Crunching Carbs: Responding to the New Diets

Published in Fresh Cup Magazine

When a customer walks into the Smith River Coffee Cabin, in the mountainous Smith River Calif. and asks for low-carb mocha, it's not an unusual request. The menu features low-carb versions of both mocha and iced cappuccino. These treats are ordered 20 to 25 times a day. Owner Tim Nolan says, "I have customers that specifically stop here for them." What's more, these loyalists are willing to pay more for their pleasure. Nolan charges $4.00 for the mocha and $4.50 for the iced cappuccino. "If you're on a diet you have to be willing to pay a little extra," he says. Nolan obviously sees the low-carb trend as an opportunity for coffee retailers. "It's part of the market," he says. "It's another piece of the pie."

Low-carb High Profit

Across the country, foodservice companies are banking on the longevity of the low-carb trend. In 2002, a study by Grocery Manufacturers of America showed that the company Better-For-You products, including low-carb foods, had logged sales of $5.9 billion. Ready for another big number? Low Carbiz, an industry newsletter reported in 2003 that the low-carb sector exceeded $15-billion dollars in annual sales. That figure is expected to grow as more and more foods become available in low carb version. Already, food retailers are making shelf space for low-carb bagels, tortilla chips, tequila mixes, and beer.

Americans are concerned about weight loss. And they should be. According to the 1999-2000 National Health and Nutrition Examination Survey, 64 percent of U.S. adults were found to be over weight or obese. In their efforts to manage and reduce weight, many Americans - up to 32 million, according to Business Weekly - are reducing their consumption of carbohydrates, in accordance with the Atkins, Zone, South Beach, and other diets.

Generally these programs prescribe limiting or restricting the intakes of breads, pastas, rice and potatoes, as well as carrots and foods containing sugar like fruit.

What does coffee have to do with carbs? Nothing, and everything.
Coffee by itself is free of carbohydrates. But fruit smoothies, flavored coffees, creamy frappes, mochas and other specialty drinks contain a surprising number. For example, a non-whipped mocha can contain up to 40 grams of carbohydrates. A frappe may have 50 to over 90 carbs, depending on the ingredients.

These numbers are unsettling for the carb conscious coffee drinker. Even people who aren't following a low-carb diet are thinking twice about what goes inside their cup. Janet Kelly, a nutrition education specialist with the Heart, Lung and Blood Institute in Bethesda, Md. says, "I see these drinks and they look so good. I would love to have them but I don't want to get in the habit. Some of them can [have] 1000 calories."

Bandwagon To Bonanza?

How is the coffee industry responding to the new diets? Despite the big numbers in food retail, many coffeehouse owners are not jumping on the bandwagon. Some just plain don't believe in it. "I hope it's just a fad," says Meg Yamaguchi, at Vancouver B.C.'s Granville Island Coffee House. "I know people are losing weight, but I personally wouldn't do it." When asked if low-carb diets have affected her business, she says, "Not enough to make us want to change our products."

Vince Piccolo, owner of Vancouver, B.C.-based, Café Artigiano, home of the Canadian National Barista Champion, agree, "We're more of a European-style café.," he says, "and Europeans stick to the old standards. We've created our niche, we're good at what we do and our customers appreciate that."

But on the supply side, it's a different story. Many manufacturers are assuming the trend will have staying power, and are rushing to duplicate their offerings in low-carbohydrate forms.

For example, chocolate powder mix is essential for making many popular coffeehouse beverages such as fraps, mochas and hot chocolate. Unfortunately rich daily doses of chocolate don't mesh with low-carb mentality. So, companies have devoted time, energy and considerable research to devise chocolate drink mixes that their customers' wants as well as their waistlines

Ridgefield, Wash-based, Tulucci Chocolate is one such company. Tulucci Chocolate is a dry, sugar-free mix, with 1 carb per serving. Even if consumers aren't dieting and they want to eat healthier, the beverage mix provides them with another option.

