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

Morgan Stanley analyst William Pecoriello predicts the popularity of low-carb diets will decline gradually in the second half of 2004, "as diet book sales typically fade seasonally in the second half of the year, and the latest low-carb books released in the past few months [e.g. 'The Hamptons Diet'] have not cracked the top 10 list," he noted in a July 14 report. However, Pecoriello expects the low-carb business to rebound in 2005 and has raised his low-carb dieting forecast for the first quarter of 2005 to reflect what will likely be another surge of people going onto, a low-carb diet as part of a New Year s resolution."

Key risks to low carb, according to Pecoriello, are the timing and nature of the next dieting trend, which could complement or detract from the popularity of low-carb diets, changes to the perceived effectiveness and safety of low-carb diets and the degree to which low-carb diets surge again in popularity during the seasonal spike of dieting behavior in January and February.

Pecoriello also expects the regular carbonated soft drink category to take a permanent hit from the low-carb movement, while categories with a healthier overall profile, such as fruit juices, are more likely to see a recovery in demand when people drop off their low-carb diets.

As for snack foods, Pecoriello believes that snack bars and pretzels are more likely to attract lapsed dieters than high-fat and high-carb foods like corn chips and puffed cheese snacks. "Less healthy products could see a negative change in household penetration and/or purchase frequency as a result of the low-carb let movement, he noted.

With obesity and diabetes reaching near-epidemic status in this country, the trend among food makers toward healthier, better-for-you foods and drinks should continue for some time.

Last month, Nabisco introduced its 100 Calorie Packs to the cookie and cracker aisle. The idea here is portion control for two of its most popular brands: Oreos and Wheat Thins. Nestle also recently announced that it will work with the American Diabetes Association to promote some of its reduced-carb items, including its Carb Select candy bars, appealing to consumers concerned with diet as part of a healthy lifestyle.

As such, one popular ingredient promoted on product packaging is Splenda, the brand name for the sweetener sucralose. Splenda comprises 6.5 percent of the overall sugar and sweetener market and gained $79 million in sales between 2002 and 2004, according to Mintel International Group. The research firm predicts that the market for sucralose will grow 151 percent by 2008 to reach $289 million.