Low-carbs playing major role in new product development

A quarter of the Europe or US-based food and drink companies interviewed by Reuters Business Insight​ said they are actively investing in the research and development of new low-carb products.

And almost all say they cannot afford to ignore the impact of low-carb dieting on the industry.

While the market analysts said assessing the current value of the low-carb market is too difficult to quantify, there are almost daily updates on obesity statistics.

It is now thought that one-third of western European consumers are currently overweight and by 2006 this will increase to almost half. And with the European dieting market forecast to be worth over €100 billion in 2007, food and drink manufacturers cannot afford to lose out.

"There is no doubt that the consumer's appetite for low-carbohydrate foods is huge. With big names entering the market on a daily basis, it is important that the UK food and drink industry realises the potential of the sector,"​ commented Camilla Palmer, author of the report.

Just this week, Nestlé division Rowntree announced the launch of low-carb versions of two of its biggest brands, Kit-Kat and Rolo's. It said it was the first UK confectionery company to develop a low-carb alternative "that doesn't compromise on taste, texture or appeal".

The UK market has also seen the entry of Atkins Nutritionals, the US-based business set up to develop foods based on the diet designed by Robert Atkins in the 1970s.

Atkins is estimated to have around 3 million fans in the UK, prompting food retailer Tesco to introduce specialist labelling for consumers wanting to check the level of carbohydrates in a variety of private label products. Other chains are expected to follow.

However, rivals to Atkins present in the UK, Keto and Carbolite, are both based in the US and industry observers have suggested that UK firms would be unlikely to follow a diet fad that has existed since the 1970's.

Yet a quarter of the companies polled in the survey said they had already manufactured a product under the low-carb umbrella, and two thirds of them said they saw the expansion of the low-carb sector as an opportunity.

While the UK is the most developed market for low-carbohydrate foods in Europe, as it mirrors the US the most closely, Germany, Switzerland and Scandinavia are also showing signs of a developing low-carb sector, reveals the report.

German airline Lufthansa is launching a test range of low-carbohydrate meals on flights to Los Angeles from July, making it the first airline to acknowledge the demand for low-carbohydrate food.

France, Italy and Spain currently show less potential for adoption of the low-carb trend however.

Other markets being influenced by the US trend - Canada, Israel, Australia and South Africa - are pinpointed as being the most developed global territories for low-carbohydrate foods although whether they will reach the size of the US market, worth around $15 billion this year, to double by 2005, remains to be seen.