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Small entrepreneurs like Carbolite were among the first to profit from the Atkins revival. The private company, which started in 1993 with Morrison and a friend peddling low-fat foods from the back of a pickup truck, switched to low carb five years ago. Carbolite chocolate bars were introduced in 2000 and became a best seller in drugstores. Revenues at the firm, which has 15 employees, reached $45 million last year and are expected to top $70 million this year, Morrison says.
Ironically, the company Atkins himself founded to commercialize his dietary theories nearly missed the low-carb bonanza. Atkins Nutritionals, based in Ronkonkoma, N.Y., was selling mostly diet books and vitamins until 2000, when the success of the Carbolite candy persuaded executives to create more prepackaged foods. The company hired marketing veteran Paul Wolff as CEO, and since then it has launched nearly 100 low-carb products, from sliced bread to soy-based snack chips to a superpremium ice cream sold under Atkins' Endulge brand. Wolff says the "aggressive" pace of product rollouts will continue. "We're out to change the way the world eats," he says.
Although manufacturers have improved the taste of diet snacks since sugarless candies first hit the market, the artificial sweeteners involved can still give food developers--and dieters--fits. Most sweets rely on a family of sugar substitutes called sugar alcohols, which are slowly digested carbohydrates that have minimal impact on insulin levels. But as most diabetics know, too much of this fake sugar can cause intestinal discomfort. Some Hershey's lovers learned that lesson the hard way earlier this year when, after 10 years in the lab, the world's third biggest chocolate maker introduced sugar-free versions of its flagship chocolate bars and Reese's peanut butter cups. For its sweetener, Hershey settled on a sugar alcohol called lactitol, which happens to be the brand name of a British laxative. "I had one--ONE--of the mini Reese's, and was not fit for human or feline companionship for the next six hours," a user confided on eGullet.com a website for food fans.
Chemists believe they have solved the laxative problem with a new sugar alcohol called erythritol. It's already in use in the Z-Carb bar as well as in Carbolite's new At Last! bars. But obstacles to further industry growth remain. For one thing, there's uncertainty about which products can legitimately be labeled as "low" or "lite" in carbohydrate content. The industry claims fiber and sugar alcohols that don't affect insulin levels shouldn't be counted as regular carbohydrates. But the U.S. Food and Drug Administration says a carb is a carb and has sent letters chastising companies, including Carbolite, for misbranding their products. After spending $500,000 last year trying to persuade the agency to change its regulations, Carbolite gave up this past winter and started renaming its products under the label Carborite.