Obesity has been the leading food industry story during the past year, and it would be hard to miss the message that it is a growing problem in the United States. While most experts discuss the underlying causes of large portion sizes and a more sedentary lifestyle, fast foods, packaged foods and beverage companies have taken a large share of the criticism. Thanks to low-carbohydrate diets such as the Atkins Diet and the South Beach Diet, even juice and sports drinks, which used to sport a healthy halo, are finding themselves on the defense. While some parts of the industry are fighting to vindicate their products, many beverage companies are creating opportunities for new products and reassuring consumers that they can enjoy their products as part of a healthy lifestyle.

The stats

The topic of obesity has statisticians working
overtime. Here are a few of their findings.

• In 1980, 45 percent of adults in the United States were overweight or obese, by 1990, it was 55 percent. Today it s 65 percent. Fifteen percent of children between the ages 6 to 19 are overweight, an increase of 10 percent during the past 10 years.

• The cost of obesity to the U.S. economy is estimated to be $120 billion a year in medical expenses and lost productivity.

• Traditional clothing retailers now report that more than 20 percent of all clothing sales for women are plus sizes.

• Obesity was the most reported food story of 2003, with the Atkins Diet following in second place.

• Demand for eggs created by Atkins Diet followers created a 20-year high price on eggs in 2003.

• Nearly 32 million Americans say they are on some kind of low-carb diet.

• Studies of twins indicate 50 to 70 percent of the tendency toward obesity is inherited. The chances of becoming obese if both parents are obese is 60 to 80 percent. The chances when both parents are thin is 9 percent. There is no indication that the tendency to be overweight is inherited.

• Worldwide, obesity affects 300 million adults and 17.6 million children younger than five.

• Of the 10.3 million cases of cancer per year, 3 to 4 million may be preventable with proper diet and exercise, according to the World Health Organization.

• About 150 million people worldwide have Type II diabetes. That figure is expected to double by 2025 due to aging, diet, obesity and sedentary lifestyle.

• Americans spend more than $33 billion annually on weight-loss products and services.

Sources: USA Today; Hunter Public Relations; Harris Interactive/Knight Ridder/Tribune Business News; Euromonitor/World Health Organization; IRI/The Centers for Disease Control; eMedical Supplies and Equipment Inc.

