Low-Carb Losing Steam

Demand May Not Be Keeping Up With Supply of Products

The nation's appetite for low-carbohydrate foods seems bottomless, judging by the many low-carb products showing up in supermarkets and the new menu items at restaurants and fast-food chains. And when Krispy Kreme Doughnuts Inc. recently announced slowing sales, it put part of the blame on low-carb diets.

Yet the mood at a recent Washington conference on the business was bleak. Sales of low-carb products have fallen sharply at independent and health food stores, and some longtime industry insiders say a shakeout has begun.

"I do think now we're on the downside of the roller coaster -- and there will be ups again, but not as high," said Dean Rotbart, executive editor of industry trade publication LowCarbiz, which organized the conference. Rotbart said he is considering a new name and broader focus for his magazine.

Even as they rush to cash in on the craze, some major food manufacturers say they see the phenomenon cooling down and becoming one part of the broad market for weight-loss products. "It's kind of exploded, it's a trend, and then it becomes, really, a niche," said Michael E. Diegel, a spokesman for the Grocery Manufacturers of America Inc. "That's where it looks like it's going at this point."

The changes in the business are hardest on the entrepreneurs who have staked their business plans on the low-carb craze. Curtis Price, co-owner with his brother and another partner of Whoa . . . That's Lo!, a low-carb store in Silver Spring, is typical of specialty retailers feeling the pinch, with sales off 15 to 20 percent in the past two months. "It reached a peak, and now it's trickling off, but it's going to eventually level out," he said.

Stores like Price's have lost some customers to supermarkets and discounters as they give more shelf space to low-carb products. But a growing number of industry experts say the declines for independents may be the first sign of deeper problems: people giving up on the diet after not doing it right, a poor reception for some foods that have been rushed to market and the diet-killing temptation available in the form of low-carb pasta, cookies, ice cream and snacks -- many of which pack a wallop in calories and fat.

"More and more consumers aren't really understanding what's involved in the low-carb lifestyle . . . so you have an increasing number of people failing" to lose weight on low-carb diets, Arne Bey, president and chief executive of leading low-carb manufacturer Keto Foods LLC, said at the conference.

Because the trend can't be ignored, big brands are turning out the low-carb offerings to defend shelf space, establish a healthier-for-you image and grab a little piece of a growth market in a cutthroat business. Plus, these products can command a premium price, so they are profitable.

Diegel of the Grocery Manufacturers of America said it's the nature of the food business for companies to quickly follow a trend. "It's all about market share and growth, and if you're going to find growth, it's got to be in new products, new categories, line extensions," he said.

But some manufacturers are planning for a time when low-carb diets are no longer the consumer favorite.