"We have to adjust to the new reality," said Mike Polk, senior VP-marketing and chief operating officer at Unilever Bestfoods, who called the "carb-aware" trend the most dramatic shift in consumer behavior since the low-fat craze of the mid-1980s. "Nobody could have predicted that the number of consumers watching their carb intake would grow from 11% a year ago to 40% today and affect all industries from bread and pastas to confection."
According to Dean Rotbart, executive editor of newsletter LowCarbiz, 30 million Americans now describe themselves as being on a low-carb diet, and an additional 100 million will join them in the next year as part of the "controlled-carb" movement that vilifies sugar and white flour.
That phenomenon has most food manufacturers rushing to reposition or reformulate, he said. "Manufacturers are convinced that sugar is the tobacco of the 21st century."
Among initiatives slated for this year are a reduced-carb line for Nestle USA's Stouffer's Lean Cuisine, to be supported with a $10 million TV and print effort in March; a line of 1-gram Sugar Carb chocolate bars from Hershey; an umbrella brand dubbed Carb Fit from the Hain Celestial Group and a low-carb ketchup from Heinz. The first trade conference to appeal to low-carb food marketers, The Low Carb Stomach, is scheduled for Jan. 22 in Denver. Mr. Rotbart said more than 100 companies are on the waiting list.
The fervor has also spawned the launch of an every-other-monthly magazine, LowCarb Living, which launches this month from independent Berkeley, Calif.-based CappMedia. Publisher Jim Capparell predicted consumers would spend nearly $8 billion on packaged low-carb foods in 2004, up from $3.5 billion in 2002. He believes the magazine could reach circulation of 1 million; it will begin with a rate base of 130,000.
Unilever set up a cross-brand team to develop Carb Options just seven months ago, based on insights from sibling Slim-Fast Foods Co. Slim-Fast is also trying to counter severe sales declines due to low-carb diets, launching a line of low-carb bars and shakes.
"We have to be nimble," said Mr. Polk , who arrived at Unilever in July from his post as president of Kraft Foods' biscuits, snacks and confectionery unit, a business particularly hard hit by low-carb mania. "Weight loss is a $9.4 billion market, and currently 45% of that is spent outside of grocery stores. We want to offer a solution to retailers that didn't exist before."
Low-carb options such as Atkins Nutritionals and Rexall Sundown's Carb Solutions are mainly available in specialty stores, catalogs or online at prices far higher than mainstream grocery brands, according to Lisa Klauser, VP-integrated marketing capability, Unilever Bestfoods. Carb Options products will be priced on average 20% to 25% higher than the regular versions of the food brands, but still retail at far less than specialty offerings, she said.
The thrust of the Carb Options marketing effort is the great taste of the foods, a trade-off consumers are not willing to make, Mr. Polk said. Spending is expected to be at least $10 million in print, online and grass-roots marketing. Using existing trademarks as endorsers of the new line is expected to foster trust in the taste as is the ad tagline: "Carb Options: Taste you can count on."
Print ads from WPP Group's Ogilvy & Mather Worldwide, New York, break later this month featuring mouth-watering food shots overlaid with a number representing the amount of grams of carbohydrates per serving of the featured Carb Options product. Barbecue sauces from Lawry's, for example, are 3 grams per serving, Garden Style Ragu 5 grams and Wishbone Ranch and Italian dressings zero. Other products in the portfolio-most of which contain McNeil Nutritionals' Splenda brand sucralose-include a Lemon Lipton instant tea, creamy Skippy peanut butter, Imperial Whipped Dressing and a line of shakes and bars (similar to Slim-Fast, but not endorsed by that brand). Ogilvy One handles the Web site, CarbOptions.com, which will feature recipes.
A Wall Street analyst applauded Unilever Bestfoods' efforts, noting that none of the company's new products over the last year "really clicked" except its Breyer's low-carb ice cream. "They need to step up the resonance of their new products, and this shows some responsiveness on their part to the shift in consumer demand."