Carb Your Enthusiasm

Here's the skinny on how to tap into the hot low-carb market.
This story first appeared in the April 2004 issue of Entrepreneur. To receive the magazine, click here to subscribe.

No question about it, low-carb diets have taken over the collective consciousness and the U.S. food industry. Whether it's Atkins or carbohydrate-restrictive diets that boast an effective weight-loss alternative to traditional low-fat, carb-rich plans, consumers eager to shed fat are flooding the marketplace in search of low-carb products. With an estimated 1 in 4 Americans on some low-carb diet and 17 million with diabetes, entrepreneurs have found a new health haven.

While major fast-food and casual-dining restaurants have scrambled to jump on the low-carb bandwagon, entrepreneurs took off running long before big corporations even made a move. Gerry Morrison, 41, and Jeff Greder, 40, started Carbolite Foods Inc., offering the first low-carb, sugar-free soft-serve ice cream in 1999, when low-fat diets were still the rage. Recognizing a shift in the diet industry, they quickly expanded their Carborite line to focus on an array of low-carb products, including shakes, bread mixes, candy bars and cookies. And they've watched revenues from their Evansville, Indiana, company skyrocket from $800,000 in 1999 to a projected $150 million for 2004.

Still adding new items to their 100-plus line, Carbolite will also be looking at licensing arrangements with restaurant chains. Though competition is definitely heating up among entrepreneurs and corporations alike in the $15 billion low-carb food market, Morrison is undeterred. "In a sense, we've launched 15 different companies that now carry low-carb candy-unheard of before we came around," he asserts. "But we feel we led then, and will continue to lead in the industry and in the creativity of low-carb products."

Retail low-carb startups like Castus Low Carb Superstores are also popping up at a rate of about one per week, says Dean Rotbart, executive editor of industry newsletter LowCarbiz ( While untapped opportunities for entrepreneurs exist, Rotbart notes, "too many people are trying to jump into this industry [in] the wrong places." Receiving a dozen calls per week from entrepreneurs looking to start low-carb product lines or stores, Rotbart deadpans, "That train already left the station." Instead, he points to areas like raw ingredients, support groups and even lifestyle products-LowCarbiz is launching a line of low-carb characters on gym bags, golf balls, etc.

Rotbart urges entrepreneurs to look at the low-carb phenomenon as a lifestyle rather than a diet, as he believes "we're seeing a revolution in the American menu." With food scientists promising tasty low-carb products, this train appears to be unstoppable. Find out how you can benefit from the low-carb phenomenon in the May issue of Entrepreneur.

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