Atkins Nutritionals has instigated Chapter 11 proceedings to seal a company restructuring that will see it downsize its operations. Although the move is driven largely by the pressure of competition in the ‘low-carb’ market, switching to focus on general health concerns should give Atkins Nutritionals a sustainable long-term focus on broader consumer trends.
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The filing of Chapter 11 proceedings by Atkins Nutritionals, the company that pioneered the low-carb diet, is not unexpected as the company has been experiencing difficulties since 2004.
Although Atkins Nutritionals may have led the way with the launch of its low-carb range, the low-carb market has also proved to be of interest to leading CPG manufacturers. For example, Unilever has released Carb Options and Carb Smart lines. The better distribution and increased marketing budgets of these companies have underscored their success in this market, and thus help to explain Atkins Nutritionals’ loss of market share.
It is not only direct competition that has driven Atkins Nutritionals to the verge of bankruptcy, however, as the Atkins diet plan has itself faced competition.
Although Atkins Nutritionals’ website cites research showing a growth in the number of US consumers following a low-carb diet in January 2005, compared to November 2004, this may have partly been due to New Year dieting, and thus the growth is unlikely to be sustained.
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By GlobalDataBy their nature, diet crazes tend to have abbreviated life cycles. Although the Atkins diet proved hugely popular, it has already faced competition from the glycemic index (GI) diet in many markets. The attraction of the GI diet is its reduced counter-intuitiveness, with principles more closely aligned with traditional healthy eating guidelines that are arguably easier to adapt into everyday life.
Upon its exit from Chapter 11, Atkins Nutritionals plans to downsize and focus on nutrition bars and shakes. This should de-emphasize the link between the company’s food products and the diet trend it so famously created. This realignment will put the company in a better position to meet to the general health concerns of western consumers, who predominantly prefer to use diet rather than exercise to actively improve their health.
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