Low Carb Foods - UK - August 2004

Contents

Introduction and Abbreviations

• Lack of trust restricts the market
• An overstated market?

• Definition
• Socio-economic group
• Lifestage and Special Groups
• Advertising data

Abbreviations

Executive Summary

• Overweight and obese trends feed demand for low-carb diets
• Over a third trying to slim, women more than men
• More affluent population bodes well for more expensive diet products
• Wide range of low-carb diets, other competing diets
• A difficult market to quantify due to lack of reliable data
• Confectionery/snack bars lead the way
• Low-carb impact on other markets hard to quantify
• Fragmented supply structure
• Little main media promotion at present
• Internet specialists still prominent but multiple retailers taking an interest
• Most popular weight loss methods
• Small minority currently on a low-carb diet, drop-out rates high
• No shortage of potential future customers
• High lapse rates need to be tackled
• Wider distribution will bring them to a new audience

Market Drivers

• Levels of being overweight and obese
• Figure 1: Incidence of being overweight or obese among men and women, by age group, 1997 and 2001
• The slimming issue
• Figure 2: Adults who are trying to slim, 1980-2003
• Attitudes towards food
• Figure 3: Agreement with lifestyle statements about food and eating habits, 1998-2003
• Attitudes towards diet and health
• Figure 4: Agreement with lifestyle statements about diet and health, 1998-2003
• Attitudes towards personal appearance and self-perception
• Figure 5: Agreement with lifestyle statements about personal appearance and self-perception, 1998-2003
• Shifts in the age structure of the UK population
• Figure 6: Trends and projections in total UK population, by age group, 1999-2008
• Shifts in the socio-economic structure of the UK population
• Figure 7: Trends in the socio-economic structure of the UK adult population, 1999-2008
• PDI and consumer expenditure
• Figure 8: PDI and consumer expenditure, at current and constant 1999 prices, 1999-2008

Market Background

Low-carb diets

• Atkins Nutritional Approach
• The Stillman Diet
• The Scarsdale Medical Diet
• The Ketogenic Diet

Other diets

• The Zone Diet
• The Hollywood Diet
• The South Beach Diet
• GI Diet
• The New High Protein Health Fast Food Diet
• No-Grain Diet

Traditional diets

• Weight Watchers
• Slimming World
• Rosemary Conley
• Slim-Fast

Market Size and Segmentation

• Limited distribution restricts quantification
• Confectionery dominates sales

Impact of low-carb on other markets

• Potatoes take a dive
• Figure 9: Market size trends for foods not encouraged as part of a low-carb diet, 1999-2004
• Eggs enjoy a boom
• Figure 10: Market size trends for foods encouraged as part of a low-carb diet, 1999-2004
• Comparative growth
• Figure 11: Indexed growth for foods not encouraged as part of a low-carb diet, 1999-2004
• Figure 12: Indexed growth for foods encouraged as part of a low-carb diet, 1999-2004

Market Trends and Issues

Main factors driving demand

Key target audience

Defining low-carb

Pricing

Attitude of major grocery multiples

The Supply Structure

Manufacturers/brand share

Companies and brands

• Atkins Nutritionals (UK) Ltd
• Carbolite Europe
• Nestl?ESA
• Laboratoire N.P.C. UK Ltd
• FeelingOK.net Ltd
• Carbophobia Ltd
• RHM Ltd
• Others
• Own-label
• New product development

New Product Trends

• August 2004
• July 2004
• June 2004
• May 2004
• March 2004

Advertising and Promotion

• Expenditure levels will grow
• Alternative promotional tactics used
• The Internet - an important promotional tool

Distribution

• The key to future growth
• Expansion lies in the hands of the grocery multiples

The Consumer

Methods used to lose weight

• Figure 13: Ways in which consumers would try to lose weight, 2000-04
• Most accept more regular exercise is best
• Fat, sugar and chocolate, not carbohydrates, seen as enemy
• No snacks/alcohol plus calorie control seen as answer
• More exercise and less alcohol is the answer for men...
• ...while women focus more on diet

Reasons for going on a weight loss diet

• Figure 14: Reasons for going on a weight loss diet, May 2004
• Health reasons and self-esteem most popular reasons for losing weight
• Men cite wellbeing, women cite their appearance

