SEATTLE – Is the low-carb diet revolution toast?

At a time when Atkins and South Beach have pervaded the national consciousness, local and national grocery stores express concern that interest in the low-carb lifestyle may have plateaued.

At Fred Meyer grocery stores, sales of low-carb products featured in its nutrition departments have dipped since May, while similar products sold in other aisles are selling moderately well.

The grocery chain declines to give exact figures, but one thing is certain:

“People are buying bread again,” said Mary Loftin, spokeswoman for Fred Meyer stores. “They’re making big ol’ hoagie sandwiches.”

The drop in interest appears true for other food, drug and mass-merchandise stores nationwide.

According to market research firm ACNielsen, first-quarter sales of carb-conscious products, excluding Wal-Mart, rose a whopping 122.4 percent over the fourth quarter of 2003 to $402.9 million. But growth slowed in the second quarter, with sales at $515.3 million, a 27.9 percent rise when compared with the quarter before.

Reasons for the slowdown vary, depending upon whom you ask. Some retail experts say the market was deluged with too many products at once; others cite studies showing that interest in the diet has reached its peak.

While the percentage of those on a low-carb diet has remained steady the past six months at 11-12 percent of the U.S. adult population, the percentage of low-carb lifestyle consumers – those who merely restrict their carbs – has dropped steadily, from 32 percent of U.S. adults in April to 21 percent in July, according to market research firm Opinion Dynamics.

Matt Wiant, who heads marketing for Atkins Nutritionals, said grocery stores saw a mass influx of low-carb products during the first six months of the year as large food manufacturers jumped into the game. (At a Food Marketing Institute trade show in May, three-fourths of the new products introduced by small and large food manufacturers carried low-carb labels.)

With too many products in the marketplace, Wiant said he expects to see a shakeout.

“Like every consumer product, if there are too many products launched in a category, some will falter out,” he said. “We absolutely think there’ll be a shakeout (among) people who don’t have good-tasting products.”

The change is most pronounced at health-food stores – the first to begin offering low-carb products – and specialty grocers dedicated to the low-carb lifestyle.

Rick Diamond, who runs a chain of Seattle-area health-food stores under the Natureway and Pilgrim’s brands, said sales of low-carb food products doubled last year.

But the company’s sales have dropped 20 percent after traditional grocery stores began offering a wider variety earlier this year – a turnaround he describes as “whiplash.”

“If we weren’t around for all these years and didn’t have stability …” he said, pondering the effects of the change in business. “I can tell you a lot of retailers in our industry are on the edge.”

Jennifer Heuer, a Kirkland, Wash.-based franchisee of the Totally Low Carb Foods chain, said sales are down 10-12 percent the past few months, but she believes they will pick up after the summer.

Heuer, who also owns two Curves fitness centers for women, said people don’t think about their health during the summer. Business at her fitness centers tends to pick up in the fall, she said.

Meanwhile, the store has paid increasing attention to serving customers who have diabetes or have undergone gastric-bypass surgery. Most low-carb products carry little to no sugar, which expands food choices for those with diabetes. Since the central theme of low-carb diets is more protein, it also appeals to gastric-bypass surgery patients, who rely on smaller portions of high-protein foods.

They had a booth at a recent Diabetes Expo in Seattle and attend local health fairs.

“Consumers were overwhelmed for a while – low carb was everywhere,” she said. “We fully expect our sales to go back up within the next few months.”

Robert McMath, founder and chairman emeritus of Ann Arbor, Mich.-based NewProductWorks, a product-development consulting firm, is less hopeful. He considers the low-carb diet a trend like many others. He remembers when Americans shunned salt.

“I’m 73,” McMath said. “I have to tell you I’ve seen an awful lot of things come and go, and America has a very short attention span. The hottest word in the American language is “new.”‘

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