In latest sign that low-carb trend is fading, Atkins files for bankruptcy protection
In latest sign that low-carb trend is fading, Atkins files for bankruptcy protection
Atkins Nutritionals Inc. filed for bankruptcy protection in New York July 31 following one of the stronger and longer consumer-driven diet trends ever to surface in the United States.
In its filing, the company listed assets of $301 million and liabilities of $325 million. Atkins stated that it owes UBS Securities LLC and other lenders roughly $301 million under a 2003 loan.
The bankruptcy news is an indication that the low-carb trend is at the least waning, and at the most over completely. And for growers of potatoes, citrus and other fresh produce commodities, the end of this particular trend is especially good news.
Potatoes are high in carbohydrates compared to most other fresh produce items, and as a result were black-listed by the Atkins diet plan. Citrus, especially orange juice, was also on the forbidden list, as were several other items such as root vegetables and high-fructose fruits.
For a while at least, it seemed that everyone in the country was on a low-carbohydrate diet. In February 2004, more than 9 percent of the population claimed to be following a low-carbohydrate plan. For commodities like potatoes and oranges, that can be a staggering percentage. But while many potato producers and distributors feel certain that the diet trends did cut into the demand, others say the statistics state differently.
Seth Pemsler, vice president of retail for the Idaho Potato Commission in Boise, said that statistics do show a correlation between the low-carb trends and a drop in potato consumption, but that the diets were not the primary reason for the decline.
"The low-carb diet was a fad," said Mr. Pemsler. As most fads do, it faded quickly. The potato boards, ours included, the orange juice industry and other commodity boards have spent a lot of money getting factual information in front of consumers about the truth behind carbohydrates. We have also promoted and marketed our products aggressively, and the result has been a more well-informed public that enjoys these healthy food items as a part of their regular diets today.
Exercise and fitness guru Denise Austin is the spokesperson for the IPC, and Mr. Pemsler said that she has been effective in promoting the intake of the right kind of carbohydrates as being necessary for maintaining healthy energy levels, which are especially important for exercise.
There have been some residual effects from the low-carb movement, said Mr. Pemsler. Quick-serve restaurants and other dining establishments are now offering alternatives to high-fat items, and many are finding alternatives to trans fats. The result has been a returning demand of french fries prepared in alternative ways.
Tim O'Connor, president and CEO of the U.S. Potato Board in Denver, agreed that statistics indicate that potato sales have held steady despite low-carb diets. He offered an explanation for producers who feel otherwise.
Our business has remained strong and is actually showing signs of growth, said Mr. OConnor. The trends surfaced about the same time as other even larger issues. The recession, terrorist attacks and other reasons kept people from dining out, which affected the foodservice industry. There were also supply and demand issues there were more potatoes being produced and more being stored which drove prices down. The result was more price shopping by retail customers, stronger bag promotions and other factors that caused prices to be held down. From a shipper standpoint, the potato movement would have seemed slow.
But from what Mr. OConnor referred to as a 20,000-foot viewpoint, potato sales have not faltered. During the past five years, potato sales at the retail grocer level have held firm at a rate of between 4.3 billion and 4.6 billion pounds per year. The 3 percent variance, he pointed out, is pretty minimal on an overall scale, and could be attributed to many factors and for different periods of time.
When you look at the statistics from this viewpoint, and put the Atkins and other low-carb diet trends in the middle of the mix, you quickly see that it had almost no impact on sales volumes, but it may have had a minor impact in combination with the many other factors, he said.
The future may be as bright as ever for the potato industry, but not because the diet trends are fading. Most of the credit goes to the nations potato organizations working together to get the positive word out about the health and nutritional benefits of the product.
While the Idaho Potato Commission has Denise Austin, the U.S. Potato Board has Healthy Mr. Potato Head, a version of the familiar Mr. Potato Head toy. Hasbro Toy Co., which owns the trademarked product, designed the healthy version in a collaboration effort with the U.S. Potato Board.
And what may be the biggest feather in the potato industrys cap is that the character is being made into a giant balloon that will make its debut at the 2005 Macys Thanksgiving Day Parade in New York.
