January 21, 2004

Kraft, rivals seek more feeding off low-carb craze

LowCarbiz Summit draws companies looking for answers

http://chicagobusiness.com/cgi-bin/news.pl?id=11249

(Reuters) — Like prospectors chasing the California Gold Rush of 1849, companies seeking to mine the low-carbohydrate eating craze are expected to show up in droves at a conference in Denver this week.

The event promises to bring together the likes of well-known packaged food makers such as North American leader Kraft Foods Inc., confectioner Hershey Foods Corp. and meat processor Tyson Foods Inc.

There will also be a multitude of niche players specializing in products that appeal only to adherents of low-carb diets like Atkins and South Beach.

Even big retailers like Wal-Mart Stores Inc., the largest U.S. grocery chain, will attend the so-called LowCarbiz Summit, which begins on Thursday and runs for two days.

"This is an industry that has erupted over a period of 18 months," said Dean Rotbart, editor of LowCarbiz.com, the online newsletter coordinating the event, which will cost attendees up to $800 apiece. "It went from a rocket sitting on a launch pad to a rocket zooming out of space."

Indeed, about 3.6 percent of the U.S. population is now following some form of a diet high in proteins such as meat and chicken but limited in carbohydrates like bread and pasta and sugars, according to NPD Group, a market research firm specializing in food trends, whose data surveyed people through August.

Some researchers and health professionals remain skeptical of low-carb diets, especially Atkins, which has been criticized for touting the benefits of liberal amounts of steak, eggs and fatty foods linked with rising cholesterol and heart disease.

Atkins Nutritionals, the low-carb food and product maker founded by the late low-carb guru Robert Atkins, has been telling health professionals in seminars to limit the amount of saturated fat that its followers take in to 20 percent of calories.

The risks appear not to deter U.S. consumers, who are struggling with rising obesity rates and related health problems. Low-carb versions of everything from Breyer's ice cream to Heinz tomato ketchup have joined their traditional counterparts on grocers' shelves in recent months.

Big restaurant chains like Burger King are even getting into the act, catering to fast-food customers with everything from bunless burgers to protein plates.

Still, some question how long the trend's momentum will continue.

"It will have a rapid rise here. It will last maybe two or three years," said NPD Vice President Harry Balzer. "When it's all over, there will still be a low-carb contingent, but it will never be the interest levels we're seeing right now."

On the agenda at the Colorado meeting are panel discussions on opportunities and risks, federal regulation, the future of low-carb retailing and how to respond to diet naysayers, according to materials provided by Rotbart.

Meals too, will stay on theme, featuring low-carb products sponsored by the likes of sandwich maker Blimpie International, Rudi's Organic Bakery, and the Tortilla Factory, to name a few.

Rotbart said he expects some 400 attendees, including brand managers and marketing types from the manufacturing and retailing communities. A second event is planned in Washington, D.C., in May.

"We believe companies have no choice but to respond to the low-carb movement with new products," wrote Morgan Stanley analyst William Pecoriello in a research report.