Defining the problem
If you’re not sure what the difference is between overweight and obese, you’re not alone. By some definitions, 30 or more pounds above a healthy weight for a person’s height is considered to be obese. The Centers for Disease Control and Prevention and the American Dietetic Association use body mass index, a calculation based on the ratio of height to weight, as a way to determine a healthy size.
Using that method, overweight is defined as having a body mass index of 25 to 29 (about 150 to 180 pounds for a 5-foot, 5-inch woman, or 185 to 220 pounds for a 6-foot man), and obese as having a BMI of 30 or more.
To confuse matters more, there is little agreement on what causes obesity. Genetics have been shown to be a big factor, with a majority of people who have obese parents following in their footsteps. But no such genetic link has been shown for people who are merely overweight.
Beverage solutions
If the definitions of obesity vary, they have nothing on the number  of diets and weight-loss theories that exist. Low-fat, the mantra of the ’80s and ’90s, has been replaced by the now-popular low-carbohydrate regimes such as the Atkins Diet, The Zone and the South Beach Diet.
The trend may be wreaking havoc on some product categories, but it’s also offering new life for some mature categories. According to Information Resources Inc., Chicago, 14 mature product categories have been ignited by the low-carb trend, and low-carb products grew $1.2 billion last year compared with 2002.
The low-carb trend also has sparked a number of new products, although food introductions far outpace beverages. During the past year, 105 beverages were introduced in the United States with low-/no-calorie or low-/no-carbohydrate claims, up from 98 during the previous year, according to Marketing Intelligence Service’s Productscan Online. The company reported 344 new foods making the same claims during the past year. But low-fat hasn’t disappeared — the addition of low-/no-fat claims brings the number of new diet-related beverages to 178.
Beer companies have been quick to develop low-carbohydrate products to hold on to consumers on low-carb diets. Anheuser-Busch started the trend with Michelob Ultra, growing the brand to $150 million to date, according to IRI. Productscan Online reports there were six additional new low-carb beers introduced during the past year, including Coors’ Brewing Co.’s Aspen Edge, F.X. Matt Brewing Co.’s Accel Low Carbohydrate Beer and Labatt USA’s Rock Green Light. Miller Brewing Co., in addition to pointing out the already low carbohydrate content of flagship Miller Lite, has extended the low-carb beer trend to malternatives with Skyy Blue’s new sibling, Skyy Sport (see sidebar).
“It’s amazing how something can get a barb into the consciousness of society and become so symbolic,” says Tom Pirko, president of Bevmark LLC, Santa Barbara, Calif., of the low-carb trend. “This has become part of the culture very quickly.”
With their steak-and-eggs menus, low-carb diets have been particularly popular with men, but Pirko says the success of Michelob Ultra is largely due to women.
“It was the first product that got the word out to women that it was sexy to drink beer,” he says. “[Anheuser-Busch] really knew how to take advantage of everything we learned from Gatorade and Nike. It pulled all that together in a way that competitors of Michelob Ultra still haven’t discovered. A-B’s success has come from understanding the nature of advertising.”
Though he says the low-carb trend has, “gotten to the point where it’s silly,” Pirko also believes it’s not going away anytime soon.
“It’s moving at a remarkable clip. This is no longer an Atkins Diet thing. It’s morphed into something bigger.
“It’s a fad because it’s associated with certain kinds of dieting. But it’s more because it’s rooted in a much bigger concern, and that is, of course, obesity in America and our awareness that we are not healthy because we’ve put on so much weight. It will persist because it’s lodged in something that is a major trend — this concern about nutrition and obesity and healthy products,” he says.
Morgan Stanley analyst William Pecoriello agrees. “We believe companies have no choice but to respond to the low-carb movement with new products,” he was recently quoted in a CNN report.
Same product, new message
While some beverage categories have tailored their line-ups to include low-carb varieties, some products that were unwittingly low-carb to begin with, are taking advantage of the trend. Spirits companies are happy to tell consumers their products contain no carbohydrates and never have.
3 Vodka Distilling Co., Chicago, says it was the first liquor product to receive federal approval to list “Zero Carbohydrates” as a nutrition statement.
“We at 3 Vodka want consumers to know that even though they are watching their carbohydrate intake, they now have the option of enjoying a great-tasting spirit without feeling guilty,” said Brian Berish, managing partner at 3 Vodka, in a statement. “Now dieters across the United States will still be able to uphold their New Year’s resolution to lose weight while enjoying alcoholic beverages responsibly.”
Bacardi also has jumped on the bandwagon, promoting Bacardi and Diet Coke as a “smart cocktail”. The company tapped Dr. Fred Pescatore, author of “Thin For Good” as pitchman for the low-carb promo, and points out a drink made with Bacardi Superior and 6 ounces of diet cola contains 66 calories and no carbohydrates.
Diageo, the world’s largest spirits company, began the year with cable TV advertising for Smirnoff vodka that touted the brand’s zero-carb content. Company spokesman Gary Galanis says the advertising was not intended to be a “diet solution,” but says the company wanted to promote the fact that the brand fits into a low-carb regime.
The company also launched a Web site, lowcarbparties.com, with recipes for cocktails and food made with Smirnoff, Jose Cuervo tequila, Crown Royal and Johnnie Walker whisky, and Tanqueray gin. And it tapped “Queer Eye for the Straight Guy” star Ted Allen as pitchman in the low-carb effort.
The company also recently announced it would provide voluntary product information such as calories, carbohydrates, macronutrients, alcohol content and serving size on its product labels. The announcement came in response to a petition, based in part on obesity and dietary concerns, that was filed with the Alcohol and Tobacco Tax and Trade Bureau calling for more information on alcohol product labels. Though it said it was against mandatory labels, Diageo said it would provide dietary information.
“This consumer data will be included on our Web sites, in printed promotional materials and, ultimately, on packaging materials,” said Guy Smith, executive vice president at Diageo, in a statement.
“Diageo’s voluntary labeling gives the consumer the information they want about carbs, calories, alcohol content and serving size in order to make comparisons across beverage alcohol.”
Cola wars find a new front
The soft drink industry has borne the brunt of attacks by those in the regulatory community concerned with obesity, particularly childhood obesity. Many school districts such as the New York City public schools and California schools have banned soft drink and snack food vending machines, and have called for products such as juice and milk to be more available to students.
Soft drink companies have reacted on several fronts. In the “If you can’t beat ’em, join ’em” vein, Coca-Cola and Dr Pepper/Seven Up introduced dairy drinks of their own last year. Coca-Cola’s Swerve is available only in schools, and its sweetener blend contains Splenda to lower the calorie content.
They also have mounted a public relations attack, refusing to be the scapegoat for an epidemic. Coca-Cola Chairman Doug Daft was recently quoted in the Atlanta Journal-Constitution saying, “Obesity is one of the world’s leading health problems.” But he continued by stressing that, “A simplistic piece of government legislation will not address the problem.”
And the National Soft Drink Association recently pointed out that “The soft drink industry recognizes the need for children and adults to consume a wide variety of beverages for proper hydration, and most soft drink companies offer a range of beverages from which to choose, including sugar-free and caffeine-free soft drinks, bottled water, juices, sport drinks and teas. The majority of schools already offer a variety of beverages in their vending machines.”
New ingredients
Frustrating to consumers in this fast-paced world of instant gratification is the fact that there is not yet a magic fat-melting pill that will make dieting obsolete. But while they haven’t yet invented that pill, companies are busy creating ingredients that are helping food and beverage companies develop products to battle the bulge.
According to IRI, the sugar substitutes category grew by $40 million last year through its measured retail channels. And that doesn’t include the sweeteners used in diet products such as beverages. Diet drink-makers have an increasing number of sweetener alternatives to help them develop products.
The leading non-nutrative beverage sweeteners are aspartame, sucralose and acesulfame potassium, the latter of which recently received general-use approval from the Food and Drug Administration for use in everything from snack foods to dairy products. Also available for beverage use is Neotame, which was approved in 2002, and is 30 times sweeter than aspartame, or 7,000 to 13,000 times sweeter than sugar. Tagatose was the sweetener of choice when Pepsi-Cola and 7-Eleven introduced Diet Pepsi Slurpee last summer because of the challenge of finding a reduced-calorie sweetener that worked in the store’s frozen drink machines.
Sweeteners will play a big part in the soft drink industry’s quest to develop more diet products. Both Coca-Cola and Pepsi-Cola are reportedly looking into mid-calorie colas that would likely incorporate sweetener blends.
Another weight-loss ingredient to recently be  approved by the FDA is Super CitriMax from InterHealth Nutraceuticals, Benicia, Calif. CitriMax, or hydroxycitric acid (HCA), received GRAS approval in November 2003 for use in beverages. The ingredient is said to suppress the appetite and increase energy, and InterHealth says a double-blind study conducted by Georgetown University showed the ingredient aided fat burning, helped lower LDL cholesterol, increase HDL cholesterol and decrease body mass index. The company says the product is particularly well-suited to beverages because it is odorless, tasteless, colorless, 100 percent soluble and contains 20 percent more HCA than other sources.
Finding the right mix
One fact remains in today’s marketplace — consumers know they need to consume fewer calories, but they have become accustomed to flavorful, convenient foods and they’re not about to give them up. Information Resources Inc. points out in its report “The Wellness Evolution: Chasing the Low-Carb Consumer” that flavor will always be the defining factor in a product, indicating that 46 percent of consumers “rarely give up good taste for health benefits.” Even heavy consumers of healthy products frequently purchase indulgent products as well, and that might be a boon to companies that discover the right mix of luxury with minimal calories.
The report stresses that changes in consumer habits will be slow and gradual, but there will be rewards — obese consumers are increasing purchases of healthier products at a rate double that of the total population. For those without significant weight problems (but hoping to avoid them), IRI says baby boomers are a prime target for wellness-related products, as are families with children.

