Atkins Seeks to Tone Down
'Cheeseburger' Image

Hoping to tone down the Atkins Diet's steak-and-bacon image, the company that bears the name of the low-carbohydrate food plan is launching a campaign centered on education rather than its products.

The ads, which privately held Atkins Nutritionals Inc. is running on the back pages of Newsweek and other major publications, feature its new Atkins Lifestyle Food Guide Pyramid.

The campaign comes as a host of rivals, including those pushing spinoff diets like South Beach, seek to cash in on Americans' fight against obesity and topple Atkins from its market-leading position.

Analysts say Atkins' backers, investment bank Goldman Sachs and private equity firm Parthenon Capital, may want to get the company in shape for an early initial public offering of stock, and changing its image may be part of that process.

"They are pressed to reinvent the public perception that the Atkins Diet is not synonymous with bacon cheeseburgers," said Dean Rotbart, editor of the online industry newsletter LowCarbiz.

Ronkonkoma, New York-based Atkins does not disclose its financial results, but said sales of its low-carb energy bars, cereals, baking mixes and other products doubled last year.

LowCarbiz estimates Atkins' retail sales at about $500 million to $750 million, exclusive of agreements with other branded retailers to use its logo, a red "A."

But a report from Morgan Stanley said low-carb dieting has reached its peak and begun a slow decline, giving Atkins all the more reason to try to steady its position.

The Atkins model runs counter to the high-carb diet depicted in the U.S. Department of Agriculture's own long-standing food pyramid, which has grain-based foods at its base and limited amounts of protein and fat on top.

But contrary to popular belief, Atkins says it prescribes "a wide range of protein sources and nutrient-dense carbohydrates, such as most vegetables, certain fruits, nuts, dairy products and whole grains."

"There's not a mention of a product on there," Matthew Wiant, senior vice president of marketing, said of the new ads. "It's reminding people that eating Atkins is fundamentally about eating whole foods."

The campaign follows criticism from consumer advocacy groups that have cautioned against the ill effects of low-carb eating, especially Atkins.

And the death of company founder Dr. Robert Atkins after a fall in April 2003 led to a spate of negative publicity when the public learned that the developer of his namesake diet had been overweight.

LICENSING IS KEY

Perhaps Atkins Nutritionals' greatest opportunity lies in the licensing deals with big food companies that go beyond its own product line.

With those agreements, the Atkins logo is appearing on a new line of salads and wraps at the Subway sandwich chain; yogurt and milk from dairy maker HP Hood; and baked goods from George Weston Foods, parent of Entenmann's pastries, Wiant said.

"That's kind of why we started with Subway," he added. "To have a big impact quickly."

Other deals are in the works, but he declined to name them or discuss how they are structured.

Industry watchers believe such arrangements are key to the success of a company that contracts its manufacturing to third parties and lacks the scale to make a big splash on its own.

Goldman Sachs and Parthenon Capital paid a reported $533 million for an 80 percent stake in Atkins last year. Neither responded to questions about its plans for the company, and Wiant declined to comment on the IPO speculation.

Atkins will continue introduce more of its own products, such as a low-carb frozen pizza due to hit stores this summer, he said.

The company is also hoping to supply restaurants with ingredients to promote low-carb menus.

This commercial push goes hand in hand with the educational drive. The company's independent Atkins Foundation has commissioned research with major universities to prove that the diet is based in science.

Atkins issued a recent statement warning about the "low-carbohydrate product frenzy." Because the U.S. Food and Drug Administration has not yet defined "low-carb" for the consumer, the company said, the labels on many of these products are "meaningless from a scientific standpoint."

Reference Source 89

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