Low-Carb Competition Welcome Within the Growing Industry

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What started as a mostly grass-roots movement has grown into a major sector within the Food & Beverage Industry.

– What started as a mostly grass-roots movement has grown into a major sector within the Food & Beverage Industry. A few years ago, a handful of successful low-carb dieters, with fiery entrepreneurial spirits, launched a number of manufacturing companies to provide products they wished were available while they were losing weight with a low-carb diet. These days, everyone from investors to farmers and analysts to major retailers watch intently as low-carb dieting continues to capture the popular imagination across the United States as at least 29 million people "low-carb their way thin."

“Back in 2001, just a small number of manufacturers were in the business,” said David Martinez, COO, Director of Sales & Marketing at Low Carb Success, a manufacturer of flaxseed-based food products. “We entered the market confident that low-carb would not only catch on, but grow in leaps and bounds quickly. So we positioned ourselves to enable growth in the long-term as more manufacturers were bound to emerge.”

Emerge, they have. Today, less than three years later, not only is there more competition, there is fierce competition. The small companies offering low/controlled-carb selections now compete not only amongst themselves but also with the major manufacturers who are also entering the market at a brisk pace. In 2004, according to Mintel’s Global New Products Database, more than 660 new ‘low-carb’ products were released into the US market January through April, about as many released in all of 2003.

Remarkably, those manufacturers who have been in the sector for years are embracing the increased competition. “We keep moving forward,” said Mr. Martinez, “remaining focused on the fact that foods that don't offer the consumer an ability to lose weight while enjoying great taste will not be purchased again. As we have done since our start -- rather than roll-out dozens of new products -- we create, test and release a limited number of products that continue to be well received by the consumer and allow us to continue to build our brand.”

CarbSense President, Jim Haun, weighed in that the explosion in popularity in the low-carb diets and products is, for his company, “an opportunity to evaluate and refine our message to position ourselves well in the marketplace for the long-term. Finally seeing how the large, established companies have chosen to address low-carb has helped us tremendously by bringing the segment to a level of maturity that enables us, and companies like ours, to focus on specific opportunities that we are best suited to fulfill. The segment is rapidly transitioning from prospecting and pioneering to becoming more of a typical niche, where the field is more stable and companies can operate with more predictability."

“The large companies have created product lines that are very well suited for main grocery isles, and will cater primarily to the broad expanse of carb-conscience consumers." remarked Mr. Haun. "Active low-carb dieters will defer to diet and nutritional sections of the store, as well as independent specialty stores. This represents a smaller, yet very attractive sub-segment, which can be well served by quality specialty manufacturers.”

Even those start-ups just getting ready to enter the market are using the increased competition to their advantage. “Consumers are well-educated about carbohydrates when they follow a low-carb diet. At Luscious Living we've taken our time and rather than rush to market, we've been carefully evaluating how to position our products and be sure our message to consumers consistently conveys the long-term lifestyle of controlled-carb eating. We want our customers to enjoy our cheesecakes occasionally while they lose weight, and continue to enjoy them when they've reached their goals,” said Jason Wachob, CEO of Luscious Living, a manufacturer readying the launch of its ‘SophistiCake’ Cheesecakes.

“While growth continues in the sector, some issues remain to be resolved,” cautioned Regina Schumann, COO of the Carbohydrate Awareness Council (CAC). “Industry guidelines still are not in place from the FDA to define ‘low-carb’ for the consumer on labels. Some manufacturers continue to use ingredients that are questionable for health, and consumers are barraged with confusing messages about what a low-carb diet is from the media. It isn't just meat, eggs and cheese; all of these foods are allowed, but that isn’t all you eat.”

“Slowly but surely, as our nation battles an obesity epidemic, the message is reaching the consumer about the healthful benefits of losing weight with a low-carb diet and the long-term controlled-carb approach,” said Dr. Gil Wilshire, MD, President and CSO of the CAC. “Overall the long-term outlook is bright for the industry and the consumer as the scientific evidence continues to emerge and support both low-carb diets and controlled-carb nutrition."

Linda Langdon, CEO of Low-Carb Creations concurred, “As continued modifications and labeling regulations occur within our industry, risk of losing consumer confidence increases. It is the responsibility of both manufacturers and retailers of controlled-carb food products to assure consumer perception is influenced primarily by documented studies and medical data. We have a profound opportunity to influence the continued growth and success of an industry that is making a definite impression in the battle against obesity and diabetes."

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Regina Schumann
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