“Understanding Demand Shifts
for Grain-Based Foods”
Presented By:
Greg Heying, Senior Vice President - Distribution
September 28, 2004
1
Current Trend
 The most recent weight-loss trends have
included high consumption of protein
and fat, and a low consumption of
carbohydrates.
 It is estimated that as many as 25 million
Americans have tried the Atkins diet
alone.
 This fad is having an effect on the way
consumers are eating and the way
marketers are thinking about their
products.
2
Current Trend
 40% of low-carb dieters say that it’s hard to
stay on a low-carb diet for more than a few
months at a time.
 42% of those on a low-carb diet say that low
carb products are worth paying extra for.
 930 new low-carb products were introduced in
the last five years, with most of the new growth
in 2003 and 2004.
 Estimates on the number of low-carb dieters
varies, but ACNielsen research says that about
17% of U.S. households have someone on a
low-carb diet.
Source:
Frozen Food Age July 2004
3
Eating Trends
1970
2000
Pounds Consumed per person:
1,497
Fats & Oils
Pounds Consumed per person:
1,775
50 lb
Sugars
139 lb
Vegetables
337 lb
Grains
136 lb
Fats & Oils
77 lb
Sugars
172 lb
Proteins
588 lb
Fruits
241 lb
Source:
USDA/Economic Research Service
Proteins
621 lb
Vegetables
425 lb
Grains
200 lb
Fruits
280 lb
4
Low-Carb Statistics
 Overall sales of low carb items were $1.4
billion in 2003.¹
 Popularity has impacted some category
sales.²
2003 vs. 2002
 Fresh Meat
 Bacon
 Beef Jerky
 Frozen Meats
Source:
¹ Denver Post
² ACNielsen
+18.3
+10.8
+20.0
+16.0 to +49.3
5
Low-Carb Statistics
The low carb industry has created a whole new
specialized retail sector.
Units
Castus
Low Carb
Store
24
Size
SKU’s
Markets
1600
8 states
(43 by year-end)
2500-3000
sq.ft.
Pure
Foods
2
1500 sq.ft.
1300
California
Country
Cutter
1
N/A
Frozen &
refrigerated
only
California
(12 by year-end)
Source:
Drug Store News March 1, 2004
6
Branded Low-Carb Trend
Branded low-carb snack and beverage
dollar sales increase.
$350.0
$300.0
$250.0
$200.0
$150.0
$100.0
$50.0
$0.0
2000
Source:
Frozen Food Age July 2004
2001
2002
2003
7
Branded Low-Carb Trend
Top low-carb brands and lines.
300.0%
250.0%
200.0%
Atkins
Walden Farms
Carbolite/Carborite
EAS Carb Control
Carb Solutions
150.0%
100.0%
50.0%
0.0%
% Sales Growth for the Past 52
Weeks, Ending 4/18/04
Source:
Frozen Food Age July 2004
8
Branded Low-Carb Trend
 Volume and sales of low-carb branded
items has decreased significantly in the
last year and has remained at a steady
level.
 Manufacturers are doing item
rationalization:
 Eliminating slow moving
 Creating new items
items
9
Low-Carb Sales Growth
Sales growth of low-carb supermarket categories for 52
weeks, ending June 13, 2004.
30.00%
25.00%
Fresh Eggs
Meat/Poultry Products
Sugar Substitutes
Snack Nuts/Seeds
Fresh Salad/Coleslaw
Natural Cheese
Breakfast Meats
Luncheon Meats
Butter
20.00%
15.00%
10.00%
5.00%
0.00%
% Change
Source:
Supermarket News August 9, 2004
10
High-Carb Sales Decline
Sales decline of high-carb supermarket categories for 52
weeks, ending June 13, 2004.
0.00%
-2.00%
Frozen Juices
Frozen Pasta
Dry Packaged Dinners
Sugar
Cold Cereal
Dry Pasta
Fresh Juices/Drinks
Ice Cream/Sherbert
Rice
-4.00%
-6.00%
-8.00%
-10.00%
-12.00%
-14.00%
% Change
Source:
Supermarket News August 9, 2004
11
Atkins Impact
 The low-carb diet is causing companies to
shrink as well.

American Italian Pasta Company will eliminate 14% of its
workforce and close a factory in Kenosha, WI.
 Krispy Kreme blamed low-carb diets for disappointing firstquarter sales and earnings.
 Jays Foods was pushed into bankruptcy as their sales have
decreased more than 10%.
 Kraft says it has lost sales and recently signed an
agreement to put the South Beach Diet trademark on some
of its low-carb products which will be disclosed later this
year.
Source:
Frozen Food Digest July 2004
12
Future High-Carb Strategies
 The U.S. potato board is launching a consumer
education campaign “The Healthy Potato, Naturally
Nutritious, Always Delicious.”
 The American Bakers Association is considering
launching an aggressive public relations campaign to
dispel what it considers myths about bread and other
grain products.
 In April, the “Milk Mustache” campaign unveiled an ad
touting milk’s weight-loss benefits.
Source:
Starch Makes a Stand – USA Today February 2004
13
Future High-Carb Strategies
 Weight Watchers is touting the potato’s virtues as part
of an educational campaign pushing produce.
 At a recent conference called “Healthy Pasta Meals”
nutritionists and pasta industry executives concluded
that pasta is a good carbohydrate that when eaten in
proper portions with other foods does not cause
weight gain.
 USA Rice, a trade association, is trying to figure out
ways with its limited budget to save rice’s image.
Source:
Starch Makes a Stand – USA Today February 2004
14
Is This Trend Sustainable?
 Consumers are notoriously fickle!
 In
the past decade, more than 2,500 diet
books have been published.
 Shifts in consumption based on such diets
are most often short-lived.
 Most nutritionists will continue to
recommend a balanced diet coupled with
moderate exercise and overall lower calorie
consumption.
15
Changes are Already Evident
 Atkins has laid off 20% of its workforce
as demand for its packaged goods
soften.
 Most of the new items introduced by CPG
companies are generating only modest
demand.
16
The (so far) Universal Truth
What consumers say they are doing
(diet, exercise, low-carb consumption)
is seldom matched by real
consumption trends over
the long haul.
17
What, Then, Is The Next Big
“Fad” Diet?
Answer that question, and you
can be the next diet guru.
18