As the low-carbohydrate Atkins diet continues to grow in popularity, companies producing calorie-controlled food ranges have seen their sales slip. But is the Atkins diet just a fad? And how will Unilever's SlimFast react to falling sales? Euromonitor investigates the future of the diet sector.

A growing obsession with health and diet has in many markets been translated into consumer demand for quick-fix solutions rather than more long-term approaches to eating behaviour. Key here is the US, which has by far the highest per capita consumption of meal replacement slimming products in the world. In this market, sector growth is being driven by meal replacement bars, rather than by the more traditional drinks. This is principally due to the greater portability and convenience of bars, as well as the better taste and mouthfeel of these products, now worth about a quarter of sector sales in the US.

Also driving growth are products emphasising low carbohydrates, following the runaway success of diets popularised by Doctor Atkins' New Diet Revolution and Barry Sears' The Zone. Key products here include a range of meal replacement drinks and bars from companies such as Atkins Nutritionals and the Carb Solutions range from Royal Numico. Together these two companies saw sales increase by nearly 20% between 2001 and 2002, compared with overall sector growth of about 12%.

Unilever Slimming Fast

By contrast, Unilever's SlimFast brand increased only at the same rate as the overall market, despite growth being led by its bars. Globally the brand did better with significant sales increases in key markets like the United Kingdom, and Western Europe more generally, fuelled by new product development and heavy advertising. However, while this was enough for sales to continue to grow globally in 2002, the company reported disappointing SlimFast sales in the first half of 2003. This was mainly due to the continued success of low carb diets in the US, as well as their growing popularity in the UK.

While Unilever claims the second half of the year will see a recovery, it is difficult to see how this might be achieved. In the UK, for example, total sector growth is estimated at less than 3% for 2003, compared to nearly 7% in 2002.

In Europe SlimFast has traditionally battled against a consumer preference for sit-down meals and 'real food'. This trend is already much less pronounced in the UK, and declining in the rest of Europe as convenience becomes increasingly important. However, much of the company's new product development demonstrates Unilever's attempt to reposition the brand not as a meal replacement, but as an effective slimming regime covering products such as soups and pastas.

Combined with US products like SlimFast ice cream (soon to be launched in Europe) and a wide variety of granola and chocolate covered snack bars designed as guilt-free between-meal snacks, the brand is increasingly competing against other well known weight control brands such as Weight Watchers from Heinz and Jenny Craig. Neither of these products are meal replacements; rather they are positioned as whole-meal and snacking solutions for weight loss and weight control. Slim Fast's new product development, combined with marketing campaigns involving new websites offering complete diet and weight management advice makes this comparison even clearer.

Low carb, high growth

Expert Analysis

The World Market for Dietetic Foods

The report provides extensive volume and value sales data on the following key product sectors: sports nutrition; slimming foods, products for food intolerances and medical foods. Also included are forecasts to 2006 and company profiles on the market leaders. Find out more here.

 

However, this is precisely the territory on which low carb diets, particularly Atkins, are competing. For the Atkins diet, meal replacement products are largely peripheral to what is essentially positioned as a lifelong change in eating habits, similar to the Weight Watchers regime. Meal replacement bars and shakes are available for that added, portion-controlled convenience, while the number of Atkins carbohydrate-controlled products spans everything from dried pastas, condiments and ready meals, in a similar manner to calorie-controlled ranges.

In fact, it can only be a matter of time before Atkins starts to negatively impact calorie-controlled and low-fat ranges and it seems unlikely that the SlimFast brand will compete successfully here against long established leaders like Con Agra's Healthy Choice and even a host of successful private label ranges.

Ultimately, for SlimFast and other calorie-controlled ranges to remain competitive, they need to show the same success rate as the Atkins diet. The low-carb regime does lead to significant and rapid weight loss, which is exactly what many people want, regardless of the long-term impact to their health. Moreover, people can lose weight while still eating many of their favourite foods. By contrast, calorie-control relies on portion-control to be really effective. In a climate of greater indulgence and premiumisation of food products, restricting food intake is a singularly unattractive option compared to the delights of a high protein, and effective, diet.

However, it is unlikely that Unilever will risk launching a low-carb product. The company has spent years working on the healthy image of SlimFast and jumping onto the fad diet bandwagon, particularly one where the long-term health impact is unknown, would damage the company's reputation, although undoubtedly bring in profits in the short term. Faced with declining sales, Unilever either needs to force the tide to turn against Atkins by producing a better product, or validate the science behind it and develop a competing range. Either way, sitting tight is no longer an option.

The Market for Packaged Food in the United States

The Market for Packaged Food in the United Kingdom