Kraft to Launch South Beach Diet Brand

Kraft Foods Inc. (KFT), best known for products like Oreo cookies and macaroni and cheese, said it is adding the South Beach Diet (search) brand to its portfolio in its latest attempt to address concerns about obesity and health.

The new products — which include cereals, wraps, frozen pizzas and entrees — will be launched in the spring and come as interest in low-carbohydrate diets like Atkins are waning.

The new brand could help Kraft, which has faced criticism by analysts over its product development pipeline, but only if it were positioned properly, according to Ken H Cannondale Associates.

"South Beach may work if the products are positioned in a whole-health context," Harris said. "It will not work as part of an extension of a low-carb diet. The trend has moved quickly away from low-carb, which has been classified as a fad diet, to whole health and the maintenance of a healthy lifestyle."

The number of consumers on low-carb diets fell to 3.6 percent in November from 9.1 percent at the beginning of 2004, according to NPD Group (search), a market research firm.

Dr. Arthur Agatston (search), creator of the popular South Beach Diet, said he hopes the new product line and Kraft's marketing will help differentiate South Beach, which he says has unfairly been lumped in with low-carb diets.

"We are not a low-carb diet," Agatston said in an interview Friday with Reuters. "We are not a low-fat diet. We are the right carbs and the right fats."

Agatston advocates eating lean meat, whole grains and leafy vegetables, while eschewing refined carbohydrates like pasta and bread. The South Beach diet frozen pizza, for example, will have a whole-grain crust that is high in fiber, with low-fat cheese and lean meats or vegetables, he said.

The South Beach Diet book, first published in April 2003, has 8.7 million copies in print and has been on the New York Times bestseller list for 90 weeks, according to its publisher, Rodale.

Kraft — which has struggled as consumer demand for foods like Oreos has waned amid concerns about obesity — has tried to address such concerns by removing artery-clogging trans fats from its foods and selling snacks in 100-calorie packages.

It also started an alliance with Agatston last year, when a "South Beach Diet recommended" label was included on products like soy-based Boca Burgers (search), Oscar Meyer (search) deli meats and Planters nuts.

The company declined to say what impact the arrangement has had on sales, citing its pending fourth-quarter earnings report. In a promotion last fall, Kraft distributed 2 million Kraft South Beach Diet recipe books with the purchase of certain products.

Kraft has also tried to cash in on the low-carb trend by labeling some foods with the CarbWell name. The South Beach Diet cereals will be ones formerly labeled as Post CarbWell cereals.

But most of the South Beach products are new items, Howard Brandeisky, vice president of South Beach Diet foods at Kraft, said in an interview. He would not say how much Kraft expected to sell of the South Beach foods but said they were expected to add to Kraft sales, not cannibalize other Kraft brands.

"We think this is incremental opportunity for both Kraft and retailers," he said.

Shares of Kraft, majority owned by Altria Group Inc. (MO), were down 12 cents at $34.36 Friday on the New York Stock Exchange.