Weighing the Low-Carb Options

A recent issue of the satirical weekly newspaper The Onion carried the front-page headline: "Senatorial Candidate Introduces New Low-Carb Platform." While intended as absurd humor -- and there have been many jokes around the low-carb movement -- the Onion article leads with the news that the candidate has "jumped ahead in the polls." Ironically, this idea parallels food and beverage manufacturers' attempts to jump ahead in sales by introducing low-carb versions of products.New launches in recent weeks and months have included Doritos Edge, Tostitos Edge and Cheetos Edge from Frito-Lay; SKYY Sport from Miller Brewing Co.; the CarbWell line from Kraft; Carb Aware whole wheat bread from Roman Meal; Advantage and Endulge bars from Atkins; Aspen Edge beer from Coors; and Unilever Bestfoods' Carb Options line. (Click here to view a gallery of displays and promotions for low-carb products.)Anne Mixen, account manager for The NPD Group, Port Washington, N.Y., says the low-carb diet probably will follow the same course as others, such as low-fat -- some people will stick with it, but many will move on to the next thing. "Don't sink a ton of money into a bunch of new plants," she advises manufacturers. "History keeps repeating itself. We're fascinated by whatever new and sexy diet is out there, but when the next one comes along, we tend to try it. Diets by nature are kind of a fad." Todd Hultquist, senior manager for media relations at the Food Marketing Institute (FMI), Washington, D.C., disagrees. "It's still a relatively new phenomenon," he says. "Retailers this year have started to react quite substantially to the craze. Manufacturers had to start rolling out new products from major brand names. Certainly it's something that's here for a while."Steve Frenda, EVP sales and marketing for Mosaic InfoForce, Chicago, says, "This has a life cycle of not months, but years. I think it will be around for awhile, which is going to force the issue of retailers to support this and create [low-carb] sections."Mosaic InfoForce is an auditing firm that tracks retail execution, and Frenda believes the low-carb rollouts are putting retailers in a dilemma. "In the past, almost anything that came along was category-specific and could easily be integrated into the way the categories have been set up in the stores," he says. "However, I think that there are lifestyle, life-stage, ethnic types of needs that are emerging in today's American society that are just bigger than any single category, and the retailer has to think, 'OK, how do I deal with these kinds of big issues in terms of setting up my departments in the store?' "Frenda estimates that "there are probably 700 to 800 UPCs out there now." He maintains that big, multi-brand introductions by such companies as Unilever, General Mills and Kraft are forcing retailers to consider a low-carb section in their stores, and that "regional thought leaders," such as Des Moines, Iowa-based Hi-Vee, and San Antonio-based HEB are creating low-carb departments. CPG Marketers: In or Out?When members of the Alexandria, Va.-based Snack Food Association (SFA) met in March, they hesitated when an Associated Press reporter asked them about how they intended to respond to the low-carb trend, recalls Ann Wilkes, vice president of communications."A lot of our members said, 'We're looking at it, but we don't know what to do yet.' Some of them said, 'With the low-fat, we kind of got burned,' " Wilkes says. "It's not something where our members have jumped on the bandwagon strongly."However, Frenda says that despite their initial reactions to low-carb, all companies are trying to capitalize on low-carb to some extent or another."I think Unilever's speed to market was extraordinary, I think they've done a nice job in branding, and I think they've done a nice job in product quality. Frankly, I think as the Krafts, the Unilevers and the General Mills come to market with low-carb options, this will put a lot of pressure on the Atkins and Ketos," says Frenda. "I don't think they can compete."The Atkins and Keto brands are "product purists," Frenda says. "They got to market and didn't necessarily pay attention to taste or the repurchase rate and some of those sophisticated things that have to be considered if you're going to sustain your product, so my prediction would be that Atkins and Keto will find themselves back in health food stores again -- the GNC's of the world." Some of the CPG marketers interviewed by P-O-P Times for this report are indeed on the bandwagon, and others are