Over the last eight months, there's been a single question we are asked more often
than any other when attending shows, meeting with manufacturers, or reading industry email:
"What do you think is the future of the low carb industry?"
It's a question more complex than it might seem on the surface, and how one views this
industry depends heavily on two things: Whose point of view you're seeing it from, and
how you define "the industry."
Let's first define "the industry," so we're all on the same page. For purposes of this
article and our perspective, we want to make it clear that we're talking about the
"business" of low carb — product manufacturing, distribution, marketing, sales,
and popularity. The media often has a tendency to view sales of low carb products
as mirrors of how well the diet itself is received, and how effective it is. And they
are most definitely not the same thing.
Low Carb is being called a "fad," and now mostly a "fad that's over." The marketing
hype, over-saturation by the media, and inflated sales were most defintely a fad. One
that did not serve the public or the scientific community well. Personally, I am glad
to see that part of it over, though it's left some casualties in its wake that truly are
So where is low carb's future headed and why? To examine that, let's look at some
industry perspectives that others have shared with us. We'll start with those store owners
who come to us frustrated and at a loss...
Tamera Pfeifer, who runs a low carb store in Alpharetta, Georgia, sent us her thoughts:
"...My husband and I have a Low Carb Store that we opened in May of 2004. The store is
not doing as well as we expected. We are thinking of changing our store
name from "Low Carb Delicious" to something else... maybe just plain "Health Foods," to draw more customers.
We haven't had the money to do the kind of advertising we really need to do
to get exposure. Our store is 2500 square feet. It's beautiful. Everyone that comes in
can't believe it! We have EVERYTHING... every brand... so many choices for the carb conscious!
We also have a frozen yogurt and a soft serve ice cream bar, made-to-order low carb
protein drinks, and a coffee bar. With all of that, though, the truth is — we are struggling..."
Linda Martz of Lindys Low Carb Market in Perrysburg, Ohio also shares her frustration
"We low carb store owners are dying out here. Why
is it that your magazine has not addressed all of the terrible press that that low
carb diet has been getting? Weight Watchers and Jenny Craig are mounting a huge
offensive against low carb and I have not heard one low carb Guru come out to say
ANYTHING at all. Soon most of the products will be out of the grocery stores and all
of the low carb stores will be closed. Then where will we be? I am heart-sick about
this. I am sure I will have to close my store soon.
I am at a loss for what else to do and I am also speaking for several other Low Carb
John Hynds of Lo Carb Outlet in Bellevue, Washington felt better after writing a
rather lengthy rant, which we'll begin here:
A Post-Mortem Industry Guide for Future Niche Manufacturers
(Or: How could low carb manufacturers
create and destroy their own market in
under one year?)
Copyright © February 2005 Low Carb Luxury
"As I look back, I can see clearly how the low carbohydrate market boom/bust is a classic example
of the total lack of "market and customer" understanding by the low carb manufacturers.
"Full steam ahead! There are huge dollars out there!" was the specialty manufacturers' mantra just one
short year ago. Their panic focused on getting into the "big box stores" — that's where the
money is... (or at least they thought.)
Oh sure there is money there — just not for them anymore.
A major component of producing a sustainable revenue stream is that manufacturers
need products that seduce the customer to purchase and, most importantly, to return to buy it
repeatedly. Rare are the single-sell success stories in our market.
Low carbohydrate food manufacturers and distributors crept into being, slowly increasing their
revenues through specialty retail shops and websites. At the same time, they were building a base
consumer who was returning time and time again. These people were actually willing to seek out
and find the manufacturer through friends and internet postings. They would spend an obscene
amount of money for their "low carb" products. Ah, the (artificially) sweet smell of money!
In no time the competition popped up and the scramble to create new product lines increased.
Still they came. Still they bought! Finally the big time — the big box store was drawing
(click here to continue reading this piece by John Hynds.)
