Atkins Nutritionals, Inc. - Company Profile, Information, Business Description, History, Background Information on Atkins Nutritionals, Inc.

2002 Orville Drive, North, Suite 1
Ronkonkoma, New York 11779-7661

Company Perspectives:

Everyone at Atkins is dedicated to helping people feel better, look better and enjoy a healthier lifestyle.

History of Atkins Nutritionals, Inc.

Atkins Nutritionals, Inc. provides prepared foods, vitamins, natural supplements, and other products related to the controlled carbohydrate diet espoused by the late Dr. Robert C. Atkins. He was one of the most famous nutrition experts since the days of Dr. John Harvey Kellogg and the Battle Creek Sanitarium, with his diet embraced by a host of celebrities. The activities of Atkins Nutritionals are divided into three areas of concentration: nutritional supplements, food products, and information products. The formulation, packaging, and selling of nutritional supplements was the company's initial business. More than 115 supplements are now offered, using high-quality ingredients and eschewing fillers, additives, artificial colors, and flavors. In addition, the supplements avoid the use of hydrogenated oils, digestive yeast, corn, wheat, salt, sugar, starch, or gluten. The food products group produces a wide range of prepared controlled carbohydrate foods, featuring four major lines. Atkins Advantage products include the group's most popular item, the Atkins Advantage Bar, available in such flavors as Pralines 'N Cream and Frosted Cinnamon Swirl. Also included in the Advantage line are breakfast bars and ready-to-drink shakes and shake mixes. The Atkins Endulge line consists of three chocolate candy bar products. Atkins Kitchen products offers a flour substitute as well as muffin and bread mixes, pancake and waffle mix, and sugar-free pancake syrup. The last product line is the Atkins Bakery, which sells specially formulated frozen white and rye bread. Atkins Nutritionals' roster of supplements and food products is sold through such major retailers as Wal-Mart and GNC, and natural-food stores across the country. In addition, a large portion of the private company's annual revenues, estimated in excess of $100 million, comes from catalog sales, either through the print version or via the company's web site--a province of the company's third business focus, Information Products and its Direct to Consumer group. Information Products also includes an Education & Research group, involved in public relations' efforts to promote the Atkins approach and brand. The Information & Online group creates all content for the company's print, electronic, and broadcast materials. Also included among the information products in this group are the dozen books authored by Dr. Atkins. Atkins Nutritionals provides financial support to a nonprofit sister company, The Dr. Robert C. Atkins Foundation, in order to conduct controlled carbohydrate nutrition research. The company is headed by Paul D. Wolff, who was installed in 2000 when Dr. Atkins relinquished control of day-to-day affairs.

Dr. Atkins's 1963 Decision to Lose Weight

Atkins was born in 1930 in Dayton, Ohio, the son of a restaurateur. He grew up on a diet that he said emphasized doughnuts for breakfast and meat and potatoes for dinner. He received an undergraduate degree from the University of Michigan in 1951, and then earned a medical degree from Cornell University. After serving his four-year internship and a cardiology residency at New York City's St. Luke's Hospital, he opened a private practice in Manhattan in 1960. In 1963, when he was 33 years old, Atkins had his picture taken for an ID and was dismayed by what he saw. He later told Observer Food Monthly, "I looked at a picture of myself and realized I had a triple chin. ... I was eating junk food. Nobody had ever told me junk food was bad for me. Four years of medical school, and four years of internship and residency, and I never thought anything was wrong with eating sweet rolls and doughnuts, and potatoes, and bread, and sweets." Atkins told the same interviewer that in November 1963 he had gained weight after Thanksgiving and, saddened after watching the television coverage of the Kennedy assassination and ensuing events, he decided to go on a diet: "As a man with a big appetite, Atkins knew he would not last on a traditional low-calorie or low-fat diet. But he'd just read an article in the journal of the American Medical Association about a low-carbohydrate diet. He says, 'It was so simple! I hadn't tried a diet before that. It was the only diet that looked like I'd enjoy being on it. I ate a lot of meat, and a lot of shrimp, and a lot of duck, and a lot of fish. And omelets in the morning, and salad and vegetables.' The diet worked. ... His cravings for buns and doughnuts had gone. He felt perky and energetic."

The Publication of Atkins's First Book in 1972

Fascinated by his own experience of losing 27 pounds in six weeks on a low-carbohydrate diet, Atkins conducted his own research on 65 patients, using an early version of what would become the famous Atkins diet. After all 65 patients reached their target weights, Atkins became convinced that the diet held great potential, and increasingly he devoted more of his time and energies to perfecting his approach and promoting it. In 1970 he wrote an article for Vogue on his low-carbohydrate, eat-all-you-want approach and as a result received one million requests for his diet plan. The article also led to the 1972 publication of a book, Dr. Atkins' Diet Revolution, which sold 15 million copies and became one of the 50 best-selling books in history, and firmly established him in the popular culture. Visibility also made him a target. His program was quickly denounced, ironically, by the American Medical Association, whose own journal had prompted him to try a low-carbohydrate diet. Critics maintained the Atkins diet, while it might lead to temporary weight loss, posed the threat of long-term health problems. As a consequence, Atkins acquired the rebel tag; to some he was regarded as little more than a quack.

The principle behind the Atkins diet held that Westerners were overweight because they ate too many carbohydrates rather than too much fat. If a person ate fat but no carbohydrates, Atkins maintained, the body would actually begin to burn off its fat, due to the secretion of a fat-mobilizing hormone. The Atkins approach evolved into a four-phase program. Dieters cut back on their intake of carbohydrates and as they approached their weight goal began to add back "good carb." Once at their ideal weight they could determine their ACE (Atkins Carbohydrate Equilibrium), which indicated how many "Net Carbs" they would be able to incorporate in their diet without losing or gaining weight.