still watching from the curb. For example, Frito-Lay Inc., Plano, Texas, has not scaled back its production of regular Doritos, Tostitos or Cheetos, says spokesman Jared Dougherty. "Right now, we know that there's a consumer out there that looks for a low-carb option," he says. "That's why we developed these products, to make sure we meet the needs of all consumers out there."The company is unsure whether it will have a specific display for its Edge-brand chips, and is "going to see how things go," Dougherty says. For now, he explains, some retailers are using the company's Sensible Snacks wire displays (seven different options that range from an endcap to a lane closer) to house low-carb alongside other healthier products such as low-fat or nonfat. These displays "house all of our products that fall under that [healthier] portfolio," Dougherty says. "They've been out for a relatively long time."Likewise, in releasing CarbWell cereals, cereal bars and condiments, Kraft, Northfield, Ill., is starting from the standpoint that "based on what we know about what consumers are looking for, we think the CarbWell line is poised to deliver those things," says spokeswoman Pat Riso. "I don't know that anybody knows what the length of the trend will be."Like many companies, Kraft has been busy calling out products that are already relatively low in carbohydrates, such as Planters Peanuts and sugar-free JELL-O, Riso says. The company has been promoting several cheese brands under the headline, "Counting Carbs? Count on Kraft." She did not have information on Kraft's P-O-P plans for CarbWell.Campbell's Soup Co., Camden, N.J., is putting out a line of Carb Request soups, but the company is doing so as part of a broader emphasis on healthy foods, and not because it sees the low-carb trend itself continuing to grow, says spokesman John Faulkner. "We think the trend is broader. There's always a trend to lose weight," he says. "If you look back over the last 20, 30 years, low-fat, low-sugar, those kind of reached their peak. We're addressing it more holistically. We would project right now that low-carb has reached its zenith. We don't think it's going to continue to grow. But it will continue to be around."Given Campbell's more skeptical viewpoint, it's not surprising that the company does not have much P-O-P planned "beyond shelf call-outs that talk about numbers of carbs," Faulkner says. "That would be stretching the point, to say we're doing any in-store advertising."Terry Elliott, brand manager for Roman Meal, Tacoma, Wash., views it differently. Although he believes the market is "saturated with brands" after it "took off like a rocket halfway through last year," and that A.C. Nielsen numbers indicate the trend has peaked, he posits that the current trend "will have legs for some time. The consumer will pay attention to carbs. I do not believe it will be a carb-avoidance [strategy]. I think they'll be smarter about which carbs they're going to use."Consequently, Roman Meal plans to roll out danglers, shelf strips and "occasional" 16-inch by 24-inch header cards for its Carb Aware whole wheat bread later this year in several markets, for a total of nearly 10,000 pieces. "It depends on our bakeries and what kind of activity they get with the retailer," Elliott says. "For a number of bakers in the United States, their reduced carb is their number one-selling loaf of bread today. I don't see it staying that way."While "everything reaches a point where it's saturated," the low-carb trend has not, says Lesley Bartholomew, spokeswoman for Blue Bunny Carb Freedom Yogurt. Le Mars, Iowa-based Wells' Dairy Inc. is rolling out line extensions for its yogurt and ice cream and promoting the yogurt with static clings, shelf strips and floor graphics. "Honestly, we can't keep our products on the shelf," she says. "We'll probably start to see [saturation] because more and more people are entering the market. But for the moment, companies are in it for a good ride."Furthermore, because American consumers are heavily focused on obesity, the low-carb trend could take a while to reach the point of saturation, according to Brian Jacobs, vice president for Tumaro's Gourmet Tortillas, Los Angeles. "In the past, we were not as conscious about health and the impact food has on people's lifestyle," he says.The company has released four flavors of its tortillas in low-carb form, and retailers can merchandise them on any of three different wire displays -- 20- and 26-inch wide racks and a 12-inch wide "power panel." Thousands of these displays are being