Brett Railey has run lowcarbdieters.com for many years now, and for a time operated
a retail outlet as well in the Orlando, Florida area. The store is now closed,
but the online venture continues. Here are Brett's thoughts:
"I feel that the future of low carb as an industry is dependant on businesses
returning to our roots, and rolling the clock back 6 or 7 years to when low
carb food was a "niche market."
When we first opened LowCarbDieters.com, there was no "industry" and very
few marketable products. We had to search out unique products that fit into
our way of eating and then find a way to get the product out to our
customers. While this was not an easy task, we were rewarded with a loyal
customer base whose dieting success depended on our ability to service them.
The retailers success was found in our capacity to offer a product that
could not be purchased at the local grocery store. If the product was truly
unique, customers found us through networking in chat rooms and bulletin
Due to the success of the low carb diet, there are more low carb dieters now
than ever. This success brings us more opportunities to offer distinctive
products that are not widely available, many times manufactured by smaller
companies who can't compete in the mass market. Our future depends on the
realization that we can no longer be "all things to all people" coupled with
our ability to specialize in finding quality products. We further need to
limit the variety of products offered to those items not available on every
Elaine Payne, along with her sister Lynn Whitfield, opened the country's first
low carb specialty store in South Carolina. Her store, as well as her online venture,
have seen the best and worst of this business. Here, Elaine shares her vision of
the future for low carb:
"If the low carb industry can weather the downsizing that is currently underway,
we may find that its future success depends upon learning from its past mistakes.
Despite the recent media hype and attention, low carb has always been, and should
have remained, a niche market. Business plans and expansions should have been
made with that in mind, but greed and other factors corrupted the growth of the
low carb industry. The core group of dedicated low carb dieters is still out there
and with that in mind, manufacturers and retailers alike can approach the business of
low carb as being a smaller, but hopefully more predictable market.
The future of the low carb industry will become more apparent as soon as the glut of
overproduced, expiring products are gone and the shakeout of the retail market is over.
As small stores close, and the mass market clears its shelves of low carb products,
the question of how to get quality, low carb products to the consumer will once again
be the familiar issue.
As a retailer, I deal each day with the problems of manufacturers who have gone
out of business, a dwindling supply of distributors, and frustrated customers who
can no longer find their favorite low carb products.
A successful future for the low carb industry will depend upon
building a new partnership and understanding between those of us in the industry
who are committed to staying and succeeding in this business."
Andrew DiMino of CarbSmart has seen the bumpy ride in a way that many other
retailers have not. He was able to get a number of lucrative licensing
deals for the CarbSmart name, including one from Breyer's Ice Cream, and one
from Bayer. He expanded his online business to include two retail stores
in Reno, Nevada and Huntington Beach, California. But this past year's
rollercoaster was not a kind one. It left him faced with closing the Reno
location, and more importantly with stress levels at a point that it caused
him to suffer a stroke. He continues to recover and considers himself both
blessed and smarter as a result. Here's what Andrew had to say:
"I believe that neither the industry nor the lifestyle is dead. It was,
howver, definitely time for the low carb marketplace to change.
When the diet was first created, its purpose was to promote weight loss, and to
improve one's health. For the first 25 years of the lifestyle, there were
no "low carb" labeled products. You either followed the Atkins' plan by the
book, or you found products in the grocery store that just happened to be
low in carbohydrates.
As the popularity of the diet grew over the last six to seven years, the first
people who created low carb products were dieters who lived the lifestyle
and wanted to share their creations with the world. These first low carb
entrepreneurs, myself among them, were looking to create and sell products made
for those few people who followed the diet and needed something more than just
eggs, meat and cheese. They knew they were servicing a niche market, and approached
their ventures knowing there was some money to be made helping others live the same
lifestyle they did.
Then negative aspects of the industry grew to unstoppable levels when those who
did not understand the lifestyle, and how and why it works, saw nothing but
dollar signs. To them low carb was just another way to make obscene amounts of
money by capitalizing on a "fad."
