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 The Low Carb Luxury Online Magazine   Low Carb Connoisseur
 
    June 2004    Page 3       > About LCL Magazine      > Cover Page      > Inside Cover      Feature Pages:   1   2   3   4   5   6   7   8   9   10   11  12     

 
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    Notes From The Field by Mark Uhrmacher

Mark Uhrmacher In my last column I described the way pricing works when a product is sold through stores. In this month's column, I'll talk about the product development trends and share some observations about how this applies to "low-carb" products.

The Background

As always, I'm a fan of big-picture views of large systems. I'm going to start with an introduction to the food industry as it exists today. Basically, the low-carb phenomenon has had a profound effect on the entire food industry. This article in USA Today has some choice quotes:

When SoyNut Butter added the words "Low Carb" to the front of its unsweetened butter last year, "sales tripled," says owner Stephen Grubb. "It was incredible."

Foodmakers who don't advertise products as low carb risk losing sales to rivals who do — even if nutritional contents are the same, foodmakers say. "If you don't put something on there, you'll just get killed," says Jim Haun, president of foodmaker Carbsense Foods.


As you can see, there is a significant economic incentive for manufacturers of all kinds (packaged foods, restaurants, beverages, etc.) to advertise their low-carb credentials. Unfortunately, it appears that manufacturers can reap the rewards of doing this whether or not their products are actually low-carb. I'll talk about this issue in greater depth later in the column and, I'm sure, in future columns.

Another important result of this significant demand for low-carb products is a shift in the distribution channels for these products. This time last year, if you wanted to purchase low-carb items, you went to either a health-food store, or a low-carb specialty shop. There you would find a selection of shelf-stable products including meal-replacement bars and shakes, pasta, snack foods, and baking mixes. By the end of the year, mainstream grocery stores had begun selling these items.

At this point, major food brands could clearly see a threat, as these new brands were getting shelf space in the same stores they sell through. And this is when we started to see the major brands rolling out or announcing their low-carb products.

To recap, we have the following driving forces:
  • Advertising a product as "low-carb" drives sales and justifies higher pricing.

  • Consumer demand for these products has driven them into mainstream "mass" distribution (ie. Grocery stores, Walmart, etc.)

  • Large brands are feeling the need to develop low-carb labeled products quickly.
Let's add a couple of driving forces from last week's column:
  • Consumers don't like high price point items.

  • Mass market likes them even less.

  • Therefore, these products cannot cost significantly more to produce than conventional items.
The Result

So, let's say I'm a marketer from a traditional food company and I have all of these driving forces to deal with. The first question I have is:

"What stops me from using a product I already know how to manufacture, with an added "low-carb" label? Is there some law or set of regulations I must satisfy?"

The answer of course, is no. If you've been to virtually any food store recently, you'll be surprised to learn that the use of the term "low-carb" on any food item is strictly prohibited by the FDA. Since the FDA has not yet defined the term, no one can use it on food packaging or marketing materials. Obviously, the FDA has chosen not to enforce this rule. Therefore, any marketer can slap the low-carb label onto just about anything without fear of legal reprisal. That is, at least, until the FDA defines the term.

Ok, what about the consumer? What are consumers looking for when they evaluate a "low-carb" product? What are companies already in the market doing?

This leads us directly to the whole "net-carbs" or "effective carbs" concept...

Some of the early low-carb companies have trained consumers to look for a "net-carbs" number on the packaging of a product, and use that as the basis for the counting of carbohydrate grams they tally for dietary reasons. This term is entirely unregulated and, in fact, it isn't clear if the FDA is going to start regulating it when they begin regulating the term "low-carb."

As an unregulated term, its calculation varies from manufacturer to manufacturer. Traditionally, "net carbs" were derived by subtracting the sugar alcohols and fiber from total carbohydrates on an FDA-required food ingredients label. This calculation is already controversial within the scientific community, as elements of it have never been proven to be accurate. However, there are several manufacturers that have developed their own method of calculating "net carbs", or are gaming the system a bit by padding their numbers. Here are a few of the questionable items I've seen in the past year:

  • A sweetener that is 100% sugar, yet claims it is one gram of "effective carbohydrate" per four gram serving.

  • A manufacturer of a packaged product that has well over 30 grams of net carbohydrate (after subtracting fiber), but claims that somehow only five grams are digestible.

  • Several manufacturers classifying ingredients as fiber that do not meet the legal definition of fiber.

  • Several manufacturers chose serving sizes that are far lower than any reasonable serving. This is done in order to show "better numbers" on the nutrition facts label. In fact, the FDA regulates this for many types of products, but the regulations are ignored.

Unfortunately, as it stands right now, there is no downside to playing these games. The marketing value of low-carb is so large that even the companies that have received warning letters from the FDA aren't feeling the pressure on their sales.

Now, don't get me wrong. I'm not Chicken Little and the sky is not falling. There are a number of honest manufacturers out there who are selling properly labeled products. Those of us who are developing products without games however, are operating at a disadvantage because we spend more to make our products. And this translates directly into higher price points to the consumer. Given the lack of regulation or credible certifying authority, you — the consumer — should approach any product claiming to be low-carb with skepticism. If you don't understand where the "net-carb" claim comes from or how a product can be called "low-carb", you probably shouldn't eat it. Don't assume that the manufacturer is smarter than you are.

Next month I'm going to talk a little about how these forces lead people to make ingredients choices. For those of you who wrote in questions, next month's column will address them. Hopefully, this column has been worthwhile for you. If anyone has any questions or comments, I would love to hear them.

                                                          

Copyright © June 2004  Mark Uhrmacher and Low Carb Luxury
Title photo Copyright © 2004  Neil Beaty and Low Carb Luxury



       

 
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