Low-carb food sales appear to be slimming down some

Low-carb suppliers see business drop as more dieters go back to bread and pasta.
DALLAS MORNING NEWS
DALLAS -- After taking the nation's waistlines by storm, the low-carb juggernaut appears to be loosening its beefy grip.
Product sales, mainly at smaller specialty retailers, have slumped. Many low-carb dabblers have defected.
And in a bit of dietary Darwinism, some makers and retailers of products aimed at what seemed like an endless sea of low-carbers now find themselves in lean times.
"Sales have waned," said Lora Ruffner, who co-owns Low Carb Luxury, a Web site and magazine.
"We've begun to see the small merchants struggle. There is a shake out going on."
Is the trend over?
Theories abound on why the air leaked from the low-carb balloon.
Some say an influx of products from major manufacturers flooded what had been a niche market. American consumers can be notoriously fickle. Many low-carb products simply don't taste good.
Even long-time carbers find it hard to argue with the recent barrage of downward barometers.
The number of U.S. adults on a low-carb diet fell to 10 percent in the three months ended June 30, off from a peak of 12 percent in the first quarter of the year, according to Morgan Stanley's equity research group.
Another study from market researcher NPD Group Inc. shows the percentage of adults on a low-carb diet dropping from a peak of 9.1 percent in January and February to 6.2 percent by April. By early July, the firm said, the percentage rose slightly to 7.3 percent.
Who can cut it
Among the erstwhile adherents is Ronnie Ramirez, a North Dallas resident who found the diet too inconvenient when he needed to grab something from a fast-food drive-through lane.
"Most of them don't offer low-carb products," said Ramirez, 39, who lost nearly 30 pounds while on a low-carb diet from January through May.
Also, he said, feelings of deprivation started setting in.
"I wanted pasta," he said. "I wanted chicken fried steak now and again -- with gravy."
To be sure, millions of Americans remain enthralled with the results of diets such as Atkins and South Beach. The Natural Marketing Institute said in July that, based on its research, "the low carb movement is here to stay."
By one estimate, there are still at least 15 million "hard core" low carbers.
Millions more are trying to limit their carbohydrate intake, but aren't fully committed to a special diet. Others are switching to low-carb products to combat diabetes and other illnesses.
About $1.3 billion in low-carb branded products were sold by U.S. supermarkets and mass merchandisers in the 52 weeks ended July 10, research firm ACNielsen says. (The data doesn't include sales at Wal-Mart.)
Sinking business
But even though that sales figure represents a dramatic 283 percent increase over the prior year, the ACNielsen data also shows the growth rate for "carb conscious" foods isn't climbing as quickly.
"It's past peaked," said Dean Rotbart, executive editor of LowCarBiz.com, a Web site that follows the industry. He started noticing a fall-off in March.
"Much of the industry is already in the valley. Many, many of the manufacturers I'm talking to are telling me that sales are less than 50 percent of what they were in January and February," he said.
"I have one manufacturer in just one line of packaged baking mixes, and he has more than $1 million in unsold inventory," Rotbart said.
The big change, many smaller retailers and manufacturers said, is the arrival into the marketplace of "the big boys."
An estimated 1,863 low-carb products have been introduced so far this year, said Tom Vierhile, executive director of Marketing Intelligence Service Ltd.'s Productscan Online.
Smaller firms make most of those products. But a rapidly increasing portion of the portfolio comes from the likes of Dean Foods Co., PepsiCo's Frito-Lay unit and Unilever NV, which introduced products such as low-carb ice cream and tortilla chips in the spring and early summer.
With the industry giants now in the game, some smaller players are getting out -- or trying to. One California-based low-carb merchant tried to sell his store on eBay and got no takers, even after lowering the price.
False advertising
Dennis and others feel that some of the products being aimed at low-carbers have carb-conscious names and marketing approaches but still have more carbohydrates than allowed in most strict low-carb diets.
Other products tout having fewer net carbs -- the total number of carbohydrate grams in a product, minus the carb grams that cause little or no increase in your blood-sugar level.
But the net carb figure is usually an estimate, rather than a figure determined from scientific testing, said Jon Anfinsen, a principal of DNA Dreamfields Co., which developed a low-carb pasta.
Actual net carb count can actually be six times higher than the level stated on the packaging, based on tests his firm ran.
Consumers try some of the products under the mistaken impression they have fewer carbs, several industry experts said. When those consumers don't shed the pounds, they drop the diet.
Unlike claims about "low-fat," the U.S. Food and Drug Administration doesn't regulate what's classified as low-carb and doesn't require testing for net carbs.
"This industry needs regulating badly," said Dennis, adding that if guidelines are eventually established, "a whole lot of companies are going to have to reformulate or re-label.