sent to supermarkets and health food stores at a cost of tens of thousands of dollars, Jacobs says. Tumaro's sees the displays as permanent, but that "depends on stores' policies," Jacobs adds.Similarly, Laura Emory, brand manager for SKYY Blue and SKYY Sport, says Milwaukee-based Miller Brewing Co. is not concerned about the market for low-carb reaching a saturation point. "Consumers are continuing to seek lighter options," she says. "There's a great interest to find brands to fit that style. I think it's continuing to build at this point." Miller plans to send out 30,000 units of on- and off-premise P-O-P to support SKYY Sport. The company does not envision permanent P-O-P of this sort because "the category is so interested in innovation," she says. "The more temporary type of pieces work fairly well."How Retailers are Reacting"It was a fad, it became a trend, and it will probably level off and become a lifestyle," says Kennith Fries, category manager for processed foods, 7-Eleven Inc., Dallas. "We're going to ride the trend as long as we can, as long as the customer is doing it. As it levels off, we will level off. Every good business person will make those same determinations at different points."CPG marketers' decisions about how much in-store advertising to roll out, and for how long, vary along a spectrum that may reflect their confidence in the low-carb trend's staying power."They're just reacting as they would for any other type of promotion, whether it be a seasonal promotion or something else," says FMI's Hultquist. "If it's going to move product and affect the bottom line, I'm sure they're going to keep doing it."Wilkes, of the SFA, figures her pork-rind and meat-snack members "have jumped all over this" but does not think smaller and more regional members are very involved. "I haven't seen any point-of-purchase" related to low-carb, she says.Some retailers are taking proactive steps to promote low-carb products. 7-Eleven created a "Better Choices, Better Year" endcap for its stores that featured products from such companies as Atkins throughout January, Fries says. "When you think of 7-Eleven, you think of Slurpee, hot dogs and sandwiches. You don't necessarily think of low-carb and offerings from Atkins. During that 30-day period, he adds, the chain "captured a lot of eyeballs" as shoppers realized the c-store carried the product.Beyond its own store-branded P-O-P, 7-Eleven has partnered with Atkins in introducing 14- to 17-carbohydrate sandwiches that will use the Atkins bread along with a P-O-P campaign spanning shelf railings, blades and signage along with a six-foot case, Fries says."It's a little bit easier for me" than it is for big-box retailers, Fries says. "I've got 2,400 square feet. You can look at my whole store in a matter of minutes."That's also true at LowCarb Destination, a specialty store that opened April 2 in Wilmette, Ill. While the store has used wood stands and "little laminates or brochures" to display product, the store has little room -- physically or otherwise -- for "gaudier or bolder displays," says owner Ruth Helgemo."A lot of it is for space; a lot of it is for perception," Helgemo says. "I'm not real crazy with the clutter. We like to have a personal relationship with our customers." She adds that she likes to make sure customers are well-informed, and "I tend to think that the product in a nutshell is not the best way to learn about it."While there's no shortage of material from major manufacturers, the primarily niche companies with which Helgemo works produce little P-O-P, she says.Wells' Dairy's Bartholomew says, "We haven't really had a huge ask" for any of the company's P-O-P. "They don't want all this stuff. Since retailers are saying, 'No more,' you have to have a competitive price, your product has to sell itself, and you have to have a great package so that it pops out at the consumer."Campbell's Soup's Faulkner says, "We're constantly working with our retailers to develop programs," he says. "I don't think our retailers are necessarily calling for low-carb displays."Conversely, retailers have actively sought displays for SKYY Sport, Emory says, although not strictly because it's low-carb. "There's interest from retailers to provide display pieces that quickly educate consumers that this is a new product, and what the benefits are," she says. "To help drive the awareness in their store and drive trial during those key [summer] holidays, retailers, particularly supermarkets, are interested in displays."

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