December 20, 2004
by Margaret Stafford
Americans appear to be losing their appetite for low-carb foods. After a glut of protein-heavy cookbooks and advertising in recent years, the latest diet trend may have run its course.
A study by NPD Group, an independent marketing information company, found that the percentage of American adults on any low-carb diet in 2004 peaked at 9.1 percent in February and dropped to 4.9 percent by early November.
Further, it said only one of four people surveyed was significantly cutting carbs and “virtually none” were reducing carbs as much as the diets recommended.
About a year ago, Dave Champlin and his two roommates lived in what their friends at the University of Missouri called the House of Fat. At a combined weight of 890 pounds, the three decided to try the Atkins diet. By sticking to the low-carb, high-protein diet, Champlin lost about 45 pounds and his roommates each lost between 50 and 60 pounds.
Despite being pleased with the results, all three were off the diet by this past summer and have gained back some of the weight. Champlin, 23, and his friends exemplify why many diet and food industry experts are declaring the low-carb diet craze over.
“It just got kind of tiresome,” Champlin said. “Eating the same thing over and over. It was monotonous.”
As a result of dietary turnarounds such as Champlin’s, many companies that rode the low-carb wave are either out of business or refocusing their strategies.
One example: MGP Ingredients Inc. of Atchison, Kan., which profited from the low-carb trend, earlier this month announced it was cutting its fiscal 2005 per-share earnings forecast by more than half - from $1.08 to no more than 50 cents.
The reason is reduced demand for its specialty proteins and starches used to reduce carbohydrates in foods. MGP said low-carb demand had peaked, and it did not expect it to return to anywhere near the level that sparked a 123 percent increase in sales in the third quarter of fiscal 2004.
MGP always expected the low-carb demand to cool, but it happened more quickly than anticipated, spokesman Steve Pickman said.
“We expected at least to continue at its strong level for the next 18 to 36 months,” Pickman said. “We by no means feel low-carb is dead, but it’s declined to a much lower plateau than we or the industry expected.”
While MGP’s future is not threatened, many smaller businesses based on low-carb products have closed their doors, and larger companies that introduced low-carb foods are changing strategies.
American Italian Pasta, the nation’s largest producer of dry pasta, reported a net loss of $12.2 million, or 67 cents per share, in the second quarter of this year. The company’s reduced-carb pasta was a flop, with sales 50 percent lower than expected. Chief Executive Tim Webster said the company planned to begin marketing it as a low-calorie, high-fiber product.
No one expects low-carb products to disappear. ACNielsen LabelTrends reported that sales of products labeled for low-carb lifestyles were still growing but had slowed. Sales, in terms of dollars, rose only 6.1 percent for the 13 weeks ended Sept. 25, compared to the previous quarter. That compared with a 105.5 percent increase in the 13 weeks that ended March 27.
That decline is not surprising, even at Atkins Nutritionals Inc., a company founded 30 years ago by Dr. Robert C. Atkins to spread the low-carb gospel.
Colette Heimowitz, vice president of education and research, said the market became saturated with low-carb products because companies joined the “diet wars” in 2004. She said many companies are expected to withdraw from the market because of the intense competition for dieters.
Heimowitz said people have been calling the Atkins diet a fad for 30 years. “It has already stood the test of time,” she said. “There is no indication that it’s going anywhere.”
She predicted people will continue to incorporate it into their lifestyle.
That’s true for Champlin, the Missouri student, who said he will continue to buy some low-carb products.
“It did teach me to watch what I eat and drink,” he said. “I’m not going to go back to how I ate before.”
Others say the decline in low-carb popularity was entirely predictable, much like past crazes such as low-fat or liquid diets.
“It was overhyped from the beginning, a craze that was never a craze,” said Bob Goldin, executive vice president of Technomic Inc., a food industry research firm. “It was a little bubble that had zero staying power. We’ve been there, done that, many, many times.”
Goldin said companies suffering because they got on the low-carb bandwagon have only themselves to blame.
“Everyone’s always looking for the silver bullet, a magic diet or a magic pill,” he said. “The whole industry needs to look at nutrition from a holistic standpoint. A lot of things go into healthy living, and they shouldn’t look for one thing to make their fame and fortune.”