As frustrated consumers warm to low-carb diets, food, beverage and restaurant brands have been right behind them. Big brands including Heinz, McDonald’s, PepsiCo, KFC, Coors and Hain Celestial Group either have just plunged into this marketplace or are making plans to do so soon, joining early committers such as Anheuser-Busch, with its hot-selling Michelob Ultra beer, and an array of small companies that have been feeding the trend for years. Sales for low-carb specialty-product companies such as Atkins Nutritionals Inc. are spiraling skyward, as is the low-carb business of Internet-based diet-plan companies such as eDiets.com.

“Within Hain, we’ve never launched a brand, so this is pretty significant for us -- we’ve bought and repositioned and redirected every single brand we have,” Simon explains. But Hain approved the Carb Fit concept, he says, as long as each product is co-branded with one of Hain’s best brands. Additionally, he says many retailers are segregating low-carb products in a special area of their stores. “Lower-carb products taste different, and you don’t want to confuse consumers. People need to know that they’re buying a lower-carb product.”

Though McDonald’s is deferring a decision for now, other fast-food chains are jumping on the low-carb bandwagon without reservation. Blimpie International Inc. is testing a Carb-Counter Menu at its Long Island, New York, venues as the first step in a national roll-out of its new lower-carb menu offerings. Blimpie is trying to gain some marketplace momentum from giant rival Subway, which has succeeded nicely in positioning its brand squarely in the better-for-you category over the last couple of years.

And as with so many other low-carb introductions, the impetus for Blimpie CEO Jeff Endervelt was personal. “As someone who has been on and off a low-carb diet for years, this was a natural for me,” Endervelt says. “But we could also see a sea change among consumers that was happening. So we started on this back in February.”

The Carb-Counter Menu features new menu items from Blimpie, Atkins Nutritionals Inc. and SoBe, the PepsiCo new-beverage unit, as well as lower-carb versions of existing menu items. Items from the low-carb menu are available individually or as part of a new Carb-Counter Combo that includes a choice of sandwich, Atkins chips and a beverage. And consumer reception for the more highly seasoned, less sweet low-carb bread in the Carb-Counter sandwiches has been so strong, Endervelt says, that Blimpie plans to sell the bread alone on a retail basis within a few weeks.

For some big food companies, the low-carb imperative can whipsaw brands. Pittsburgh-based H.J. Heinz Co., for example, announced that in February it plans to introduce a low-carb ketchup called One Carb, which cuts carbs from regular ketchup by 75 percent. And any day, Heinz is set to announce low-carb versions of its Smart Ones frozen-dinner line.

Yet one of the company’s other major brands, Ore-Ida potato products, which includes French fries, apparently is suffering from the trend. Industry-wide sales of French fries, for example, were down by more than five percent from a peak of US$ 520 million in the first quarter of 2001, according to the United States potato board. Concerns about trans-fats in the oils used to prepare fries, especially at restaurants, also contributed to the downward trend.

Meantime, instead of receding after the death of its founder, Dr. Atkins, last winter, Atkins Nutritionals has exploded further into the food business and now is selling its own brands of ice cream, brownies, blueberry muffins, spaghetti, pizza, bread, milk and chips. And top executives of New York-based Atkins have indicated that they want to make a multi-billion-dollar brand out of Atkins, which until quite recently sold only shakes and nutrition bars.

The dramatic shift toward low-carbohydrate products – and, of course, away from higher-carbohydrate products – appears to have sacked Kraft during the third quarter, when the company said that softening sales of Oreos and other cookie brands in its Nabisco division were partly responsible for lower earnings.

Kraft has a US cookie-market share of about 40 percent, and CEO Betsy Holden conceded that it was beginning to lose some of that to Atkins and other “healthy-cookie” -- mostly low-carb -- brands. Another problem for Oreos and other cookies is growing consumer awareness of and aversion to the trans-fat content of those products.

Even more dramatic has been the fallout for sales of Unilever Plc’s Slim-Fast liquid and powder products, which declined nearly 21 percent during the 52 weeks ending September 7 in US grocery, drug and mass-merchandise chains (excluding Wal-Mart), to $333 million, according to Information Resources Inc., the Chicago-based tracker of consumer packaged goods. Slim-Fast’s performance was the worst by far of any major brand and dragged business for the entire category nearly six percent lower for the period, to an industry total of about $960 million, IRI said. The big winner? Liquid and powder weight-reduction products offered by Atkins Nutritionals soared by more than 147 percent during the period.

What’s worse for the Slim-Fast brand is that Unilever executives seemed to have been caught a bit flat-footed by the speed and severity of the erosion of their sales by consumers’ gravitation toward lower-carb alternatives. In fact, among the newest products introduced by Slim-Fast are a series of pasta dishes which apparently weren’t developed -- and aren’t being marketed at all -- toward low-carb sensibilities.

One late-coming indication that Slim-Fast may be ready to hop on the low-carb bandwagon, though, is that it is introducing a new line of snack bars called Success, “for people who count carbs.” No other information was available about Success; Unilever executives weren’t available for comment.    

[24-Nov-2003]