- The Washington Times - Monday, August 1, 2005

Food companies that jumped onto the Atkins diet fad a few years ago are facing the same sales slump that forced Atkins Nutritionals Inc. into filing for bankruptcy protection Sunday night.

The Ronkonkoma, N.Y., health food company, which led the low-carbohydrate diet craze, filed for Chapter 11 in the U.S. Bankruptcy Court in New York.

The company blamed a decline in consumer demand for low-carb products coupled with a glut in the low-carb market in the second half of 2004, when bigger food manufacturers introduced competing products.

Low-carb diets, which were successful from 2002 to early 2004, promoted eating protein instead of carbohydrates.

Market research companies said the low-carb fad reached its peak in February 2004, when 9 percent of American adults were on the diet. About 2 percent of U.S. adults use the diet today.

Food companies that teamed up with Atkins also have reported a drop in their low-carb product sales.

CoolBrands International Inc., an Ontario frozen-desserts company, reported last month that its quarterly sales were hurt by the lack of low-carb demand and the nonrenewal of a license with Weight Watchers.

The company, which makes Atkins-brand ice cream novelties, said sales for its fiscal third quarter ended May 31 tumbled 14 percent to $119.6 million from $139.1 million a year earlier.

American Italian Pasta Co., a Kansas City, Mo., pasta manufacturer, also cited a dip in low-carb sales for the decline in its most recent financial quarter.

The company started selling a reduced-carb pasta last year to counter the decline in pasta consumption in 2003 and 2004.

But sales for American Italian’s fiscal second quarter ended April 1 dropped largely from the slowdown in low-carb diets. Sales fell 12 percent to $100.1 million from $113.3 million a year earlier.

Analysts said the Atkins bankruptcy filing and lull in the low-carb market are no surprise.

Low-carb sales, at stores excluding Wal-Mart, hit $2.52 billion for the year ended July 16, up only 34 percent from $1.88 billion a year earlier, according to the most recent data from ACNielsen.

Those sales had more than tripled from $619 million in 2003, said the global market research firm.

While low-carb diets were popular, “there was never much interest in low-carb products,” said Larry Shiman, vice president for Opinion Dynamics Corp., a Cambridge, Mass., market research company.

A handful of low-carb diet foods probably will stay on the market, similar to the products that survived the low-fat diet craze in the 1990s, Mr. Shiman said.

For the near-term future, consumers are more likely to branch out into other healthy fare, he said, adding that whole-grain foods are gaining more interest.

Whole-grain food sales for the year ended July 16 jumped 6 percent to $6.97 billion from $6.58 billion in 2004, ACNielsen said.

But T.G.I. Friday’s Inc. said yesterday its Atkins-approved items are still popular with customers.

The restaurant chain, which is owned by Minneapolis hospitality conglomerate Carlson Cos. Inc., has seven Atkins-approved items on its menu.

Atkins plans to expand T.G.I. Friday’s menu to include “maintenance meals,” which would be higher in carbs for people maintaining their weight, said Colette Heimowitz, education and nutrition information vice president for Atkins.

The items are likely to appear in the restaurant chain in a year, she said.

Atkins now plans to focus on its nutrition bars and shakes while promoting a broader healthy-food line, Ms. Heimowitz said.

“Consumers will see no difference,” she said, adding that Atkins products will continue to be sold on store shelves.

While studies have shown that patients on strict low-carb diets can lose an average of 3.6 pounds in two weeks, dietitians said they caution their patients against cutting an entire food group out of their daily diets.

“Whenever individuals omit whole food groups, they are in danger of compromising their diet” by eliminating nutrients like fiber and vitamin B, said Baltimore dietitian Noralyn Mills.

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