need to taste," he says. "They need to vet, they need to screen, they need to filter these products, because right now, in the low-carb gold-rush atmosphere, the first-to-shelf urgency tail is wagging the consumer-preference taste dog."

    An easy way to test foods is to set up a sampling room at corporate headquarters and conduct taste panels with employees who actually are on low-carb diets. "Retailers need to round up people in their organizations who are living low-carb and have that taste sensitivity, and let them give their opinion," Bey says. "A lot of products won't make it to the shelf that way, and they'll save themselves a lot of complaints and problems with suppliers."

    Retailers should also keep an eye out for low-carb products high in sugar alcohol, Bey says. "Some products are as high as 28 grams of sugar alcohol. It doesn't have a laxative warning on it, and if someone eats two of these, they're going to spend a good part of the day in the toilet, and it can worsen existing medical conditions." But even that hasn't stopped scores of people from switching to a low-carb lifestyle.

    Jury still out

    Research from ACNielsen shows that more than 17 percent of U.S. households report that someone in their household is currently on a low-carb diet, while 19.2 percent report that someone in their household was once on such a diet, but is no longer. "The low-carb diet craze is having a significant impact on how people eat," says Todd Hale, senior v.p., Consumer Insights at ACNielsen in Schaumburg, Ill. "The number of people on low-carb diets is impressive and likely underrepresents the true story, since many more people may be selectively decreasing carbohydrate intake without considering themselves to be on a complete low-carb diet," he says. "However, the number of people who have tried a low-carb diet and are no longer on it is compelling, as well. The jury is still out as to whether the low-carb diet has staying power."

    "Americans are an instant-gratification society," notes Ellen T. Carroll, registered dietitian and senior editor and foods development director of Cooking Light magazine in Birmingham, Ala. "People see the low-carb diet as a magic bullet, and although it does require an extreme lifestyle change, they would still rather pin one food or food group as being a 'bad guy' among the others. The belief is, 'If I leave the bad guy off, then all of my weight problems are solved.'"

    Those "bad guys," including bread, sweet baked goods, and pasta, are fighting back. The manufacturer of Wonder, Home Pride, and Beefsteak Rye breads has introduced new low-carb white and multigrain breads under the Home Pride Carb Action label. "We're selling it nationwide, and like many of the low-carb breads on the market, our No. 1 ingredient is water," says Mark Dirkes, senior v.p., marketing at Interstate Bakeries Corp. in Kansas City, Mo. He notes that each one-ounce slice contains 10 grams of carbohydrates and four grams of dietary fiber, resulting in a net carb content of six grams.

    La Tortilla Factory can top even that. It's developed a large whole-wheat tortilla with five net carbs, and small whole-wheat, garlic and herbs, and green onion tortillas with three net carbs each. "In these tortillas there are no refined white flour or sugars added," says Rob Kelly, marketing director at La Tortilla Factory in Santa Rosa, Calif. "It's a mix of nutrient-rich whole-grain flours used instead of white flour."

    The tortillas are being targeted to the low-carb consumer. "Under that broad umbrella resides the low-carb consumer, the organic consumer, and the fat-free consumer," Kelly says. "As for Hispanics, while low-carb is not a craze in the Hispanic community, the low-carb lifestyle is beneficial to everyone, so we believe more and more Hispanic people will be discovering the benefits of low-carb in the near future."

    And if folks are still waffling on the issue, they can check out Van's Carb Manager frozen waffles, available in Homestyle, Butter Pecan, and Flax varieties. "Our waffles are made with all-natural ingredients," says Jim Kelly, c.e.o. of Van's International Foods in Torrance, Calif. "They contain no trans fats, which is very important. The natural trade and, we believe, the mainstream are ready for more items like ours."

    Van's Kelly says reducing the carbs while still maintaining excellent taste, texture, and quality is a major challenge. "The carbs are usually in the chief ingredients, which are sugar and enriched flour," he says. "You have to bulk up and use something to hold the product together, so we use a combination of soy protein, wheat gluten, and eggs to bind it together."

    Van's Kelly believes low-carb foods are here to stay. "I think it will probably evolve through some cycle, and the great products will stay out there and the not-so-great ones will fall by the wayside," he says.

    Thanks to companies like Dawn, there's now a low-carb future in the bakery department. It's introduced Dawn's Carb Appeal, a line of six varieties of prepackaged 2.25-ounce muffins and 0.85-ounce miniature muffins in clamshells, and half-ring cakes. Flavors include blueberry, double chocolate, carrot with walnuts, lemon poppy, apple spice, and banana nut. "We saw the need of what was missing in the marketplace," says Julie Chamot, market development manager at Dawn Food Products, Inc. in Jackson, Mich. "Our first goal was to address taste. We knew that customers are looking to increase variety while maintaining their commitment to the diet regimen. What we wanted to do was offer a product that was pretty indulgent in taste, but a lot less indulgent than regular baked goods in terms of carbs.

    "We feel there's an advantage in using the Carb Appeal brand name, because it really conveys sensible carb control and good taste," Chamot adds. "And it's easily recognizable for the consumer as a controlled-carbohydrate product."

