4beans4me
Fri, Dec-17-04, 10:18
Low-carb Sales Falling From High Note
By Michele Chandler
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Mercury News
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The low-carb industry was all the rage earlier this year, when millions of Americans looking to trim down flocked to Atkins and other diet programs promising weight loss even while eating bun-less cheeseburgers, steaks and a new breed of lower-carb cookies, chips and ice cream.
But the party's over now. The percentage of Americans following some form of low-carb, high-protein diet fell to 4.6 percent in September, down from a peak of 9 percent in January, according to research firm NPD Group.
Dollar sales of the specialty foods has also slowed, rising 6.1 percent during the third quarter rather than the double-digit gains seen by the low-carb food industry earlier this year, according to ACNielsen LabelTrends.
Low-carb's shrinking clout stunned specialty retailers like Castus Low Carb Superstores of San Ramon.
Expansion plans
Just eight months ago, the five-outlet Castus chain was gearing up for expansion. Selling products made by low-carb specialists including Keto Foods and Atkins Nutritionals, Castus forecast 200 stores across the nation by the end of this year, including 25 in the Bay Area.
They didn't see the triple whammy of a fall-off in low-carb fever, a flood of low-carb items launched by mainstream food manufacturers and rough competition as big grocers and discounters began carrying low-carb foods.
``The whole low-carb world has taken a huge hit,'' said Castus' chief executive, Rick Schott. ``It's not as sexy and profitable as it used to be.''
Today, Castus has eight Bay Area outlets and just 22 locations nationwide -- far below original expectations. Chain-wide sales are down about 40 percent from April, when the low-carb craze was in full swing.
Four Castus stores have been closed, including ones open less than a year in San Jose's Westgate and San Mateo. Plans to sign up more franchisees are on hold, although three Castus stores already planned for San Diego and Florida will open during the next month.
Starting next year, all the stores will take on a new name -- Castus Low Carb Diet Centers -- and new mission -- running a Weight Watchers-like managed weight loss program centered on low-carb meals.
Production stopped
Meanwhile, other low-carb-focused firms are struggling. Keto, a 6-year-old specialty low-carb food manufacturer in New Jersey that supplied Castus, last week stopped producing and shipping any products. The company ended up in choppy financial waters after dozens of mainstream firms released a tidal wave of low-carb items that glutted the market. Some items didn't taste good and most cost more than their carb-rich counterparts. ``That was a recipe for poisoning the entire low-carb well,'' said Keto's president and chief executive, Arne Bey, who added that the company expects to resume shipments next year.
Some specialty stores like the Trim Gourmet in Los Altos, which began as a low-carb-focused shop, aren't trumpeting low-carb these days. Instead, store officials talk up products as transfat-free and sugar-free. ``I believe sugar-free is here to stay. Low-carb? It's neither here nor there,'' store owner Dolores Jioia said.
In low-carb's heyday, vitamin and supplement store Beehive Health & Nutrition tallied $900 a day in low-carb product sales. Low-carb product sales amount to a scant $100 a day now, said Judy Burnham, owner of the family-run South San Jose business.
While plenty of people remain on low-carb diets, Burnham said they can find a wide variety of low-carb foods at many stores, including Safeway and Wal-Mart. So, Burnham is pruning her inventory, slashing prices on low-carb salad dressings, chocolate chip muffin mix and pancake syrups by as much as 90 percent. Once those items are cleared out, she'll stock only about 40 popular low-carb foods -- including granola -- down markedly from the 200 products she carried during the peak of the low-carb boom.
The store is also promoting its wheat-free and gluten-free goods. ``As one thing goes out, another comes in,'' Burnham said. ``We just move with the times.''
http://www.mercurynews.com/mld/mercurynews/business/10438401.htm?1c
By Michele Chandler
http://www.mercurynews.com/images/common/spacer.gif
Mercury News
http://www.mercurynews.com/images/common/spacer.gif
The low-carb industry was all the rage earlier this year, when millions of Americans looking to trim down flocked to Atkins and other diet programs promising weight loss even while eating bun-less cheeseburgers, steaks and a new breed of lower-carb cookies, chips and ice cream.
But the party's over now. The percentage of Americans following some form of low-carb, high-protein diet fell to 4.6 percent in September, down from a peak of 9 percent in January, according to research firm NPD Group.
Dollar sales of the specialty foods has also slowed, rising 6.1 percent during the third quarter rather than the double-digit gains seen by the low-carb food industry earlier this year, according to ACNielsen LabelTrends.
Low-carb's shrinking clout stunned specialty retailers like Castus Low Carb Superstores of San Ramon.
Expansion plans
Just eight months ago, the five-outlet Castus chain was gearing up for expansion. Selling products made by low-carb specialists including Keto Foods and Atkins Nutritionals, Castus forecast 200 stores across the nation by the end of this year, including 25 in the Bay Area.
They didn't see the triple whammy of a fall-off in low-carb fever, a flood of low-carb items launched by mainstream food manufacturers and rough competition as big grocers and discounters began carrying low-carb foods.
``The whole low-carb world has taken a huge hit,'' said Castus' chief executive, Rick Schott. ``It's not as sexy and profitable as it used to be.''
Today, Castus has eight Bay Area outlets and just 22 locations nationwide -- far below original expectations. Chain-wide sales are down about 40 percent from April, when the low-carb craze was in full swing.
Four Castus stores have been closed, including ones open less than a year in San Jose's Westgate and San Mateo. Plans to sign up more franchisees are on hold, although three Castus stores already planned for San Diego and Florida will open during the next month.
Starting next year, all the stores will take on a new name -- Castus Low Carb Diet Centers -- and new mission -- running a Weight Watchers-like managed weight loss program centered on low-carb meals.
Production stopped
Meanwhile, other low-carb-focused firms are struggling. Keto, a 6-year-old specialty low-carb food manufacturer in New Jersey that supplied Castus, last week stopped producing and shipping any products. The company ended up in choppy financial waters after dozens of mainstream firms released a tidal wave of low-carb items that glutted the market. Some items didn't taste good and most cost more than their carb-rich counterparts. ``That was a recipe for poisoning the entire low-carb well,'' said Keto's president and chief executive, Arne Bey, who added that the company expects to resume shipments next year.
Some specialty stores like the Trim Gourmet in Los Altos, which began as a low-carb-focused shop, aren't trumpeting low-carb these days. Instead, store officials talk up products as transfat-free and sugar-free. ``I believe sugar-free is here to stay. Low-carb? It's neither here nor there,'' store owner Dolores Jioia said.
In low-carb's heyday, vitamin and supplement store Beehive Health & Nutrition tallied $900 a day in low-carb product sales. Low-carb product sales amount to a scant $100 a day now, said Judy Burnham, owner of the family-run South San Jose business.
While plenty of people remain on low-carb diets, Burnham said they can find a wide variety of low-carb foods at many stores, including Safeway and Wal-Mart. So, Burnham is pruning her inventory, slashing prices on low-carb salad dressings, chocolate chip muffin mix and pancake syrups by as much as 90 percent. Once those items are cleared out, she'll stock only about 40 popular low-carb foods -- including granola -- down markedly from the 200 products she carried during the peak of the low-carb boom.
The store is also promoting its wheat-free and gluten-free goods. ``As one thing goes out, another comes in,'' Burnham said. ``We just move with the times.''
http://www.mercurynews.com/mld/mercurynews/business/10438401.htm?1c