Does my bottom line look big in this?

Stefan Stern takes a look at the diet industry and finds some very large figures

It is the genius of capitalism to spot trends and changes in behaviour which might create opportunities for commercial exploitation. 'Lifestyle' is not just a marketing concept or a section in a magazine - it is a business sector in itself. Track the lifestyle closely, and markets may open up.

Modern, developed societies are health conscious, if not always terribly healthy. This means that any successful product range targeting health could bring in millions in revenue. Food, and diets, are at the heart of this. As lifestyles (that word again) change, and more of us lead sedentary, physically inactive lives, the risks of weight gain and damage to health through obesity are obvious. Anxiety and guilt over what we eat fuel what is, in the UK alone, a diet market worth £11bn a year. The message is clear: big bottoms are big business.

In the last couple of years one name has cropped up more than any other in the competitive world of diet fads and crazes - that of Dr Robert C Atkins, the cardiologist from Ohio, who died in April last year at the age of 72.

His first major work, Dr Atkins' Diet Revolution, was published in 1972, and was originally mocked as eccentric, advocating as it did the removal of carbohydrates from the diet in favour of a generous consumption of protein and fat. At that time fat in particular was regarded (and still is by most nutritionists) as a particular evil, whereas carbohydrates were considered a benign form of energy.

Atkins' work drifted into relative obscurity until 1992, when a revised edition, Dr Atkins' Diet Revolution, was published. The book has now sold over nine million copies - more even than the great Harry Potter phenomenon - and has provoked a worldwide response. Three million dieters are said to be pursuing the Atkins route in the UK alone.

Atkins' notoriety has been aided by his high-profile true believers. The actress Jennifer Aniston - Rachel in Friends - has been transformed from the pleasantly rounded Manhattanite of a few years ago to the ultra lean model of today, thanks to Atkins, it is said. The actress Renee Zellweger lost the dozens of pounds she had gained to play the lead in Bridget Jones' Diary by following the Atkins regime, Hollywood gossips say. And pop star Robbie Williams, it is believed, put his puppy fat years behind him by cutting out the carbs. (Not all the stars want to be associated with Atkins, however. Catherine Zeta-Jones, for instance, recently instructed her lawyers to put a stop to unfounded speculation linking her to the Atkins craze.)

Atkins reached a 'tipping point' a couple of years ago, and now business is beginning to feel the consequences - or reap the rewards - depending on which sector you are in.

The British potato council, for one, is worried. Sales were down 4% in the last 12 months, at a time when supermarkets are already putting margins under enormous pressure. As many as 70,000 people are employed in the UK potato industry.

For years, squeamish types have been carefully removing the jackets from their baked potatoes - thereby getting rid of most of the vitamin C and all of the dietary fibre. Now Atkins fanatics are scooping out the flesh as well. Fish and chip shops, already struggling with the soaring price of cod and haddock, now face the prospect of some customers eschewing the chips. Considering that the takeaway portion of chips is their single most profitable item, the Atkins effect looks like taking its toll on the high street in this sector as well.

The potato council has launched a £1m advertising campaign to try and reassure British shoppers that they have nothing to fear from the spud. 'Potato Pete', a lovable anthropomorphised tuber, has been urging Brits to join in a 'take a potato to work' week.

The UK's Federation of Bakers, too, is concerned. Bread is a £3bn market. Traditionally, working Brits breakfasted on toast (or cereal, another naughty carb), may have had sandwiches for lunch and had a couple of slices of bread and butter with dinner. In October last year the Federation ran British Bread Month in an attempt to convince doubting shoppers about the benefits of the product.

The bakers wanted consumers to eat 'an extra slice a day' as, they believe, 'penny for penny, bread is the most nutritionally rich food available'. Let the battle of the health statistics commence. 'Six slices of wholemeal bread provides around 70% of the recommended daily amount (RDA) of fibre, whilst six slices of white would give more than 30% of the recommended daily allowance of calcium,' the bakers say. 'Bread is also an excellent source of starchy carbohydrates, that leading nutritionists agree should comprise around one-third of a healthy diet.' Not according to the late Dr Atkins.

Jonathan Warburton, chairman of the family-owned firm of bakers that bears his name, and that has been trading from its Bolton base since 1876, appears unperturbed. 'Wasn't there something in the Bible about loaves and fishes?' he jokes. 'This product has been around a wee while.'

As one diet fad rises, another falls. Unilever paid $2.3bn for the SlimFast range of products three years ago, at a time when the meal replacement business looked like a winner. In the three months to September 2003, sales of Unilever's 'health and wellness' division (which includes SlimFast) fell by 23.5%, accelerating from the 14.5% drop in the previous six months. It is not the consumers who are slimming fast - it is the company's profits.

But it's an ill wind that blows no business any good. As the Atkins effect makes itself felt in the supermarkets, other purchasing decisions are being altered. Spending on meat has gone up by about 5% in the last 12 months - and this in the country that brought you mad cow disease. Michelob Ultra, a low carbohydrate beer, is now the 12th biggest selling beer in the US. A low carb beer will be appearing shortly under the Budweiser brand as well. Heinz is busy developing a low carbohydrate tomato ketchup, while Carbolite, a fast-growing US company, is storming up the league tables with its carb-free chocolate candy bars.

Almost everyone is trying to get in on the Atkins act including, believe it or not, Kentucky Fried Chicken. One ad in a recent (but now hurriedly abandoned) campaign portrays a woman returning home in the evening and announcing to her husband: 'You know how we've been talking about eating better? Well, it starts today!' - and so saying places a bucket of KFC fried chicken down on the table. After much mockery and complaint KFC discontinued the ads.

Legislators are getting interested too. A committee of UK parliamentarians recently summoned representatives of food giants such as McDonald's, PepsiCo, Kellogg's and Cadbury Schweppes to give evidence about their product marketing and labelling. The business leaders, unsurprisingly, were opposed to excessive intervention - advertising bans or scary-sounding ingredients labels - on health grounds. Andrew Cosslett, managing director at Cadbury Schweppes, said health warnings were for 'dangerous things', and added, 'I don't think a Curly-Wurly is a dangerous thing.'

The Atkins diet 'works' - at least in the short term. By cutting out carbohydrates the dieter reduces calorie intake significantly, and loses weight. Some experts have suggested that the long-term health risks of a high protein, high fat diet are likely to include heart disease and cancer. Atkins himself had a heart attack the year before he died, although his supporters insist that this was in no way related to his diet.

But business cannot afford to be too judgmental about crazes and fads. It cannot ignore them. There is money to be made, and losses to be avoided, by keeping a close eye on the new, new thing. Whether it is sensible or even morally right to jump on every passing bandwagon is another question altogether.

Stefan Stern is a regular contributor to the specialist press and an expert on work, management and industrial issues.