“There’s current evidence that healthier, nutritional eating and weight-loss objectives are driving significant shopper shifts and growth in shelf-stable, refrigerated and frozen aisles,” it says.  BI

Skyy Blue sports a low-carb twin
Miller Brewing Co., Milwaukee, Wis., and Skyy Spirits, San Francisco, are getting ready to expand the popular low-carb beer trend to the malternative segment with new Skyy Sport, a lower-carb line extension to Skyy Blue. With 160 calories and 15 grams of carbohydrates per serving, the product is said to contain half the carbs of other flavored malt beverages. The brand will be launched nationally in March.
“In the flavored malt beverage segment, Skyy Sport is offering a product that has a significant difference from the other brands,” says Laura Emory, brand manager for Skyy Blue. “We’ve talked to consumers and there is an interest in finding a brand that has the flavor of a flavored malt beverage and also offers a low-
calorie, low-carbohydrate proposition.”
Skyy Sport has a citrus flavor, with a touch of cranberry, which Emory says is popular with both men and women, and says, “is a clean, crisp, sophisticated flavor, so it’s attractive to 21- to 27-year-olds, but also consumers that are older than 27.”
The brand will be supported by a print advertising campaign in both men’s and women’s fashion magazines, accompanied by public relations and sampling events, and point-of-sale materials and display units at retail.
“They take up a small footprint in the store, but make a strong presence in attracting consumers to new products,” says Emory.
Skyy Sport will maintain the look of Skyy Blue, with a color scheme of blue, white and silver, and marketing maintains Skyy Blue’s image, but with a slightly more easygoing attitude, as it is “positioned for a more casual and active lifestyle,” according to Miller.
“Our advertising is definitely staying in the tonality of the Skyy Blue brand,” says Emory. “It continues to have the upscale look of people in very fashionable settings.”
In addition, she says, the low-carb message will be integrated into the product’s advertising, packaging and point-of-sale materials.
“We are speaking to people who already are consuming flavored malt beverages but are interested in a flavored malt beverage that is lower in calories and low-carb,” Emory says. “We’re trying to provide consumers with the facts about the calories and the carbs that are in the products so they can make their own decisions about how the products fit into their lifestyle.”