The whole point of these campaigns is to get people to increase their potato consumption, said Mr. OConnor. The supply and demand situation has leveled out, nutritional information is in place and being promoted and we have well-placed expectations of a positive future.
In its filing, the company listed assets of $301 million and liabilities of $325 million. Atkins stated that it owes UBS Securities LLC and other lenders roughly $301 million under a 2003 loan.
The bankruptcy news is an indication that the low-carb trend is at the least waning, and at the most over completely. And for growers of potatoes, citrus and other fresh produce commodities, the end of this particular trend is especially good news.
Potatoes are high in carbohydrates compared to most other fresh produce items, and as a result were black-listed by the Atkins diet plan. Citrus, especially orange juice, was also on the forbidden list, as were several other items such as root vegetables and high-fructose fruits.
For a while at least, it seemed that everyone in the country was on a low-carbohydrate diet. In February 2004, more than 9 percent of the population claimed to be following a low-carbohydrate plan. For commodities like potatoes and oranges, that can be a staggering percentage. But while many potato producers and distributors feel certain that the diet trends did cut into the demand, others say the statistics state differently.
Seth Pemsler, vice president of retail for the Idaho Potato Commission in Boise, said that statistics do show a correlation between the low-carb trends and a drop in potato consumption, but that the diets were not the primary reason for the decline.
"The low-carb diet was a fad," said Mr. Pemsler. As most fads do, it faded quickly. The potato boards, ours included, the orange juice industry and other commodity boards have spent a lot of money getting factual information in front of consumers about the truth behind carbohydrates. We have also promoted and marketed our products aggressively, and the result has been a more well-informed public that enjoys these healthy food items as a part of their regular diets today.
Exercise and fitness guru Denise Austin is the spokesperson for the IPC, and Mr. Pemsler said that she has been effective in promoting the intake of the right kind of carbohydrates as being necessary for maintaining healthy energy levels, which are especially important for exercise.
There have been some residual effects from the low-carb movement, said Mr. Pemsler. Quick-serve restaurants and other dining establishments are now offering alternatives to high-fat items, and many are finding alternatives to trans fats. The result has been a returning demand of french fries prepared in alternative ways.
Tim O'Connor, president and CEO of the U.S. Potato Board in Denver, agreed that statistics indicate that potato sales have held steady despite low-carb diets. He offered an explanation for producers who feel otherwise.
Our business has remained strong and is actually showing signs of growth, said Mr. OConnor. The trends surfaced about the same time as other even larger issues. The recession, terrorist attacks and other reasons kept people from dining out, which affected the foodservice industry. There were also supply and demand issues there were more potatoes being produced and more being stored which drove prices down. The result was more price shopping by retail customers, stronger bag promotions and other factors that caused prices to be held down. From a shipper standpoint, the potato movement would have seemed slow.
But from what Mr. OConnor referred to as a 20,000-foot viewpoint, potato sales have not faltered. During the past five years, potato sales at the retail grocer level have held firm at a rate of between 4.3 billion and 4.6 billion pounds per year. The 3 percent variance, he pointed out, is pretty minimal on an overall scale, and could be attributed to many factors and for different periods of time.
When you look at the statistics from this viewpoint, and put the Atkins and other low-carb diet trends in the middle of the mix, you quickly see that it had almost no impact on sales volumes, but it may have had a minor impact in combination with the many other factors, he said.
The future may be as bright as ever for the potato industry, but not because the diet trends are fading. Most of the credit goes to the nations potato organizations working together to get the positive word out about the health and nutritional benefits of the product.
While the Idaho Potato Commission has Denise Austin, the U.S. Potato Board has Healthy Mr. Potato Head, a version of the familiar Mr. Potato Head toy. Hasbro Toy Co., which owns the trademarked product, designed the healthy version in a collaboration effort with the U.S. Potato Board.
And what may be the biggest feather in the potato industrys cap is that the character is being made into a giant balloon that will make its debut at the 2005 Macys Thanksgiving Day Parade in New York.
The whole point of these campaigns is to get people to increase their potato consumption, said Mr. OConnor. The supply and demand situation has leveled out, nutritional information is in place and being promoted and we have well-placed expectations of a positive future.
