Food for thought for manufacturers

IT ISN'T often that an entire nation of some 300m people changes its eating habits. But, spurred on by panic over an obesity epidemic, Americans are switching to low carbohydrate, high-protein diets in their tens of thousands every week and the food industry is scrambling to keep up.

The last time such a vast change in diet took place was the early 1980s when Americans turned decisively against fat. But, according to the best-known low-carb regimen - the Atkins Diet - fat is back.

The theory is that if you cut out carbs, your metabolism changes and you lose weight - even if you eat more fat. So food manufacturers are desperately switching their attention from cutting fat to cutting carbs.

Take chocolate. You can now give the lady in your life a box of chocolates in the reasonable confidence that it would actually help her lose weight. It costs a bit more but Russel Stover, America's third-largest chocolate maker which markets low-carb chocs through Wal-Mart, could barely keep up with the demand on Valentine's Day this year.

Meanwhile, old dieting orthodoxies are being trashed. Sales of Unilever's Slim Fast meals collapsed by 30% in the third quarter of last year, almost entirely in the US, taking the company apparently unawares. It has hastily rushed out a low-carb version of Slim Fast and is waiting to see if its $10m (£5.7m) marketing campaign will lift sales again. It does not, however, have any immediate plans to launch anything low-carb in Europe.

£24bn market next year

OTHER big companies have also had to adapt. Pepsi, for instance, has rushed out low-carb versions of its popular Doritos and Tostitos tortilla chips.

Lisa Klauser, vice president of marketing at Unilever Bestfoods, the US unit, said the sudden popularity of low-carb food was an 'unprecedented shift' in US eating habits.

'We know that at least 30m people are living the low-carb lifestyle and that number is expected to double in the next year,' she added.

Other experts estimate the number of devotees is closer to 50m and that the market in low-carb food will rocket to around $24bn in the next year. A little excitement in the food industry is, therefore, only natural. The panic was evident when the industry called a two-day summit in Denver, Colorado, to discuss how to take advantage of the new habits. Some 450 companies attended.

The adjustment is probably easiest for the retailers. Wal-Mart, the largest retailer in the world, has already dedicated a section in its stores to low-carb goods. Other supermarkets and grocery stores are at least giving generous shelf space to the rapidly growing number of low-carb foods. There are even food store chains springing up that sell only such products.

But it is not so easy for the food manufacturers such as Kraft and ConAgra, which have had to do some fast work in the lab to come up with suitable offerings. As veterans of the diet wars, of course, they have long experience of coming up with fat-free and sugar-free, so they know the routine. If there are low-fat chips then why not low-carb mashed potato mix?

It has already hit the shelves. So has low-carb bread (made of soy flour) and low-carb pasta. According to market researcher Mintel International, 728 products claiming to be low in carbohydrates have been introduced since 1999.

Manufacturing carb-free grub is not easy, of course. Prices tend to be high: you get about half as much low-carb chocolate as ordinary chocolate for a given price. And the companies are not saying whether they have slipped in a higher profit margin on the low-carb goods too.

Restaurants are also leaping on the bandwagon with varying degrees of enthusiasm. But with American restaurant goers spending $440bn last year on everything from cheesecake to french fries, there are big bucks at stake in meeting the low-carb demand.

Burger in lettuce

DEAN Rotbart, chairman and executive editor of LowCarbiz, a magazine devoted to low-carb eating, says: 'The reflexive response of most restaurant operators has been can we ignore this? Can't we just serve the hamburger without the bun?. Obviously, the consumer has said no.'

In fact, Burger King has indeed swallowed the idea of a burger without a bun - you can get it wrapped in a piece of lettuce instead. McDonald's, spiritual home of such carb-heavy horrors as chips and Coke, has not changed its menu but in some outlets it gives customers a leaflet advising them on which items to choose for a low-carb meal.

Other restaurants, however, have been cannier with their marketing. Last year, TGI Friday cleverly inked an endorsement deal with Atkins Nutritionals - one of the high priests of the new diet - to serve Atkins-approved meals. This reassures customers, in effect, that they are getting the real thing. Blimpie's, one of America's biggest sandwich chains, soon followed suit.

What makes TGI Friday's move so ingenious is that the chain does not appear to have had to invest much in the new meals because Atkins allows you to eat most 'normal' food. A centrepiece of its low-carb menu, for instance, is New York strip steak in blue-cheese sauce, the kind of thing Friday's would have been serving anyway.

The conversion to the Atkins way of life has been so sudden that it is too early to tell exactly how big the financial effects will be across the food industry. But early results suggest it could be huge.

The initial impact, as at Unilever, is likely to be harsh on the less nimble-footed. But as with other diet crazes, there are probably good profit margins and marketing opportunities to be had from low-carb food once the industry figures out how to provide it. Let's hope they can at least come up with low-carb summer pudding before the weather gets warm.