Can the Atkins diet raise GNP?

Commentary about business and finance.
Sept. 15 2003 10:49 AM

The Bull About the Beef

Has the Atkins diet really transformed the American economy?

Illustration by Robert Neubecker

When Unilever PLC, the British food giant that owns Slim-Fast Foods, announced in July that U.S. profits had dropped 23 percent, it quickly pointed an accusing finger at the Atkins diet, the trendy weight-loss plan high in protein and low in carbohydrates. Atkins, Unilever's chairman explained, has set off shock waves in consumption that have cut Slim-Fast's profits, and there's no way to fight a fad.

Suddenly, Wall Street is blaming the diet craze for all sorts of economic upheavals, and the deafening buzz is almost enough to drown out economic sense. Time, the Economist, USA Today,and countless media outlets—marveling at the idea of slimming pork chops and heavy cream—have touted the commercial impact of the Atkins plan. The diet has been blamed for falling wheat prices and booming beef sales.

But is there really an Atkins economy?

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Three months ago, the British Federation of Bakers made headlines when it announced that bread sales have declined 2 percent per year since Dr. Atkins' book was re-released in 1997. Wheat consumption has dropped from 147 pounds per person to 139 pounds in the past six years. And in May, the Tortilla Industry Association held a high-profile seminar titled "An Industry in Crisis: The High-Protein, Low-Carb Diet and Its Effects on the Tortilla Industry."

Atkins-friendly foods, on the other hand, are booming. News reports have credited Atkins for an increase in U.S. beef sales in 12 of the past 14 quarters. Prices on cattle futures have climbed from 65 cents per pound in 2001 to 82 cents per pound today (suggesting the beef market has grown by $3 billion in 3 years). Consumption of bacon and eggs are at 10-year highs. Beef jerky sales are up more than 40 percent in the past two years, and pork-rinds have tripled their market share to $496 million per year.

Entrepreneurs are rushing to join the party. Atkins Nutritionals Inc., the food company started by Atkins before his death this year, sold $100 million worth of 90 low-carb products last year. Weight Watchers is introducing a low-carb pasta. Michelob hawks its new beer Ultra with the slogan, "Lose the carbs. Not the taste." (Michelob refuses to specify how the beer is selling but says it has "exceeded expectations.") And in California, New York, and, improbably, Texas, you can get freshly prepared Atkins meals delivered hot to your door. No one can specify the size of the Atkins market, but experts estimate it's at least $1 billion per year.

"It's rare that a diet will have an impact on national trends," said Harry Balzer, the author of the annual Eating Patterns in America. "Atkins is the exception."

But Atkins is winning more credit than it deserves, say economists. It's an example of how media excitement about a cultural trend leads to misinterpretation of an economic trend.

The evidence most commonly cited to prove the Atkins diet is roiling the economy is a study by the Natural Marketing Institute that claims 25.4 million Americans—12 percent of the adult population—have tried the Atkins diet. But those numbers deserve a little skepticism. NMI's executive project director, Joe Marra, said the company doesn't specifically ask about the Atkins diet. Rather, under the methodology used by NMI in its survey of 2,000 families, anyone who forgoes bread for a few days in an attempt to lose a few pounds is considered an Atkins dieter.

But almost everyone else, including experts from the consumer information giant NPD Foodworld, pegs the number of Atkins dieters at closer to 3 percent of the nation's adult population—about 6 million people—based on statistical sampling.

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