In 1978 Atkins began to create nutritional supplement formulations at the request of his patients to address their specific needs. His private practice became so devoted to his nutritional ideas that in 1984 he expanded and renamed it The Atkins Center for Complementary Medicine. The demand for his nutritional supplements increased, so that the center's staff spent an increasing amount of time packaging and mailing the products to patients. The business was then formalized in 1989 with the founding of the predecessor to Atkins Nutritionals, Atkins Complementary Formulations. The company was created to meet three key goals: develop and market dietary supplements and low carbohydrate foods; provide funding for research in carbohydrate nutritional science; and support the efforts of The Atkins Center in promoting the development of complementary medicine.

Although Atkins continued to promote his ideas during the 1980s, his diet fell out of favor during this period when low-fat foods became widely popular. The Atkins diet enjoyed a resurgence in the 1990s, spurred by the 1992 publication of Dr. Atkins' New Diet Revolution. In turn, business picked up for Complementary Formulations, although the company was slow to take advantage of its momentum. Dr. Atkins by his own admission was a disinterested businessman, viewing Complementary Nutritionals as just a hobby. The company compiled and mailed its first catalog of vitamins and supplements in 1996, but it was little more than a price list of products. Also in 1996 a rudimentary web site was launched. A year later a more polished Complementary Formulas catalog was produced (in 1998 it was renamed Atkins Direct). The company's first food product, the Advantage Bar, Chocolate Macadamia Nut Flavor, was introduced in 1997, but it was according to one press account "flavor-challenged." Nevertheless, Complementary Formulations moved forward, renamed Atkins Nutritionals in 1998. At the same time, Dr. Atkins continued to expand upon his personal success, publishing a new edition of Dr. Atkins' New Diet Revolution in 1999. In that same year he established the nonprofit Dr. Robert C. Atkins Foundation, which would be supported in part by the profits derived from Atkins Nutritionals.

New Management Team in 2000

Despite the platform its founder commanded, Atkins Nutritionals was in need of new management in order to reach its potential. In the summer of 2000 Dr. Atkins brought in a team of people to energize the company on a number of fronts. In addition to nutritionists and food scientists to spur the product development side, he also brought in business talent to run the enterprise. He ceded day-to-day control of the company to a new chief executive officer, Paul D. Wolff, who had previously run a marketing company that concentrated on nutritional products. One of the first steps Wolff took was to establish Atkins Health and Medical Information Services, a mechanism for influencing reporters, government officials, and physicians. In addition to publishing a quarterly research newsletter the unit also was responsible for making vast improvements to the company's web site. The developing company line was that the Atkins diet was in reality a "nutritional approach." Atkins Nutritionals also took steps to improve the taste of its food products and to develop a wide range of new items. By the end of 2000 Wolff also launched a $7 million print, radio, and outdoor ad campaign to promote the company's new breakfast bars and shakes. Atkins Nutritionals suffered some setbacks in the early months of its management shakeup, however. A new computer system turned out to be insufficient to meet its needs. With too little capacity the inventory tracking module caused a number of misrouted orders, leading to perishable foods being misplaced and spoiled. In addition, the company's call center was so swamped by complaints that waiting times on hold increased as much as 3,000 percent. Atkins Nutritionals ultimately sued its accounting firm, Ernst & Young, which had recommended a computer consulting spinoff for the job.

In 2001 Atkins Nutritionals rolled out even more new products and also continued to beef up its marketing budget, which more than doubled to $15 million. In early 2002 the Atkins approach to nutrition was bolstered by several studies that came out indicating that people on the Atkins diet were able to lose weight without compromising their health. The momentum gained from this news was mitigated somewhat in April of that year when Dr. Atkins fainted at a business meeting and was hospitalized for cardiac arrest, which both he and Atkins Nutritionals quickly maintained was caused by an infection and had nothing to do with his diet. In July 2002 the company was the recipient of even better publicity when a New York Times Magazine cover story made the case that the Atkins approach to nutrition had been unfairly maligned and actually worked. Wolff was eager to exploit such positive publicity, as well as ongoing news accounts about how overweight Americans had become. Atkins Nutritionals rushed out new products and continued to increase its ad spending in an effort to seize as much of the market as possible while the Atkins diet was receiving an inordinate amount of hype.

In January 2003 Dr. Atkins published his 13th book, Atkins for Life, and once again garnered a great deal of publicity, which helped to fuel the momentum of Atkins Nutritionals. In February additional scientific studies were released supporting his nutritional ideas. A few weeks later, however, on Tuesday, April 8, he was walking to work in Manhattan following a major snowstorm that had left streets and sidewalks coated with ice. Around 7:30 a.m. he fell, hitting his head on the pavement and suffering severe head trauma. Although immediately rushed to the hospital, he died from his injuries 11 days later. Because his death was accidental and completely unrelated to his diet, there was no reason to expect that Atkins Nutritionals would be adversely affected. In reality, the Atkins diet was better known in popular culture than the man who devised it. Wolff and his management team continued their aggressive push to expand the business, which reportedly saw its revenues grow by 70 percent in 2002 and was expected to show similar if not better results in 2003. The company was testing a line of on-the-go meals in health clubs, pursuing the idea of providing Atkins room service in hotel chains, and preparing to enter the European market. As Wolff told one reporter, "We don't have modest ambitions."

Principal Divisions: Nutritional Supplements; Food Products; Information Products.

Principal Competitors: Jenny Craig, Inc.; Nutri/System, Inc.; Weight Watchers International, Inc.


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