Considering Keto

The ketogenic (keto) diet has been gaining traction for several years. But, until fairly recently, prepared foods and beverages billed as keto-friendly have mostly been the purview of specialty marketers, especially in the health food and natural products space. A key trend late last year and in 2020 has been the entry of more general-market CPG companies, restaurants, diet plans, and celebrities, an indicator that the craze is fully in the mainstream.

The diet, which has generated controversy among health experts and advocates, calls for a daily calorie intake that is carb-light (as little as 5% of daily calorie intake) and fat-heavy (as much as 75% of calories). It is touted as promoting weight loss, reducing the severity of some diseases, such as epilepsy and type-2 diabetes, and clearing the skin. Negatives include irritability, headaches, and bad breath, among others.

Mintel’s Global New Product Database (GNPD) counted 88 keto-friendly product launches in 2018, marking an increase of 780% over a small base in 2017. In just the first four months of 2019, marketers introduced more than double that total at retail.

Some keto-friendly products are the same as they have always been, but have started calling out their value for keto. Others are specially formulated to support a keto diet, often containing beta-hydroxybutyrate (BHB) salts and/or medium chain triglyceride (MCT) oil.

Some of the marketers jumping on the trend of late include:

  • Restaurants. Canadian chain Pizza Pizza, BurgerIM, and others have begun offering keto crusts and/or buns (often in partnership with Unbun Foods). Meanwhile, chains from Smoothie King to Hardee’s to Chipotle have been entering the fray, the first with a range of specially formulated Keto Champ smoothies, the second with a Keto Low-Carb Breakfast Bowl, and the last—long considered a keto-friendly option in general—creating a formal Keto Salad Bowl.
  • CPG companies. Wells Enterprises’ Halo Top low-calorie ice cream launched a Keto Series encompassing seven flavors, Conagra’s Duncan Hines launched keto-friendly cake mixes, and Kraft-Heinz paired with Twisted Ranch, a St. Louis restaurant, for five keto-friendly flavors of ranch dressing. Michelob Ultra has a line of keto-friendly fruit-infused beers under the Ultra Infusion banner.
  • Diet brands. The South Beach Diet, now owned by Tivity Health’s Nutrisystem, is relaunching with a keto option, encompassing a cookbook, app, prepared foods, and food-delivery options. And Abbott Nutrition’s ZonePerfect program added a keto formulation to its line of nutrition and weight loss powders and bars.
  • Celebrities. Harlan Kilstein, a keto-centric lifestyle expert, known for his Completely Keto and Speed Keto diet programs, is expanding into nutrition bars in 2020, with keto shakes and bread also planned. And Vinny Guadagnino of Jersey Shore fame released The Keto Guido Cookbook: Delicious Recipes to Get Healthy and Look Great in September 2019, with health and wellness publisher Rockridge Press.

As noted, specialty marketers have been particularly active in the keto segment and that continues, with companies from Birch Benders and Keto Farms to Happi Foodi and Califia, among many others, introducing new keto foods and beverages.

The global market for keto products is pegged at $9.7 million in 2018, with a predicted compound annual growth rate of 5.5% bringing the total to $15.6 million by 2027. This is according to the most-often cited study, distributed by Research and Markets in August of 2019. More than 6% of Americans followed the diet in 2019, double the number in the previous year, according to the International Food Information Council Foundation’s 2019 Food and Health Survey. That made it the fastest growing of the 15 diets tracked and put it in a tie for the third-most popular diet last year. Meanwhile, “What is keto?” was the second-most-searched medical term on Google in 2019.

Despite the current popularity, there has not been much licensing in this segment to date. That may well change. The market is becoming more crowded, likely spurring food brands to look to partnerships in order to stand out. And the trend increasingly seems to have some staying power, creating an incentive for licensors to consider jumping in.

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