Go with the low: hear everyone talking about the low-carb revolution, but think it's too late to get in the game? Don't worry—there's still plenty of opportunity to profit from America's newest obsession

Entrepreneur, May, 2004 by April Y. Pennington

Fighting for headline space right along with the presidential election and celebrity woes, low-carb has become one of the most talked about topics at home, at work and with friends and acquaintances. The low-carb buzz, spearheaded by the Atkins diet and a handful of similar weight-loss plans, has boosted sales in traditional food industries such as meats, eggs and nuts. And it has turned a once-quiet specialty market into a burgeoning empire of low-carb products and services that has businesses cashing in on carb-conscious dieters.

The timing is still ripe for entrepreneurial newcomers--as The Valen Group, a strategy consulting firm for Fortune 500 companies, discovered in a recent study. According to the survey, 59 million U.S. adults are controlling their intake of carbohydrates, and more than 40 million others said they were considering a low-carb diet in the next months. Collectively, those figures are fast approaching half of all U.S. adults.

While competition in the low-carb industry indeed increased in the past year, especially with major companies jumping on the bandwagon, there are plenty of opportunities to get in and start a business catering to the picky palettes and pocketbooks of these watchful consumers. Carbolite Foods Inc., for one, is a once-small operation that has rocketed to a projected $150 million in 2004 sales, thanks to its Carborite line of low-carb candy and assorted goodies. (For more on Carbolite, see last month's "Carb Your Enthusiasm" on page 28.) Clearly, low-carb dieters are gobbling up products that allow them to taste low-carb versions of what would otherwise be off-limits, and Gus Valen, CEO of The Valen Group in Cincinnati, says demand is outstripping supply.

For low-carbers, it's not just a diet, it's a full-blown lifestyle. For entrepreneurs, it's an industry rife with possibilities. For those who've already taken the plunge, it's clear there's a hunger to be satisfied. Dean Rotbart began the first industry newsletter, LowCarbiz, in July 2003 and has seen the number of subscribers soar to more than 1,400 since he started requiring paid subscriptions in September. And when Rotbart held the first low-carb industry summit in Denver in January 2004, more than 500 attendees--ranging from the likes of Frito-Lay Inc., Kraft Foods Inc. and Wal-Mart Stores Inc to entrepreneurs--turned up to discuss issues and opportunities surrounding the growing industry. With so many restaurants and food manufacturers joining the ranks of smaller operations in offering low-carb options, Rotbart thinks the stir among Fortunc 500 companies to take action won't endanger the opportunities out there for entrepreneurs, but will actually reinforce and authenticate the market. "It's good news for the entrepreneur that Fortune 500 [companies are] validating [that] it will be an industry for years to come and not just a flash in the pan," says Rotbart. "Their very movement into this creates a self-fulfilling prophecy."

Healthy Returns

Philip Goglia, Ph.D., knew about low-carb long before the recent craze. An All-American wrestler for Duke University in Durham, North Carolina. and former Mr. North America, Goglia points out, "To the bodybuilding, Olympic and professional athletic community, low-carb dieting was always a primary aspect of food programming." His passion for fitness and health propelled him to earn a doctorate in nutrition and start Performance Fitness Concepts (PFC), a nutrition and wellness firm in Santa Monica, California, in 1981. The company helps clients worldwide set up and manage their nutrition and exercise programs, and has helped celebs like Owen Wilson and Brendan Frasier shape up for physically challenging roles.

With low-carb attracting the mainstream, PFC estimates that between 74 and 84 percent of its clients are now on a low-carb diet. In fact, PFC's revenues will increase from $1.2 million in 2003 to a projected $2.5 million in 2004, due in part to its low-carb books, nutritional, programs, support groups and other products. PFC's corporate wellness program--which aids companies in helping their employees reach health goals using a nutritionist and workouts if an onsite gym is available--has signed on its first corporation, with 7,000 employees. PFC also recently created an entertainment division that caters to busy agents and actors. The company's latest venture is a pharmaceutical-grade supplement line, sold through retail stores, that enhances the low-carb of no-carb food program.

Goglia, 44, maintains that, unlike most other nutrition firms, PFC's approach is metabolically based. The company assesses clients' blood chemistries and uses lipid profiles, which determine how much fat and protein an individual can manage based on readings like HDL, LDL, triglycerides, total cholesterol and glucose, and the ratios between them. Though multitudes start low-carb diets on the fly, the Atkins diet recommends that dieters obtain tests such as these; and those dieters serious about monitoring their health do. If clients' metabolic types don't fit with the low-carb diet, Goglia will find an appropriate food program to help them stay fit.