Dieting for Dollars These are boom times for the weight-loss industry. Can the big food companies be far behind?
By Steven Finch

(Business 2.0) – Americans have never been bigger--and neither has the diet industry.

Six out of 10 Americans are defined as overweight; that's double the 1980 figure and high enough for the Centers for Disease Control and Prevention to declare obesity a national health crisis. Polls show that a quarter of all Americans are dieting. Their pain is the diet industry's gain: According to research firm Marketdata Enterprises, sales of weight-loss programs and products hit $24 billion last year, up 7 percent from a year earlier.

That number actually understates the heft of the weight-loss business. Add in health clubs, medical programs, and diet prescriptions, and the total reaches about $40 billion. The low-carb segment of the business is on fire. Sales of nutrition bars like those made by Atkins Nutritionals and ZonePerfect Nutrition hit $562 million last year, more than triple the 1998 figure.

Weight Watchers remains the industry heavyweight. It had estimated revenues of $810 million in 2002, which put it just ahead of rival Slim-Fast's roughly $800 million. Weight Watchers claims not to be worried about the low-carb frenzy. Karen Miller-Kovach, its chief scientific officer, expects many dieters to simply binge on the low-carb substitutes. "You can't have your low-carb cake and eat it too," she says. But Atkins and others are targeting Weight Watchers's nuke-and-serve niche. Low-calorie entrees account for about 20 percent of all sales of frozen single dishes and dinners. Atkins has yet to produce its own frozen entrees, but is considering doing so.

Huge though it is, the low-carb craze likely doesn't presage the demise of, say, Doritos. But big food companies are eyeing the trend. In September, Anheuser-Busch launched Michelob Ultra, with just 2.6 grams of carbs per 12-ounce can. And PepsiCo executives say they're contemplating snacks with soy and nuts and drinks with grain and fiber. They won't say whether they plan to launch any of them. But like the beckoning aroma of a freshly baked glazed doughnut, a market teeming with desperate dieters may ultimately prove too tempting for mainstream food giants to pass up. --S.F.