The prevalence of low-carb diets

• Figure 15: Consumer behaviour relating to low-carb diets, May 2004
• Small number currently on a low-carb diet
• Drop-out rates are high
• Still strong interest in low-carb diets for the future
• Majority of adults yet to try low-carb and no plans to do so

Low-carb diets' impact on food consumption patterns

• Quarter of consumers claim to consume less bread
• Figure 16: Shifts in consumption of bread, May 2004
• Claimed pasta consumption grows
• Figure 17: Shifts in consumption of pasta, May 2004
• Potato consumption appears to have slumped
• Figure 18: Shifts in consumption of potatoes, May 2004
• Coffee/tea consumption rises
• Figure 19: Shifts in consumption of coffee/tea, May 2004
• Mineral water consumption springs ahead
• Figure 20: Shifts in consumption of mineral water, May 2004
• Regular carbonates consumption drops
• Figure 21: Shifts in consumption of regular fizzy drinks, May 2004
• Diet carbonates consumption also appears to have fallen
• Figure 22: Shifts in consumption of diet fizzy drinks, May 2004
• Balance of lager/beer consumption is down
• Figure 23: Shifts in consumption of lager or beer, May 2004
• Wine or spirit consumption increases
• Figure 24: Shifts in consumption of wine or spirits, May 2004
• Meat and fish consumption up and not just among low-carb dieters
• Figure 25: Shifts in consumption of meat, poultry and seafood, May 2004
• A sea change in consumption for crisps and snacks
• Figure 26: Shifts in consumption of crisps/snacks, May 2004
• Low-carb fails to boost nut consumption significantly
• Figure 27: Shifts in consumption of nuts, May 2004
• Boom in vegetable consumption
• Figure 28: Shifts in consumption of vegetables, May 2004
• Fruit shows healthy growth in consumption
• Figure 29: Shifts in consumption of fruits, May 2004
• Consumers claim to eat fewer eggs despite low-carb boost
• Figure 30: Shifts in consumption of eggs, May 2004
• Milk and yogurt consumption on the rise
• Figure 31: Shifts in consumption of milk and yogurt, May 2004
• Slight drop in cheese consumption implied
• Figure 32: Shifts in consumption of cheese, May 2004
• Claimed consumption of sweet biscuits and cakes dips
• Figure 33: Shifts in consumption of sweet biscuits and cakes, May 2004
• Chocolate and sweet consumption also declines
• Figure 34: Shifts in consumption of chocolate and other sweets, May 2004
• Consumers cut back on ice cream too
• Figure 35: Shifts in consumption of ice cream, May 2004

Detailed demographics

• Figure 36: Most popular methods used to lose weight, by gender, age, socio-economic group, lifestage, presence of children and Mintel's Special Groups, May 2004
• Figure 37: Most popular methods used to lose weight, by region, media usage, TV viewing habits and supermarket usage, May 2004
• Figure 38: Other popular methods used to lose weight, by gender, age, socio-economic group, lifestage, presence of children and Mintel's Special Groups, May 2004
• Figure 39: Other popular methods used to lose weight, by region, media usage, TV viewing habits and supermarket usage, May 2004
• Figure 40: Most popular reasons for wanting to lose weight, by gender, age, socio-economic group, lifestage, presence of children and Mintel's Special Groups, May 2004
• Figure 41: Most popular reasons for wanting to lose weight, by region, media usage, TV viewing habits and supermarket usage, May 2004
• Figure 42: Other popular reasons for wanting to lose weight, by gender, age, socio-economic group, lifestage, presence of children and Mintel's Special Groups, May 2004
• Figure 43: Other popular reasons for wanting to lose weight, by region, media usage, TV viewing habits and supermarket usage, May 2004
• Figure 44: Experience with low-carb dieting, by gender, age, socio-economic group, lifestage, presence of children and Mintel's Special Groups, May 2004
• Figure 45: Experience with low-carb dieting, by region, media usage, TV viewing habits and supermarket usage, May 2004

The Future

• No shortage of potential customers for diets in general
• Encouraging levels of trial
• Biggest potential: improving/proving the science
• Distribution is key
• Wider distribution will prompt shake-out
• Greater competition will help to develop market
• With competition comes promotion
• It's no longer just about Atkins
• Opportunity for domestic suppliers
• Legislative hiccup on the horizon?
• Low-carb: fad or fixture?

Forecast

• Figure 46: Forecast of those with experience of low-carb diets, 2004-09
• Scenario 1
• Scenario 2
• Scenario 3