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The impact of the low-carb diet craze, as typified by the Atkins and South Beat diets, was put in vivid relief last week when Krispy Kreme Doughnuts announced that it is lowering its profit projections by 10 percent for 2004, saying that consumers’ concerns about carbohydrates were affecting how many doughnuts they are willing to buy and consume.

“The popularity of low-carb diets has captured the consumer's attention,” said Scott Livengood, the company’s CEO. “It’s impossible to predict if low-carb is a passing fad or will have a lasting impact. For several months, there has been increasing consumer interest in low-carbohydrate diets, which has adversely impacted several flour-based food categories, including bread, cereal and pasta.”

Livengood said that the low-carb craze hadn’t affected the Krispy Kreme boom until recently, but that momentum for that approach to weight loss seemed to be building.
KC's View:
We think that it seems myopic to view the low-carb craze as the reason for a sales shortfall at Krispy Kreme. The fact is that the doughnut isn’t just bad for you if you’re on Atkins or South Beach – there’s no diet that we know of that lists Krispy Kremes on the “allowed” list.

Maybe what’s really happening is that while low carb diets get all the press, what’s really happening is that people in general may be getting more health conscious…even if for short period of time marked by a lack of willpower.

That said, we think that Krispy Kremes will, for a long time, be on the indulgence list for Americans. This drop in expectations is probably more a blip than anything else.