The UK is Atkins' biggest European market but despite a survey last year that claimed more than 3 million Britons have tried the low-carbohydrate, high-protein diet, most are thought to have had difficulty in sticking to the regime.
The firm has also been hit by competition from low-carb variants of established brands, with several leading food manufacturers reducing carbohydrate content in some of their best-selling products.
Research carried out by Reuters last year suggested that over a quarter of food and drink companies in the UK, Europe and US were actively investing in research and development of new products.
The UK market for low-carb products has also been affected by sustained media scrutiny of the Atkins diet, said to lack long-term safety data.
David Jago, director of Mintel's Global New Products Database (GNPD), has long predicted that the low-carb trend would merely be a fad. Consumers will be more interested in balanced, healthy eating this year than extreme dieting, he forecast in January.
And despite a flurry of new low-carb launches towards the end of 2004, food formulators are already looking at the follow-up to Atkins, foods with a low-glycaemic index.
Administrators are to be appointed to Atkins Nutritionals UK, which sells more than 20 products for people following the eating plan, sources told the UK press yesterday.
Atkins UK's fate is preceded by job cuts and a restructuring drive at the firm's headquarters in the US, launched midway through 2004. At the time, the UK division's chief executive Roger Spicer said that sales were 'buoyant' with 'no signs of a downward trend'.
Other sources suggest however that the firm has been making a loss for some time.