Low-carb, High-carb: What’s a Baker/Pasta Maker to Do?

With the public’s appetite for low-carbohydrate food products on the rise, what is the right strategy for a baker or spaghetti maker these days: Buck the trend or join in the feast?

 

Marketing experts at Wharton say the answer will depend on what manufacturers of breads, pastries, pasta and other foods that are high in carbs think about the future of the low-carb craze. If they feel it’s a mere flash in the pan, they may do the smart thing in not spending a lot of money to launch a low-carb product line to supplement their existing high-carb offerings. But if they feel the low-carb trend is the real deal and represents a permanent shift in the dietary habits of Americans, they should not hesitate to jump on the bandwagon and produce low-carb alternatives.

 

The faculty members also say that supermarkets have little to lose in setting aside shelf space to accommodate both high- and low-carb foods so that their customers do not walk away disappointed. In addition, the Wharton scholars note that producers and supermarkets should tout the nutritional benefits of high-carb products to educate people that high-carb food does not necessarily mean bad food.

 

Atkins and other low-carb diets have gotten so much attention in the last few years that consumers may think it is a simple decision for a bread or pasta company to launch a low-carb product line. But the faculty members say that doing so is far from a no-brainer. “It’s a tricky issue,” says marketing professor Patricia Williams. “The question is to what extent is the Atkins diet and the whole low-carb thing a fad and to what extent is it a genuine shift in consumption patterns that will remain with us for a significant period of time? Of course, it’s very hard to know the answer to that, which puts manufacturers in a difficult place for sure. Do they cater to something that might be a trend or not do it and risk doing nothing?”

 

Williams says her intuition is that “we’re at the peak of the craze. But my sense is low-carb diets will have a long-term impact in the same way the low-fat craze has had a long-term impact. I don’t think consumers today are focused on buying only foods that are low fat, but those products play a significant role in the marketplace and consumers do consider [fat content in foods when they shop].”

 

Marketing professor David J. Reibstein agrees that launching new low-carb products requires careful consideration. “What you would hate to do is put out a major effort and investment and find that by the time you get to market, the market’s gone. That’s something that has happened on any number of occasions. Temporary trends come and go.”

 

But Reibstein, who himself has been on a low-carb diet for four years, believes that the low-carb phenomenon is more than a passing fad. “People are infatuated with trying to figure out how to control their weight. The bestselling books are whatever the diet du jour is. Most of these diets don’t work, but [low-carb diets] have been around for quite a while. The bigger risk, in my mind, is for the company that says, ‘No, I’m going to wait this one out.’ They will find they are standing on the sidelines while this market continues to grow.”

 

Low-carb ‘Shelf Talkers’

Marketing professor Stephen J. Hoch is not impressed at all with low-carb diets. “It’s frankly just one more in a long line of pathetic dietary fads that we’ve seen a gazillion times over the last 30 or 40 years. When I walked into my local supermarket six to eight months ago, I started seeing low-carb ‘shelf talkers’ [blurbs posted on supermarket shelves] saying ‘low carb.’ Before that it was ‘low fat’ and ‘low sugar’ … I said to myself, ‘This is just ridiculous.’”

 

Nonetheless, Hoch says baked-goods companies have little choice but to give serious consideration to developing low-carb alternatives to their existing products. “It is costly for them to launch a low-carb line of products. Manufacturers need to tread lightly and experiment, but not go full hog. I don’t think manufacturers can completely stick their heads in the sand and do nothing, even though doing something may well call attention to fact that their other products are higher in carbs. It would be myopic to not do something.”

Two trade groups, the American Bakers Association and the North American Millers’ Association, are not about to take the low-carb phenomenon lying down. The two groups – which represent 80% of bakers, ingredient suppliers, packaging manufacturers, milling companies, and manufacturers of related equipment – plan to spend $4 million to $5 million on a public relations campaign to educate consumers on the health benefits of regular bread, according to Lee Sanders, vice president for regulatory and technical services at the ABA. The tentative tagline of the campaign, which is scheduled to get underway in late summer or early fall, is “Bread. It’s Essential.”

 

“We don’t think accurate messaging is out there about the health of grain-based foods,” says Sanders, who notes that low-carb diets led to a 10% decline in sales of baked goods and ingredients in 2003. Sanders says the amount of money the groups plan to spend may appear small, but she adds that the campaign will not involve advertising. Instead, it will rely on other, less expensive PR methods, such as printed materials aimed at physicians and consumers.

