By ,
Published January 14, 2015
The clock is ticking for makers of packaged foods aimed at low-carb dieters as more U.S. consumers are abandoning the protein-heavy regimens.
In just a few months, a barrage of new low-carb products like Kraft Foods Inc.'s (KFT) Oreo CarbWells and Unilever Plc's (search) Ben & Jerry's Carb Karma ice cream have crowded supermarket shelves, and even mainstream food publications are scrambling to cater to carb-wary consumers.
Martha Stewart Living magazine (search) has recipes for "breadless stuffing" in its Thanksgiving issue, TV's Food Network (search) launched a show called "Low Carb and Lovin' It," and Bon Appetit (search) magazine added a low-carb option to its menu guide.
But behind such reinforcement of the "low-carb lifestyle," the percentage of Americans following diets like Atkins and South Beach dropped to 4.6 percent in September from 9 percent in January, according to research firm The NPD Group (search).
Sales of "The South Beach Diet (search)" book slowed to about 20,000 copies a week in early October, down from around 70,000 a week during what some experts said was the peak of the low-carb diet craze in early March, according to Nielsen BookScan.
"The bloom is off the rose," said Bob Goldin, executive vice president of food industry consulting firm Technomic. "It doesn't look like the market has any staying power."
Even former U.S. President Clinton, a lover of fast-food who underwent emergency quadruple bypass heart surgery in early September to relieve clogged arteries, said last week on ABC's "Primetime Live" that he wished he had foregone his relatively recent low-carb regimen of steaks and cheeseburgers in favor of a diet lower in fat.
The fall-off in interest has been accompanied by slower sales of products aimed at enhancing low-carb diets. Dollar sales of such foods rose 6.1 percent during the 13 weeks ended Sept. 25, down from double and triple-digit gains in the previous six periods, according to ACNielsen LabelTrends (search).
NPD vice president Harry Balzer attributed the continued sales growth to consumers' willingness to try new things, but said the challenge is to get them to keep buying products often seen as costing more while not tasting as good as than the original versions.
"That's where the problem lies," Balzer said, adding that he did not expect the low-carb trend to last any more than another two years. "We'll see a lot of (food companies) discover that this just isn't selling."
Some of those companies are already feeling the brunt of low-carb backlash. American Italian Pasta Inc. (PLB), grain processor MGP Ingredients Inc. (MGPI) and dairy company Dean Foods Co. (DF) all recently said disappointing sales of their low-carb products would hamper future profits.
"A lot of the food marketers are jumping on the bandwagon after the wagon has already left," said Bon Appetit Editor-in-Chief Barbara Fairchild.
The race by food manufacturers to offer low-carb versions of everything from yogurt to bread has contributed to the problem by creating a glut of those foods.
"The whole category is going to show some decline," said SunTrust Robinson Humphrey analyst Bill Chappell. "I might occasionally try low-carb pasta but I don't need 10 different versions."
Saturation in the low-carb market has taken the biggest toll on smaller niche players, the most high-profile of them being the company behind the Atkins Diet (search). Atkins Nutritionals Inc. said in September it hired a turnaround specialist and will cut jobs due to stiff competition from the growing number of low-carb products.
And investors are already scrambling to cash in on an implosion in the trend. Shares of egg company Cal-Maine Foods (CALM), which have enjoyed a strong run-up as low-carb dieters drove up the demand for eggs, has attracted a horde of skeptical investors.
An estimated 83 percent of Cal-Maine shares were sold short in the 30 days ended Oct. 15, according to Rhodes Analytics. Short-sellers borrow shares then sell them, hoping they will fall. If that happens, they can buy at a cheaper price, return them to the lender and pocket the difference.
https://www.foxnews.com/story/low-carb-food-sales-cooling-off