August 2004 Times & Trends Executive Summary:
CCARB-CUTTING SHOPPERS
Stirring up CPG Food & Beverage Categories

Times&Trends reviews new developments and critical events across all major CPG categories, key channels and all consumer groups, providing powerful benchmarking insights to help guide strategic decisions.

This month’s subject is part of Times&Trends series on the Wellness Evolution, specifically the latest trend of low-carb consumption and carb-branded product sales trends. The purpose of this report is to summarize trends in the latest year and most recent 12 weeks through mid-June.

Here’s a summary from the brief:

Carb-Cutting Is Still Trending Strong – The Battle For Dieters’ Attention Is Just Beginning.

CPG companies are launching carb versions, carb packaging, reduced-calorie and artificially sweetened products to stimulate dieting shoppers’ interest and trial – ultimately, taste satisfaction and price versus dieting results will determine who wins.

This free summary is also accessible via the GMA Web site  at http://www.gmabrands.com/publications/gmairi.cfm

Shoppers are faced with unavoidable weight control and associated health issues. Two-thirds of Americans are overweight. The CPG industry’s opportunity to serve these consumers with products that satisfy but also support weight-loss goals is enormous.

There’s been an unprecedented consumer response to the low-carb diet. Low-carb dieting is easy, effective and fast. Reporters are claiming that carb-cutting is declining – but store sales trends do not show that to be the case. Yes, the jury is still out on its long term effectiveness.
 

The major positive sales impact of this craze is with naturally low-carb products – like eggs, bacon, light beers, & others – estimated to have grown as a group over $4 billion in annual sales in the latest year.

Food Manufacturers are jumping in with low-carb line extensions. Companies launching multi-category offerings, package blurbs and “we’re low-carb” ad campaigns – are taking over a larger share of carb-branded activity from carb companies like Atkins. Total carb-branded activity, in aggregate over $1 billion in sales, is estimated to have grown over $800 million in annual sales through June 13, 2004.

Portable, between meal snacks & beverages is the likely carb-cutting battleground. Soft drinks & beer, snack bars, candy and other sweets are predicted to sustain consumer carb-cutting or calorie-cutting interests. However, lower-calorie or artificially sweetened, diet versions may take over shoppers’ attention and taste satisfaction. Pepsi Edge and Coke C2 competition has just begun and will challenge dieters to reconsider their options. Artificially sweetened line extensions are growing rapidly.

Retailers are evaluating low-carb stocking, merchandising & shopper communications strategies. Carb-brands have received unusually strong display support and are often displayed in multiple locations with multiple carb-brands. “Healthier Eating” sections are being tested within categories and as separate departments. Food ads are flagging a deluge of new entries. The jury is still out on which strategies and which best practices consumers will respond to more than others.

Taste approval, price/value and weight-loss results – the ultimate test. Many carb-company products are premium priced compared to brand carb-extensions, which are more competitively priced. Klondike’s Carb Smart – a much better value to the carb-cutting shopper – doubled Atkins’ Endulge share of frozen novelties in latest 12 weeks of data.

Concerned overweight shoppers are trying multiple diets. IRI MedProfiler™ data shows that low-carb dieting is competing against low-fat/cholesterol, low-calorie/sugar and low-salt dieting for weight-loss results. Awareness and interest is heightened. Media and government news may sway dieters in new directions away from carb-cutting.
 

Low-carb could go the route of low-fat. The low-fat branded craze in the early 90s – including SnackWell’s & WOW! branded snacks – saw about five years of growth and then has declined ever since. However, consumers may sustain interest in selected naturally low-carb products as they did with naturally low-fat yogurts.

Implication – It’s too early to predict low-carb’s rise or demise – but the industry opportunity to serve the consumer and support America’s need to curb the obesity crisis is huge, and it’s just begun. IRI has taken the initiative to provide manufacturers and retailers with updates on the status and market trend of carb-branded items with a new syndicated service, CarbTracker™, the industry’s most complete source of sales results for the low-carb industry. This service is now available.

Source: IRI's Times & Trends Reports
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