General Mills shelved this month's launch of an extension to its Total Protein low-carb cereal, Total Protein with Almonds, and plans to cut the price of the original entry-priced 20% higher than regular Total for fewer ounces. Unilever Bestfoods also plans to lower prices in certain categories where its premium-priced Carb Options line is facing stiff competition.
The corrective moves are not surprising to industry observers who marvel at the frenzied speed with which package-food marketers have developed low-carb products. "In my 25 years watching the way people eat, there's never been a movement to one thing so quickly and marketers in the slow-growing food industry are in a rush to get there," said Harry Balzer, VP-market research firm NPD Group.
In the case of General Mills, the scramble to beat rival Kellogg Co. to the punch is obvious. The pull-back on the extension, due to its unappealing taste, was joked about in the offices of one Midwest grocery retailer "because the first one didn't taste good either," a buying executive from the chain said. While it's too early to pull the entire line, launched in February, the executive said, like other low-carb entries, "it's not setting the world on fire."
Information Resources Inc. shows sales for Total Protein reached just $4 million from the time of its launch through May 16 in food, drug and mass outlets excluding Wal-Mart Stores. By comparison, General Mills' successful launch of Cheerios Berry Burst last year reaped sales of $18.7 million during an eight week period shortly after its distribution.
General Mills spokesman Tom Johnson said Total Protein scored well in taste tests and that the extension is "just in a holding pattern" as the company focuses attention on other new-product introductions, such as Peanut Butter Toast Crunch. He declined to say whether the product would ever launch.
Despite research showing consumers are still as "carb aware" as they were six months ago, retailers, including some Wal-Mart Stores executives, report that low-carb is a low seller. That's driving some to request that these products' premium prices come down.
Unilever, readying the third wave of products to its existing 32-item Carb Options line this August, will reduce prices on some products-on average 25% to 35% higher than full-carb counterparts-and increase marketing support to stave off competition.
"We will do what it takes to be competitive," said Lisa Klauser, the food unit's VP-integrated marketing capability, especially in categories such as salad dressing where competition has heated up from entries such as Kraft Foods' CarbWell line.
Sales for Carb Options in the largest low-carb category, nutrition bars, pale in comparison with those of low-carb leader Atkins Nutritionals. According to IRI data for the 52 weeks ended May 16, Atkins' nutrition bar sales totaled $308 million, as compared to $900,000 for Carb Options' bars (the latter out only five months).
Matt Wiant, Atkins' senior VP-marketing, said of newcomers, "If you put something together in three weeks, it's not going to taste good."
For the first four months of this year, just over 400 trademark applications carrying the word "carb" were filed, the same as in all of 2003 and four times that of 2002. "It's quite possible the trend will be over in the six to eight months, before the trademark examiner even looks at it," said Glenn Gundersen, partner at law firm Dechert, who studies trademark trends.
NPD's Mr. Balzer said that "as food manufacturer, you have to play in this game right now." But he added: "Just don't bet the ranch on this. It's not a long-term development in the history of eating in this country. It is a blip."