Here to stay or fad about to fizzle, low carb still spurring sales in drug

Drug Store News, August 23, 2004 by Michelle L. Kirsche

Instead of picking their poison (read: high-fat/high-sugar foods and drinks), marketers are counting on carb-conscious consumers picking protein instead--and throwing a couple of extra products into their shopping baskets, products that fit in with the low-carb lifestyle.

Whether the carb-cutting counterculture is just part of a diet fad that eventually will pass or it is a sustainable lifestyle choice still remains to be seen. There has been some speculation in the press that it is possibly a trend that already has peaked. Still, it is estimated that 12 percent or more of American consumers are following some form of a carbohydrate-restricted diet, ranging from Atkins and South Beach to just cutting back a bit on simple sugars and starches to eat a little lighter. And with a low-carb lifestyle comes other needs beyond just sugar free.

And therein lies myriad cross-merchandising opportunities that retailers need to consider getting into while the getting is good. Certainly, some are moving in that direction.

An example is a new partnership between CVS and Pfizer Consumer Healthcare, which included its Listerine PocketPaks in a specially marked low-carb section at the National association of Chain Drug Stores' Marketplace show in June. Pfizer has since teamed with CVS to place the breath-freshening strips strategically in the retailer's low-carb food sections.

Yes, PocketPaks are low in carbohydrates, but that's not really the point. Strict carb cutters tend to suffer from bad breath, Dave McCann, manager of strategic sales development for Pfizer's oral care_ group, told Drug Store News.

"We saw this as an opportunity to drive additional sales and help low-carb consumers at the same time," said Steve Valentino, director of national accounts for drug, mass and military at Pfizer Consumer Healthcare. The low-carb initiative remains, at least for now, in the test phase. "It's not necessarily a key strategy for the brand," he said.

For now, Pfizer is treating the test as a way to add value for consumers shopping low-carb displays and to afford retailers a chance to "sell multiple concomitant purchases that meet the needs of consumers [in areas of the store] where they might not have been shopping before," he added.

Other strong opportunities include tying in some diet aids and dietary supplements that support a low-carb diet. In the wake of the ephedra ban, many drug chains have turned a lot of that space over to an array of carb-cutting diet formulas. In addition, more emphasis is being made in the press on the need to supplement fiber; people on low-carb diets tend not to get enough of it. Metamucil wafers or any of the powdered fiber supplement brands might be a good add-on to a low-carb food set--or at least an in-store coupon that sends customers to the laxative aisle.

While retailers and their supplier partners are exploring new ways to capitalize on the low-carb trend, the question remains as to just how long low-carb's 15 minutes of fame will endure. It has been reported that all-low-carb retailer Castus is looking for private label low-carb food makers for its supermarket chain. At the same time, however, the Vitamin Shoppe advertised that it was selling all of its Atkins products for half the suggested retail price, indicating that the retailer could be trying to dump excess low-carb inventory. Conversely, if the low-carb revolution is still alive and strong, the 200-plus-store chain could be playing the Wal-Mart game, setting itself up as the lowest-cost provider for Atkins staples in its core markets.

Further fueling the staying power versus fizzle factor debate over low carb is how manufacturers are positioning new brands entering the market. Some are incorporating a low-carb message front and center, while others are incorporating low-carb into an overall health and wellness position.

Unilever, which continues to roll out new products to its Carb Options line, has reworked its Slim-Fast line under the name Optima, positioning it as containing a balance of carbs, fat and protein. Others are focusing strictly on the low-carb aspect, including Coca-Cola and rival Pepsi with their respective mid-calorie colas C2 and Pepsi Edge.

While General Mill's low-carb Total Protein cereal reportedly has fallen short of company expectations, rival cereal maker Kellogg Co. has since introduced its new Special K For Your Low Carb Lifestyle. Kellogg also introduced Keebler Chips Deluxe Carb Sensible Cookies in the cookie aisle and Eggo Special K For Your Low Carb Lifestyle waffles for the freezer.

With more new products and line extensions entering the market, numbers continue to show sales of low-carb products in the drug store channel are on the rise. According to AC-Nielsen data for the 52 weeks ended June 12, total sales of carb-conscious food and (non-alcoholic) beverages hit $137.6 million, up 133.6 percent in dollars and 137.6 percent in units in drug stores. Of course, drug stores still represent a relatively small piece of the low-carb pie, accounting for less than 2 percent of total dollars spent on low-carb food and non-alcoholic beverages in food, drug and mass (excluding Wal-Mart).