 

Sanders says bakeries have to take a multi-pronged approach in addressing the low-carb craze, including launching low-carb product lines, while at the same time educating customers about the advantages of traditional breads. “I think you do all those things. You have to make smart business decisions for your specific company. One of the things that bakeries and other manufacturers know is key is giving consumers the products they are seeking. Consumers like variety. I think with the advent of the low-carb craze you’re going to see more low-carb products out there. Bakeries are now making more low-carb products in response to consumer demand but not to the exclusion of [their traditional products]”

         

Several faculty members say the PR campaign by the bakers and millers may be worthwhile, given the success of similar efforts in the past, such as television ads promoting the consumption of beef and eggs. Both products came under fire years ago for being high in fat and cholesterol, respectively, but meat and egg producers have spent millions pointing out the benefits of protein and other nutrients in the two foods.

 

‘People Who Care Will Pay the Price’

Marketing professor Barbara Kahn says bakeries should be able to succeed in selling both regular and low-carb breads, but only if the low-carb products satisfy finicky consumers. “There will still be a market for bread, but whether there’s a market for viable low-carb bread depends on taste and the aesthetics of the product.” It’s also important, she says, for consumers to know that bakers aren’t substituting ingredients that people consider unhealthy.

 

Kahn adds that if low-carb breads cost more than regular brands, only affluent consumers may be able to afford them; people with modest incomes and poor dietary habits may be out of luck. In general, she says, it is easier for the rich to jump onto dietary bandwagons. “If you want to be on some of these diets, you have to spend more money on food. I definitely think you will see that socio-economic response to [the low-carb trend], at least in the beginning. People who care will pay the price.”

 

It may be easier for makers of breads and other baked goods to develop low-carb products than for pasta companies, according to Williams. The reason, she says, is that bread is more of a discretionary food choice since it, unlike pasta, does not constitute the main course of a meal. But Williams says bakers may have a harder time convincing aficionados of low-carb diets that bread is good for them to eat on a regular basis.

 

“Breads, desserts and pastry items are things that are, perhaps, unnecessary in our meals,” Williams explains. “They are secondary items, whereas pasta is typically more of a main course. If you’re a pasta manufacturer, you can play up the health benefits that have been ascribed to your product or to the way your product might be served: pasta and tomatoes, which have lycopene, and olive  oil, which has a beneficial form of fat. You can also serve pasta with meat. If you’re a baked-goods manufacturer, that’s harder to do. You’re not going to serve baked goods with something on them to make you healthier. People already see them as unhealthy.”

 

Reibstein notes that one element critical to the success of low-carb foods will be just how low in carbs such products really are. For a bread to be lower in carbs than traditional breads may get dieters to consider the product. But the most successful products will be ones that are truly low in carbs. Reibstein recalls that, some years ago, a soft-drink company introduced a diet soda with 55 calories. That represented fewer calories than found in regular sodas but more calories than are found in the usual diet soft drink, which typically has only one calorie.

 

“I think the product just died,” Reibstein says. “It’s one thing for me to try and reduce calories, but if I have an alternative with one calorie, I’m not going to drink something with 55 calories. To do the trick with bread, manufacturers have got to do the same thing. Reducing carbs is not going to get you there. You got to have low carbs or, ideally, no carbs.”

 

Even if low-carb consciousness is here to stay, it may not have a major impact on sales of high-carb foods in the long term. While many Americans are eating healthier diets today than they did 50 years ago, Hoch says government data show that overall consumption of meat, fish, vegetables and other major food groups has not changed all that significantly during this time. As a result, bread and pasta makers may not have to worry about sharply declining sales of their regular products in years to come. If they do see more drops in sales, perhaps those decreases will be offset by sales of low-carb variations they bring to market.

 

Says Hoch: “The stability of what people eat is remarkable; it has not changed that much over time. You think fish consumption has gone up a lot? Nope. It’s gone from 15 to 17 pounds a year over the last 50 years. There are plenty of people not paying attention to any dietary fads, so they are not going to be influenced by whether there’s a fad or not. Many products are low sugar, low salt, low fat; those products sit side by side with regular products on store shelves and people choose. So, are categories like white rice, bread and pasta going to see some dip in demand? Yes, and they probably will continue to. It’s impossible to know how long lasting that will be.”

 

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