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There continues to relentless coverage in the media of the low-carbohydrate diet craze, and the impact it is having on food businesses throughout the country.

For example, MSNBC reports that companies like General Mills and International Multifoods are suffering because they sell carb-laden products such as cereal, potatoes and pancake mix. Manufacturers like Hormel, on the other hand, that sell low-carb products like Spam and Dinty Moore beef stew, are seeing strong sales increases, as in the nation's egg industry.

Reuters reports that McDonald's of Canada will begin listing all the calories in the food it sells there, as well as offering a "lighter" menu that includes new salads and grilled chicken entrees for adults, and grilled cheese sandwiches and apple slices with caramel sauce as options for children.

And the Denver Post reports on how chain restaurants are developing low-carb menus, convenience stores are offering low-carb alternatives, and even manufacturers like Heinz are in the process of creating low-carb condiments.

Indeed, sales of low-carb foods reached an estimated $1.4 billion in 2003 and some believe could eventually reach $3 billion. But the jury remains out on whether this is short-term hype or long-term lifestyle trend.

The first-ever low-carb business conference - dubbed "LowCarbiz Summit" - is meeting in Denver this week, attended by manufacturers and retailers alike.
KC's View:
What's the over-under on when some major medical study comes out suggesting that the Atkins Diet, South beach Diet, and their brethren lead to a higher incidence of some sort of malady?

MNB user Paul Schlossberg offered an interesting perspective on this trend:

It is interesting to see so many companies moving in this direction across so many product categories. This will result in a faster path to prove (or perhaps disprove) the opportunity for low carb products.

The real issues for manufacturers are whether or not (1) this will be incremental volume or simply converted sales from established products, (2) higher margins (in percentages and in pennies) will be generated. What will the source of volume be for all of these new products? Will new users be attracted to these new products to drive truly incremental consumption?

It is tricky. Not doing it (launching low carb products) puts a brand at risk of losing share to others who do introduce low carb brands or line extensions. Simply cannibalizing one's own base business is acceptable - but only if margins are not deteriorated. That will be a challenge when considered against the high cost of introducing new products in this rapidly expanding category.

Of course it still comes down to "tastes good" - because that is what build repeat sales. If the early entrants get lots of trial and don't deliver on good taste, there might not be much in the way of repeat sales. That will hurt the broader category potential.

Let's not forget shelf space in every retail segment. If so many new items show up - some items will have to fall off the shelves. Keep your eyes on the shelf sets in your neighborhood stores. Planagrams are going to be changing.