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At Weight Watchers, which is publicly traded, the stock has been sputtering in a strong market since October 2002, and net income has been flat for two years. The firm gets most of its revenue from memberships, which have been flagging, says analyst Kathleen Heaney at the Maxim Group, a New York City brokerage firm. That's temporary, according to Eliot Glazer, vice president of North American marketing for Weight Watchers. "A lot of what is behind low carbs is pseudo science," he says. He reports seeing a flood of disheartened low-carb dieters come to Weight Watchers as "they find they really need help to lose weight."
--THE BAD-NEWS BEERS
Beer is widely seen as bad news for anyone counting carbs, which helps explain why beer consumption was down 1.6% last year and why Anheuser is determined to wrest a correction out of Agatston. Interestingly, Anheuser stumbled on the maltose issue when one of its St. Louis--based brewmasters, John Serbia, read Agatston's book before starting the South Beach diet this winter. Serbia ignored the part about abstaining from beer and lost 15 lbs., says Anheuser spokeswoman Katz.
Still, while beer sales have gone flat, volume increased 3% last year for spirits, which generally contain no carbs. Alcohol of any sort is frowned upon in almost every diet because it contains calories and can act as an appetite stimulant. In some cases the body may turn to the more readily available alcohol instead of stored fat to burn as an energy source.
Despite all that, the spirits industry has made hay with its low-carb status. Distillers, including Bacardi and Diageo, have launched ad campaigns to trumpet their spirits' carblessness. Diageo, which makes Smirnoff, the world's top-selling premium vodka, created the website LowCarbParties.com to tell drinkers how to decarb their cocktails. "The spirit is not the problem," says food and wine expert Ted Allen from Queer Eye for the Straight Guy, who helped launch the site. "It's the mixer." Liquor and grocery stores are beginning to carry products like Baja Bob's low-carb margarita mix, which has been sold online and in specialty stores for four years and is now getting space at Meijer and other supermarkets in the Midwest and Northwest. Sales were up 380% last year.
This spirited success spawned the growth of new low-carb beers, which started with phenomenally successful Ultra and now include Coors Aspen Edge and Rolling Rock's Rock Green Light. As a class, these brews are saving the day because "everything else went into the doldrums," says Harry Schuhmacher, editor of the newsletter Beer Business Daily. Anheuser attributes its record U.S. beer sales last year (103 million bbl., up 800,000) in large part to Ultra, which was launched in late 2002 and whose sales have more than quadrupled initial projections. "It became the fastest-growing beer brand since Miller Lite was introduced in 1975," says Schuhmacher. The company quietly reformulated its Natural Lite to add to the low-carb train. Promoting low-carb beer got a little trickier this month when the Feds warned against ads portraying these drinks as even remotely healthy.