Monday, July 12, 2004

Low-Carb Diets: Trend or Fad?

There has been an ongoing dialog at Business Pundit in the comments sections of several postings about whether the low-carb diet craze is a new trend in the American diet or a short-term fad. This is more than just an academic argument since business ranging from food processors to franchises are going to invest one way or the other, and a wrong bet could mean a devastating loss for the business.

The WSJ today weighs in today on the side of fad. They make it hard to link to it on their paid site, but here are some of points from the article Some Food Makers Trim Low-Carb Plans as Trend Slows:
o Surveys state that the number of Americans who say they are on a low-cab diet peaked in February at 9% and is now down to 6-7%.

o Food makers are still cranking out low-carb foods and their sales are still climbing, but growth is slowing and they are starting to cut back on plans. Besides the drop-off of demand, the food industry's has been unable to charge a premium for low-cab fare, making new investments in the segment doubtful.

o Specialty products and stores like Castus Low-Carb Superstores and Accu-Carb, a low carb bread company, are seeing sales down by as much as 50% this year as the number of suppliers entering the market is swamping the overall demand.
Overall, I am on the "hype" side. I have no doubt that people lose weight on this diet, but I think the low-carb trend will be like other popular diets: a large portion of the population will try it at one point, but long term there will only be a small segment of the population that permanently changes their eating habits. The segment will probably be a large enough to support a few businesses and product lines, but there isn't going to be a mass change in the American diet. Companies should provide a product for this segment if it makes sense (by using the usual cost/risk analysis, ROI, and other tools we marketing managers have at our disposal), but companies shouldn't jump blindly into what is really a short-term fad.

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