As sweet as this sounds chocolate sounds, there has been one obstacle with offering it. "The product is expensive, because we use high end products, " says Tulucci owner, Becky Mays. When offering a new product for the first time, size also matters. Tulucci offers its customers a mix in a 5-pound quantity, but this large tub is not appropriate for every retailer. The solution for Tulucci was to offer 12 2-pack servings to let first-time customers get a taste of what they have to offer. New accounts can thus progress in size, if a product suits their needs, while regular customers like Tim Nolan at the Smith River Coffee Cabin are able to order the tubs.
The Keizer, Ore-based Gosh That's Good Chocolate is another player. A coffeehouse owner with a health club industry background, owner Darin Teal recognized the need for a low-carb, sugarless chocolate mix. "We see more people that are working out and taking care of themselves. They're demanding a product," says Teal. He came up with a chocolate that customers could enjoy without the guilt. His Sugar Free Classic contains only 4 grams of carbs in a single tablespoon.

When it comes to sugar-free products, people aren't sure what to expect. Syrup makers, for their part, are either already offering or are planning to low-carb alternatives. Teal explains that people are hesitant about sugar-free products, because they've tasted so many bad ones. "Anything that's supposed to be better for you is supposed to taste bad." He says that retailers can overcome this suspicion by making use of promotional items such as banners, buttons and t-shirts. He also strongly recommends giving out samples. "People are always willing to try new things," he says.
Playing It Cool

Blended ice drinks are traditionally carb-monsters. But even here, vendors are trying to refashion their existing offerings to capitalize on the dieting trend. At the same time, the trend has created a niche for new companies to fill.

Aliso Viejo, Calif-based Coffee Interventions has focused on making healthy alternative beverages for consumers. Their first launch, a soy-based, blended, iced-coffee boosted with vitamins and minerals, led to a second beverage for the carbohydrate crunchers. Owner Dana Caputo says, "People started asking me for low-carb and that's when I had to respond." She launched the Lower Carb Alternative in February, and is now convinced that "more customers are demanding products that are healthy and low in carbohydrates."

That being said people have preconceived ideas of what a low-carb beverage will taste like. Caputo says, "They're expecting an artificial sweetened aftertaste, that you find with other sweeteners." People are also surprised by the amount of flavor and body that can be in a low-carb drink. Caputo suggests giving out samples and providing promotional material along with the nutritional information. This allows people to actually see the ingredients for themselves. She believes such encouragement "will help the consumers make their decision."

Caffe D'Amore, based in Monoriva, Calif. is also helping consumers make carb conscious decisions. Within the next two months, the company plans to launch a new line of low-carb products. Creative director Mary Ann Castaldi says, "We will be offering a Mocha flavor in our frappe freeze line that has coffee already in the mix," leaving only milk, water and ice up to the retailer.

While being committed to the low carb line, Castaldi recognizes, "The key to targeting the marketplace is creating versatility." By introducing low-carb products that are important for today's marketplace while continuing to offer a variety of more familiar products, retailers and vendors can stay with trends and maintain quality.

Big Train of Foothill Ranch, Calif. has also moved into the low-carb market. As national sales manager, Jackie Todd tells it, "We started noticing a trend toward low-carb about 18 months ago. We wanted to make sure we got in on it." The company's initial venture was a low-carb chai. The newest is a low-carb iced blended mocha, one serving of which contains two grams of carbohydrates.

Given the number from other sectors of the foodservice industry - including fast food and restaurants - there is lots of enthusiasm among vendors for their coffeehouse lines. Yet some in the industry, including Todd, have heard the argument that low-carb is just a fad. "Atkins has been around for over 30 years. I don't think it's something that's going to go away," She says. "I think they're going to have to meet the needs of the consumers."

And gauging consumer desires is an art for demographers, market researchers and other owners of crystal balls.

Waiting For The Stampede

Polly's Gourmet Coffee in Long Beach California has been in operation for almost 30 year. Owner Mike Sheldrake, who sells about 10,000 drinks, has yet to feel the impact of the low-carb trend, despite living at the epicenter of lifestyle fads. Yet he does believe that health conscious choices are going to become more popular. "I think it's going to reach a new plateau form where it is now," he says. Sheldrake currently offers 3 sugar free syrups to his customers, but he's not in any rush to offer more. "I'm going to stick with the three that I have until my customers tell me I need a fourth," he says.