Is the Atkins Brand Toast?

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When Atkins died, a brash, 34-year-old doctor named Keith Berkowitz emerged as his successor at the clinic. Here's where the absence of the founder was most obviously felt. The products company had coexisted peacefully with the practice when Atkins was alive. But though the doctor had founded both businesses, the principals decided that the two entities should split up following his death. The plan was for Berkowitz to buy the practice for an undisclosed sum; as part of the deal, he would give up the Atkins name, which was important to the product marketers.

Then on October 2--just days before Berkowitz was set to ink the deal--Atkins Nutritionals announced in a press release that the center would cease operations 13 days later. Patients were informed that they would need to seek treatment elsewhere. The center's 25 employees were given notice. Berkowitz was stunned. In a statement, Veronica Atkins said, "It is sad for me to see the medical practice close, but I am gratified to see [my husband's] teachings being accepted and practiced by physicians in this country and around the world." (Through a company publicist, Veronica Atkins declined to speak to Inc.)

Richard Rothstein, the spokesperson for Atkins Nutritionals, says he thinks the deal broke down over money--an assertion with which Berkowitz disagrees. When asked if he believes Dr. Atkins would be disappointed that the practice closed, Berkowitz says "probably"--adding that his mentor would approve of his subsequent plans to open his own practice in New York, employing most of his former colleagues.

Kabak says that the clinic closed precisely because Dr. Atkins played a central role in it. In contrast, the products business can survive without him "because he was never very involved," Kabak says. "He wanted to produce products, but it's not what made him tick." And so the company continues to roll out everything from bagels to breakfast cereal, produced by various manufacturers and marketed under the Atkins label. The company has also struck licensing deals with the likes of New England dairy producer HP Hood, which is selling a line of milk called Carb Countdown with 75% to 90% fewer carbohydrates than regular milk. Mary Ellen Spencer, vice president of brand marketing for Hood, says she got on the Atkins bandwagon because "it's no secret that this thing is growing."

In fact, Atkins is likely to attract big-name competitors, as well as partners. Already, H.J. Heinz and Michelob are introducing low-carb products--and a growing number of niche players are making goods like sugar-free chocolate bars. On the plus side, retail demand is also rising. Wal-Mart Supercenters stock the Atkins-Hood milk, and a spokesperson for the health food chain GNC, which operates 4,500 stores in the U.S., says its larger stores now stock four shelves with low-carb products--up from one shelf last year.

Of course, as brand consultant Davis notes, "it is possible to follow a low-carb diet without eating Atkins-branded products." Given that consumers have options, Davis adds, the company will succeed only if Atkins products taste good. That may be tricky because, to strip carbs out of food, the company replaces key ingredients like wheat with soy and almond flour--a process that can muddy the taste. Indeed, in online chatrooms where Atkins followers swap recipes, taste comments pop up a lot. One person used the word blech to describe Atkins barbecue sauce; another complained that the pancake syrup was "no Mrs. Butterworth's."

High prices may also limit the brand's appeal--several chatroom posters said that the $4.99 price tag for four small single-serving ice-cream cups was a bit steep. "I suppose that if some people get desperate enough for a bagel or cereal, they may be willing to pay anything," says Hayes Roth, a vice president of the brand consulting firm Landor. "But there is a point where the price gets too high."

Despite these problems, however, the team extending the Atkins brand shows no signs of slowing down. Because the diet doc didn't really manage the products business, his loss is not acutely felt there. Sure, the patients he treated will miss him. But consumers will probably forget that Atkins was, in fact, a real person in time. For a brand, that's okay. "To be honest," says Roth, "I didn't even know that he was still alive when I read that he had died."

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