It hit its lowest point when companies like Kelloggs and General Mills released
cereals, cookies, and snack items filled with white flour, high fructose
corn syrup, and even sugar and called them "low carb." The lack of sincerity
and desire to actually help the people who need true and healthy low carb products
turned the industry on its ear.
Their products' debut did not make living a low carb life less successful or less important,
nor did it change the basic truth that it worked. It simply changed the way people
incorporated these products into their lifestyle.
The industry was forced to see that this is a specialized lifestyle and not meant to be
a mainstream way of eating for America. Low Carb products were indeed meant to be available
in wider distribution, but not nearly so many products in so very many stores.
So my thoughts on the future of the low carb?
Continued scientific proof will show that the concepts of carbohydrate restricted
dietary regimes are valid. We will see more clinical and medical studies that support its
efficacy, and it will be more readily accepted by the public.
Although low carb products will continue to be available, the consumer will now
demand products that are stricter in their ingredients, taste better, and are lower priced.
Products will be made by specialty companies that only manufacture Low
Carb or other diet products and they will be more properly sold by specialty retailers that
understand the lifestyle.
Kantha Shelke is a principal at Corvus Blue LLC, a Chicago-based food science and research
firm that specializes in competitive intelligence and expert witness services. The company
is retained by progressive businesses and professional organizations to help them succeed in
what matters most. Kantha's view of this industry is multi-faceted, and her thoughts on this
issue were of particular interest to us:
"The popular press reports that the low-carb diet industry was a fad and that low-carb diets are
on their way out. In reality, however, the wisdom of the low-carb regimen is seeping
steadily into the shopping habit-behavior of consumers who care about their long-term
health and wellness and it's becoming more of a lifestyle than a diet.
How do we know this? By simply watching what consumers are eating these days ? and clearly,
they are adopting (and recommending to their circles of influence) the essence of low-carb
diets ? i.e., the practice of minimizing simple carbohydrates and replacing empty calories
with nutrient-dense protein-rich foods. The general public is
increasingly receptive to great tasting alternatives and is demanding tastier foods that
are good for you. Restaurants are increasingly catering to patrons? requests for foods
that have little or no simple carbohydrates and which comply with either South Beach or the
Sales of low-carb foods in 2005 will probably not mirror the double- and triple-digit growth
rates seen in the previous years ? but the emerging market will certainly seek level ground
and not die as a category. How can it ? when a majority of Americans face overweight issues
and when many of them rely on food-based solutions to keeping pounds off.
Slowly but surely, we will see changes in the food industry. Savvy companies will reformulate
their products and change their marketing practices while they strive to introduce foods that
are healthier for you. So, we will see less of creative labeling and more of truly nutritious
and good tasting foods in the marketplace.
We don?t have to wait long to figure out the direction of this category. The first quarter,
generally the peak season for diet products, will tell us which foods discerning consumers
are seeking for their health and wellness."
We caught up with Linda Langdon of Low Carb Creations while attending a show in San Francisco
last week. We posed the same question to her, and Linda's answer came easily and quickly:
"I think we'd all been living in a bubble for awhile there. And when the bubble burst, we
found ourselves back in reality... where we should always have been. Had we as an industry
gone overboard? Well, let me ask you this question, "Have you ever heard of a "Low FAT Specialty
So, as you can see, there's no one clear answer as to what the future holds for low
carb in the short term. In the long term, it's not going anywhere. Products with a lower carbohydrate
profile will have a place on America's store shelves from this point forward. But most of us
have learned a valuable lesson that can serve us well in the future. And for those that
haven't learned? Well, we all know the often repeated refrain that those who cannot
learn from history are doomed to repeat it.
Note: We also asked this question of Dan Maiullo, formerly of Keto Foods, for his perspective,
and he opted to write an entire article about it... Turn to Page 12 to read Dan's
article on The Future of Low Carb.