Atkins Empire’s Bandwagon Waylaid By Hungry Competitors

Aug. 2–SAN RAMON – Six years ago, Leland Turner was diagnosed with high cholesterol and diabetes and placed on a low-fat diet. It didn’t help: one year later, he went under the knife for open-heart surgery.

But Turner, 45, turned his health around with the Atkins diet, and he swears so much by the low-carbohydrate weight-loss program that he and his partner, Kevin Carpenter, now own two low-carb stores, in San Ramon and Pittsburg.

Even as Atkins Nutritionals Inc., the company founded by the late Dr. Robert Atkins, filed for bankruptcy Monday, the duo — and other faithful Atkins dieters — said that interest in a low-carb lifestyle is as strong as ever.

“Atkins is here to stay,” said Carpenter, who lost 60 pounds with the Atkins diet. The Chapter 11 bankruptcy “is just a blip. People truly doing low-carb will continue to do it. I’m sure (Atkins Nutritionals) is going to rebound.”

Carpenter and Turner own two Castus Low Carb Superstores, part of a franchise that once included 25 stores in California, Virginia and Alaska.

But the stores faced intense competition from supermarket chains such as Albertsons and Pleasanton-based Safeway Inc., which leapt into the low-carb craze last year and started carrying any number of low-carb tortillas, frozen meals and ice cream. One by one, the Castus stores started shutting down; today there are seven.

“We got kicked in the teeth,” said Rick Schott, CEO of the Castus chain who opened the first store in San Ramon six years ago before selling it to Turner and Carpenter last year. “We used to be the only game in town, but now we’re not.”

The same has happened to Atkins Nutritionals, Schott believes. Giant food makers such as Unilever, whose brands include Slim Fast, and Kraft Foods joined the Atkins revolution, churning out their own low-carb products and making Atkins Nutritionals’ protein bars and shakes one of many low-carb choices on store shelves.

Smaller companies also jumped in with low-carb alternatives, from Carb Slim mint cookie crunch bites to Carbquick biscuit and baking mix. Castus in San Ramon carries about 100 brands, including Atkins Nutritional.

“Low carb is as popular as ever,” Schott said. People are “not waning in interest, per se. It’s because there are so many players in the market.”

At least one trend watcher begs to differ. Only 3.6 percent of the U.S. population reported being on a low-carb diet, according to the NPD Group, down from nine percent at the beginning of 2004.

It is not so much that the Atkins diet has gone out of style, said Zoline Turner of Hayward. It’s just that she and other dieters now think of what they’re on as a low-carb diet. Some have also disassociated themselves from the Atkins name because of criticism that it is not healthy.

“A lot of people don’t call it Atkins anymore,” said Turner, a 48-year-old Xerox Corp. account associate, no relation to Leland Turner, who has been on a low-carb diet on and off about three times.

She joined a low-carb weight loss program at Castus in late December and has since lost 45 pounds.

“This is the longest I’ve been on low carb, and it’s really working for me,” she said.

Diana Chartier ran into Castus in San Ramon on Monday afternoon to pick up four boxes of Atkins protein bars, ringing up more than $100.

“I don’t think (the bankruptcy) is going to change the products available,” said. “I just figured it’s one of those things when people go bankrupt but not out of business. I don’t think (Atkins) is a fad. It works.”

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