Skyy Sport will be available in 12-ounce six-packs, and will contain 5 percent alcohol by volume. Pricing will be similar to Skyy Blue.

Dairy vending wave
In September, the Midwest Dairy Association and Dairy Management Inc., which partnered with Swiss Valley Farms, Davenport, Iowa, announced results of a vending study testing the theory “if you build it they will come.” Placing vending machines in 17 middle and high schools in Iowa and Illinois, the study found that milk consumption increased by more than 5 percent by volume per school during the 2002-2003 school year compared to the previous year. Additionally, 60 percent of all dairy products sold were attributed to milk.

“The test has helped us accomplish [greater dairy product availability],” said Kevin Stiles, vice president, marketing and industry coordination for Midwest Dairy Association, in a recent statement. “We’re confident that these test results will be useful as we encourage widespread adoption of dairy vending in other markets of the country.”

Vending healthy alternatives
Stonyfield Farm has come a long way from its start 20 years ago as a yogurt company on a farm in New Hampshire. Today, as a leader in the dairy category, its claims to beverage fame are its 8-ounce smoothie for convenience-craving adults and a drinkable yogurt for babies. It also has taken matters into its own hands to provide a solution for childhood obesity: starting its own vending program in schools.
“We want to change people’s minds about how they eat, and kids’ minds about what’s fun,” says Cathleen Toomey, spokesperson for Stonyfield Farm, Londonderry, N.H.
Beginning with its YoBaby drinkable yogurt for babies, which meets moms’ as well as kids’ demands for taste and nutrition, Stonyfield products combine all-natural ingredients, natural sweeteners and flavors, the live active cultures reurti and acidophilus and inulin, a fiber ingredient that helps increase calcium absorption by as much as 20 percent.
The company president’s direct involvement in new product development is how Toomey says Stonyfield got involved in the Menu for Change program, its grassroots vending approach targeting children and parents.
Partnering with a local nutrition organization and school administrators, Stonyfield introduced “healthy” vending machines in three Rhode Island schools in a pilot program last fall. Currently, more than 200 schools are on Stonyfield’s healthy vending list across the country. And during the next few months, California, Connecticut and New Hampshire also will be implementing the machines in schools.
“We feel that children are smarter than people give them credit for,” Toomey says. “We say give them a choice. One of the critical parts for making this program work is the sampling we did in schools to introduce them to the foods. Many of them had never seen the products and they didn’t know what they tasted like.”
And as other milk-based drinks are appearing in vending machines across the country, Stonyfield’s introduction of vending machines with low-fat, low-sugar products, including its yogurt and smoothie lines, in participating schools is only the first step.
In addition to offering vending machines with snacks such as yogurt, cheese and milk, the company also has partnered with local school boards to reward schools that come up with the most creative solutions to improve overall nutrition. Stonyfield also is encouraging parents to change their childrens’ eating habits by offering tips and resources on its Web site.

