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US Food Companies Scramble to Cash in on Low-Carb Diet Craze - 2004-06-10

One-fourth of American adults report they're on a diet at any given time. And so potent are the hottest, latest versions of low carbohydrate diets, like the one named for the late diet guru Robert Atkins, that hundreds of low-carb products have elbowed their way onto grocery store shelves across America. Even big corporations that make foods high in carbohydrates, like bread and pasta and orange juice, are scrambling to cash in on the low-carb bonanza.

The low-carb idea caught on because carbohydrates turn to body sugars that fatten us up and can lead to diabetes. Sales of more than 1,500 low-carb products, from teas to spaghetti sauces to ice cream, and even cheesecake, topped $15 billion just in the past year.

Giant brewers like Coors hustled low-carb beers onto the market. Burger King and Back Yard Burgers and other fast-food chains are touting thick beef burgers wrapped in a crisp lettuce leaf instead of a bun. Even anti-constipation medicines have climbed aboard the low-carb express.

There's a low-carb café in wealthy Beverly Hills, California. Inns are offering Atkins muffins for breakfast. At Sheraton Hotels, even the mint under a guest's pillow is low-carb.

And since July of last year, an online magazine called LowCarbiz has been watching it all. Its editor, Daisy Whitney, says what began with a few small specialty companies grabbed the attention of big food conglomerates like Kraft and General Mills. They've hurried to market their own low-carb products and reposition some old ones as low-carb. Sara Lee confectioners is partnering with the Atkins-brand company to develop a low-carb pizza. Even the potato industry is trying to come up with a low-carbohydrate spud, if indeed such a thing is possible.

"Most restaurants have some sort of low-carb offering on their menu, or at least would very easily be able to accommodate a low-carb follower. It's completely pervasive now," said Ms. Witney.

It's a great time to be the publisher of diet books like these: How to Design Your Own Low-Carb Diet, The Everyday Low Carb Slow Cooker Cookbook,15-Minute Low-Carb Recipes, Carb Counter's Diabetic Cookbook.

But now is not the best time to be making high-carb, high-sugar products like doughnuts. The Krispy Kreme Company, whose outlets serve doughnuts hot out of the oven and which packages the glazed treats for grocery stores, is forecasting a 10 percent drop in profits this year. Senior Vice President Stan Parker lays the blame directly on the low-carb frenzy. He says Krispy Kreme is working on a new sugar-free variety but hopes to ride out the low-carb storm.

"We could develop a low-carb doughnut, but it probably wouldn't taste very good. We will not put out something that doesn't taste good," he said.

The House of Bread, where customers can watch bakers at work in 10 outlets from Michigan to California, is taking a two-pronged approach to what its founder, Sheila McCann, calls the low-carb epidemic. Its website and store posters remind customers that whole grains have always been a key part of healthful diets. Still, in response to sliding sales, the House of Bread has added three lower-carbohydrate varieties to its line.

"Our products, whole grains, are the good carbohydrates," she said. "So we're kind of changing our slogan a little bit. Ours is 'Where good taste comes naturally.' But we're adding another one: 'Home of the good carbs! House of Bread. I mean, I am in business, right? And part of being in business, you have to give customers what they want."

Low-carb does not necessarily mean low-fat. Each little piece of one company's low-carb pecan-delight chocolates has 50 calories. And Consumer Reports magazine's laboratories found that a rocky road low-carb ice cream on the market has many more calories and much more fat than even premium ice cream brands.

"In their original form, Atkins and similar diets were all based on whole food, meat, fruits, dairy products," said Nancy Metcalf, a Consumer Reports senior editor. "You couldn't even think about having a piece of coffee cake. And as the carb-counting idea has taken hold, the processed-food industry has noticed a profit opportunity with all of these putatively low-carb products by using various tricks of the food processor's trade. The concern is that by putting variety back into these diets, not to mention a lot of calories, we're going to undercut the very things that probably make low-carb diets successful in the first place."

Just as nutritionists fussed and fretted about low-fat diets that cut way back on healthy fruits and protein, they are alarmed by the low-carb craze. Joanne Slavin at the University of Minnesota says in today's video-game era, people have identified carbohydrates as Public Enemy No. 1. And they're out to zap them!

"In the end, it's calories that are really important," she said. "People are assuming if it's low-carb, it's good. And that's a really bad assumption to make. It's a typical American thing. We want the easy solution, and we want the answer, that it should be in a pill or it should be given to us in a very easy fashion. And so we need to convince consumers that there isn't an easy way. It's a forever thing."

Corporate strategists who are rushing low-carb products onto the market might want to talk with Paul Weiner. He's the natural foods manager at New York City's upscale Fairway Markets. He says the low-carb craze never caught on in Manhattan, where his customers pay very careful attention to product ingredients. But last year at Fairway's Long Island store, he says, he cleared out a whole aisle for low-carb products because customers clamored for them.

"What we're finding this year is that the trend is going the other way, slipping back," he said. "We at Fairway are probably going to cut back on our linear footage for the category and stick with real good foods. You know, I've been in the natural foods business for 25 years. Every year there's something. And last year it was low-carb. I must admit, it was the most powerful fad I've ever seen, but the drop-off is powerful as well. It may have a small following as did oat bran and low-fat. But I think a lot of people are going to lose a lot of money," he said.

For the moment, though, low-carb this and low-carb that are sizzling.

The U.S. Food and Drug Administration expects to issue proposed rules by year's end that will help consumers sort through all the low-carb claims. What exactly does low-carb mean? What are net carbs? Already the federal food watchdog has ruled that if I cut even a couple of carbohydrate grams from my company's brand of bread, it's OK to say my bread is part of a low-carb lifestyle.