How low can we go? Low carbohydrate craze at a crossroads

Cheers, Jan-Feb, 2005 by Howard Riell

As the old song goes, 'I don't want to set the world on fire, I just want to start a flame in your heart.'

There's a similar refrain that goes along with low-carb foods and beverages as 2005 opens. Like so many trends, low-carb has finally begun to cool down after a long run. But it's not going to disappear.

Instead, it leaves behind a legacy--a sizable group of people who remain committed to consuming fewer carbs. Operators must continue to cater to them from now on--which means ongoing opportunity, especially for wine, spirits and beer sales.

Indeed, research indicates that Americans are showing signs of finding the golden mean in their eating habits. According to Harry Balzer, vice president of NPD Group, in the 19th Annual Report on Eating Patterns in America, "It appears that Americans are beginning to find a balance between the need for convenient, inexpensive meals and their expanding waistlines."

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But other industry observers are more cautious on the low-carb craze.

"It seems the whole low-carb phenomenon is kind of on the wane," says David Henkes, principal and executive director of the Adult Beverage Insights Group for Chicago-based Technomic, Inc. "We're seeing that in food as well as in beverages, where the interest seemed to peak probably six to eight months ago when everybody was jumping on the bandwagon. Now it seems consumers have kind of gotten over (it). That's not to say it won't exist as a niche phenomenon for certain people who believe in that type of diet. But as sort of a mainstream dietary consumption pattern, low-carb really seems to have fallen off the face of the earth."

HAS LOW-CARB PEAKED?

"In general, the low-carb trend has plateaued," agrees Anishka Clarke, beverage & tobacco analyst for Standard & Poor's. "It's still something that food and beverage manufacturers are aware of and taking into account with their products and future marketing plans, though. When it comes specifically to spirits and wines, we see companies taking advantage of some of the positive aspects of the spirits. For example, the fact that they may have zero carbohydrate content, and that their labeling can now (include) that they have zero carb content. I believe they will take advantage of that fact."

However, operations that don't usually latch on to trends have been largely unaffected by the low-carb craze. For example, it has never resonated at Manhattan's venerable landmark, The '21' Club, according to wine/beverage director Chris Shipley.

"We literally don't have any low-carb wine here at all," he notes. "I have a couple of bottles of no-alcohol wines, which I guess would be low-carb, but they're just here because once every two years somebody requests a bottle. We're not what you would call a trendy place. Because of our clientele, we don't market our spirits to them. When the CEO of Time-Warner comes in and orders a Tanqueray & tonic we don't say, 'Well, have you tried this?' We say, 'Yes, sir.'"

LOW-CARB VS. LIGHT BEERS

Are low-carb beers taking business away from light beers? "It's hard to say," says Yuri Kato, publisher of www.CocktailTimes.com. Kato notes that low-carb cocktail ideas and the zero-carb spirits facts are not as widely distributed as low-carb light beer. "Because beer advertising can appear in major broadcasting networks, unlike distilled spirits products, I think it makes it difficult for distilled spirits companies to compete at the same level."

Fortunately for the spirits industry, Kato adds, "[The] revival of cocktail culture is certainly big today. So within the cocktail-drinking society, I think that the zero-carb spirits awareness has been increased over the last few years."

Henkes believes low-carb beers are, indeed, taking away from light sales. "What you're seeing is that some of the beer companies now are trying to position their light beers as low-carb alternatives. From the manufacturer's perspective, if they can take a product that already exists and market it differently to appeal to a new group of people, in this case low-carb consumers, that's better for them."

The opportunity for spirits, wine and beer suppliers is clear.

White wines have about 1.5 grams of carbohydrates per serving, and red wines about 3.0 grams. Light beers such as Michelob Ultra have 2.6 grams, while on the high end, brands like Budweiser, Miller Genuine Draft and the like have approximately 10 grams per serving, according to Standard & Poor's.

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"Today we all know at least a few people who're on low-carb diets," says Kato. "I think people realize what we drink is as important as what we eat. There is simply a great demand by the consumers for low-carb drinks, and low-carb anything."

Aside from the profitability of low-carb drinks, Kato reasons, the trend also gives the industry "an opportunity to educate consumers about distilled spirits. People know that beer contains higher carb (content) than wine or spirits, but not a lot of people know that the majority of distilled spirits contains zero carbs."