    Galaxy Desserts has developed a line of low-carb cheesecakes and mousse cakes that began shipping to retailers last month, and with only five or six grams of net carbs, they're so rich that one can't tell they're low-carb. Jean-Yves Charon, the company's master pastry chef, developed the products. "We went through a testing process with about a half-dozen of our buyers throughout the country with our prototypes, to get their feedback," says Danny Rubenstein, chief orbiter at Galaxy Desserts in San Rafael, Calif. "We also did focus groups to make sure we were getting the right flavor profile, the right impression, and we far exceeded expectations on flavor every single time."

    The line is being backed with marketing support that includes promotions and demos. That may be needed, since the items could be priced a bit higher than Galaxy's other desserts. "Our research shows that if consumers like the flavor and taste of a product, they might pay a little bit more for it if it's low-carb," says Rubenstein, adding that demand for the products has been strong across the country.

    "Low carbs won't be a Pet Rock," he says. "I don't think it will go away. There's some trend aspect to it, but when the water settles it will settle at a level that's still very substantial."

    Low-carb Hershey's bar

    Carb-counting customers with a sweet tooth can also turn to Hershey, which has developed the great American low-carb chocolate bar, marketed under the Hershey's 1 g Sugar Carb brand name. It's available in chocolate candy, chocolate candy with almonds, and chocolate candy with soy crisps flavors, and is sweetened with erythritol and inulin instead of sugar. "The nice thing about erythritol is that you get the benefits of sugar alcohol without the laxation effect," says Christine Dugan, a spokeswoman for Hershey Foods Corp. in Hershey, Pa.

    "Our advertising and marketing will tie it in with the nutrition aisle, but certainly there's an opportunity for dual or even triple placement with the candy aisle and checkout counters," Dugan adds.

    One of the categories hardest hit by the low-carb phenomenon has been pasta. According to ACNielsen, for the 52 weeks ended Dec. 27, dry-pasta unit sales plunged 4.6 percent to 1.2 billion boxes. But at a mid-February conference in Rome, a plan was laid out for a counterattack. "The pasta and grain companies have got to start some education campaigns about what happens when you eat a diet that's high in fat," says Dun Gifford, president and founder of Oldways Preservation Trust, the Boston-based food-issues think tank that conducted the conference.

    "We'll provide the scientific background for campaigns for companies that need some help to get back to the middle again," Gifford says. "Pasta is a healthy food. It's a good carb that's easy, quick, and inexpensive."

    Monterey Pasta is addressing declining category sales by coming out with a line of Carb-Smart refrigerated pastas and sauces, which contain roughly half the carbs of traditional products. "They're fresh and refrigerated, which we believe makes us first and unique in the marketplace," says Kevin Kiper, marketing director at Monterey Pasta Co. in Salinas, Calif. Carb-Smart consists of six filled and sheet pasta products, a four-cheese sauce, and cheese manicotti.

    Monterey looks for the line to help it win back shelf space. "The pasta category has taken a beating as a result of the low-carb craze, and the response from retailers has been to take space away from pasta," Kiper says.

    That's also been happening in the juice aisle. To address that issue, Mrs. Clark's Foods has come up with a line extension of private label low-carb juice products. "We're getting requests to try to revamp and lower the caloric and carbs of literally all of our juices," says Bruce M. Spurlock, national sales & marketing manager for Mrs. Clark's Foods in West Des Moines, Iowa.

    Low-carb is also muscling its way into the deli case. Perdue has added new low-carb messages to its successful Definitive Deli branding program. Shelf danglers, countertop easels, and T-stand signage that shouts: "Zero Carbs!" and "For your LOW CARB lifestyle!" are now appearing in stores. "Our goal is to position our deli products in their existing form to appeal to the folks that are motivated by carb and protein content," says Joe Burns, senior marketing manager, deli channel at Perdue Farms, Inc. in Salisbury, Md.

    The program includes hot rotisserie chickens, sliced-to-order luncheon meats, and the Perdue Deli Pickups line of prepackaged sliced turkey products. "The beautiful thing about this is that our product is naturally low in carbs, and we haven't changed it in any way," Burns says.

    Low-carb mania has even hit the natural and organics aisle. HomeGrown Natural Foods, Inc., manufacturer of the Fantastic Foods instant-meals brand, has rolled out a line of low-carb instant soups under the Carb'Tastic sub-brand. "We looked at our top-selling cup flavors and figured out how we could refine them to make them low-carb," says Sarah Bird, v.p. marketing at the Napa, Calif.-based firm. "We were successful in significantly lowering the number of net carbs. Our line to date has been very focused on bean and pasta-type ingredients, so we're using less of that, and more soy," she notes. "We're using textured soy protein. You get a good fiber hit, a good protein delivery, and not huge carbs."

    Judging from initial reaction, it looks like HomeGrown has a homegrown hit. The line will be followed up by five low-carb versions of its Fast Naturals shelf-stable meals. "The reception from the trade has been just wonderful," Bird says. "We've had a really good response, and things are getting on the shelves almost overnight, which shows that the demand and interest are both retailer- and consumer-driven."

    Let's hope this is one diet that both parties will be able to stick to for the long haul.

    By Richard Turcsik
    • About Richard Turcsik

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