New age weight-loss platform
During the late ’90s, new age beverage companies told us “better-for-you” products were about adding things — herbs and vitamins, for example — to a product, not taking things such as calories away. With growing publicity and concern about obesity, it seems today’s new age beverage companies need to do both. Fuze Beverage LLC, Englewood Cliffs, N.J., is answering the call, with a portfolio of products called Slenderize. The line contains three varieties: Cranberry Raspberry, with 5 percent juice, 10 calories and 2 grams of carbohydrate per 8-ounce serving; Cranberry Apple, with 1 percent juice, 5 calories and 1 gram of carbohydrate per serving; and Tropical Punch, with 5 percent juice, 10 calories and 1 gram of carbohydrate per serving.
Slenderize is one of several Fuze product “platforms” or product lines, which also include Energize, Essentials, Green Tea and dairy-based Refresh. While Slenderize is the weight-loss platform, all of the products were formulated to be lower in calories and carbohydrates than competitors’ products.
“It really goes back to the vision of our company,” says Fuze Founder and Chief Executive Officer Lance Collins. “All our platforms are formulated with lower carbs and lower sugar.”
Slenderize products are sweetened with a blend of acesulfame potassium and sucralose. In addition, each variety contains L-carnitine, and an amino acid; chromium, a mineral that helps metabolize fat; vitamin C; and CitriMax, or hydroxycitric acid, an ingredient designed to control appetite and boost energy.
Thus far, Fuze has used sampling and point-of-sale materials to market the brand, but the company plans to add outdoor advertising and radio spots for the summer selling season.
Jeff Powers, head of marketing at Fuze, says the sampling efforts help educate consumers who might be reluctant to visit special retail channels.
“In the past, consumers have been forced to go to the GNC channel, which is quite intimidating to a lot of people,” he says. “We’ve found a way to partner with our distributors and do sampling, to tell consumers that Slenderize fits their lifestyle.”
With all of the diet news in the media, the company is finding consumers are quickly picking up the message. It recently created a low-carb multipack for club stores, with all three Slenderize varieties, and conducted sampling in the stores.
“Costco gave us an end-aisle placement for our low-carb variety pack and I was amazed how everyone understood the low-carb message,” says Collins. “All ethnic backgrounds, all genders, all ages... they all understood the low-carb message. It was really enlightening.”
The company currently is partnering with a convenience store chain in Minneapolis to develop a “healthy” store section, and hopes to work with other retailers to create other such retail sections.
“We see that as a trend,” says Collins. “I think you’re going to see it through all channels, be it convenience stores, supermarkets, club stores. They’re going to have dedicated good-for-you and wellness sections.”
“We’d love to roll that out with any c-store or with any company that wants to partner to help the consumer live a healthy lifestyle,” adds Powers.

Tropicana rolls light juice
One might think that orange juice is inherently high
on the list of healthful drinks, but growing concerns about sugar, even those derived from fruits, are
forcing juice-makers to come up with alternatives to traditional juice.  
Tropicana Products Inc., Bradenton, Fla., is one of the juice producers tapping into the growing demand for lower-sugar products. But it’s not only concentrating its efforts on developing a juice for people interested in losing weight. Its Pure Premium Essentials line addresses a number of health concerns such as cardiovascular disease, immune deficiency and sensitive stomachs. Tropicana Pure Premium Healthy Heart offers six vitamins and minerals that promote cardiovascular health, and Tropicana Pure Premium Immunity Defense is fortified with antioxidants to protect body cells. Its Healthy Kids juice offers a kid-friendly taste with added vitamins and FruitCal calcium.
To specifically address concerns about obesity, Tropicana has developed a juice that offers one-third less sugar with the same flavor and nutrition as a regular glass of orange juice.
Tropicana depends on its consumers to determine the products it will introduce and the message it conveys about its products. Carefully following dieting and eating habits of Americans, the company focuses on adding valuable vitamins and minerals to its products without compromising the taste that consumers expect.
“We monitor trend data and do a lot of consumer research about what people want in orange juice, and the barriers there are to [drinking orange juice],” says Carla McGill, nutrition scientist at Tropicana. “And we do a lot of testing on consumers with prototypes. We found through our research that 41 percent of consumers don’t drink orange juice because of the calorie content. We created Light’n Healthy as part of our Tropicana Pure Premium Essentials line to meet a consumer need in the marketplace.”
The reduced-calorie juice is made with fewer orange solids and Splenda to provide the traditional orange juice taste that consumers expect. It also offers a full-day’s supply of vitamin C and FruitCal calcium.
“The nutrition is as close to regular orange juice as we can make it,” McGill says. “We’re marketing it as a wellness product.”

Consumer disconnect
Americans know they have a weight problem, but many do not actively combat it, according to a survey conducted by the Bally Total Fitness health club chain, based in Chicago. The company’s Every Body Needs Something survey questioned a random selection of Americans 18 and older, and found 97 percent are aware of the issue. Other findings of the survey include:
  • More than 97 percent of respondents felt a personal need to lose weight, yet only 25 percent follow a diet program.
  • More than 83 percent of adults claim to want complete nutritional information on menus, but only 39 percent of respondents say the information would influence their food choices.
  • While losing weight is fundamentally a function of calories expended exceeding calories ingested, only 35 percent count calories.
  • For those who monitor their food intake, the carb-counters and fat counters are equally matched. Forty percent watch carbohydrates and 40 percent watch fat intake.