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Comparing Major Diet Food and Weight Loss Companies, Business and Industry Trends Analysis

Weight Watchers ( ) is the top U.S. weight-loss company.  The company offers weight management services through a network of company-owned and franchised operations (available in 30 countries worldwide) as well as its web site.  Members choose to attend weekly meetings for weigh-ins, strategy sessions and group support or follow the OnlinePlus plan which offers support, education and customized meal plans from the company’s web site.  Members prepare their own food and track it using the PointsPlus plan.  No food is off limits but members are limited to a specified number of points each day. 

Jenny Craig ( ) is a nationwide storefront operation.  In November 2013, former parent company Nestle SA sold the firm to its current owners, private equity company North Castle Partners.  Nestle exited the business due to a steady decline in revenues over many years.  (Nestle had acquired Jenny Craig in 2006.)  Members visit neighborhood centers once per week for weigh-ins, sessions with personal counselors and food selection and pickup.  The program is customized, based on Jenny’s Cuisine food prepared at regional facilities (most items are frozen but some items such as snacks, protein bars and nutrition shakes are shelf stable).  Members supplement program food with fresh vegetables, fruit and dairy items.  Franchised centers are found throughout the U.S., Canada, France, the UK, Australia, New Zealand and Puerto Rico. 

Nutrisystem ( ) is an online-only program, members order a month’s worth of Nutrisystem foods at a time and have access to counseling online if they desire.  Members select foods from Basic, Core or Uniquely Yours programs, with Basic being the least expensive and consisting of pre-picked foods and Uniquely Yours offering more food choices and the ability to customize those selections.  Most foods are shelf stable (including freeze-dried items) with frozen selections available under the Uniquely Yours plan.  Most plans start with a first week Fast 5+ selection that promises weight loss of five pounds or more. 

Of the three competitors discussed above, Nutrisystem has done the best job of adapting to advertising and marketing potential of today’s advertising media.  It is an aggressive advertiser on digital platforms and on a wide variety of cable TV channels.  Instead of spending overhead money on physical storefronts, it invests in advertising instead, relying on consumer responses to its web site and toll-free numbers, instead of stores. 

Weight Watchers is unique among these three firms in that it relies on membership fees for the vast majority of its revenues, while the other two firms rely on sales of packaged or frozen foods.  Jenny Craig’s business model combines the counseling and storefronts of the Weight Watchers model with the packaged foods sales strategy of Nutrisystem.  Both Jenny Craig and Weight Watchers hold members accountable with regular weigh-ins.

While there clearly remains a massive market of overweight (and obese) consumers who are frustrated by their weight and might purchase weight loss services or products, all three of these firms are threatened by evolving technologies and by very strong consumer eating trends.  On the technology side, consumers have been relatively quick to adopt mobile apps, web sites and wearable devices that help them 1) count steps and exercise; 2) enter their daily food intake and track total calories; 3) use social tools to interact with other overweight consumers; and 4) access fitness, nutrition and wellness advice online.  These technology avenues are generally considerably less expensive than going through traditional weight loss firms.

On the food trends side, consumers are, to a rapidly growing degree, shunning traditional packaged and frozen foods, including those that feature low calories.  The key here is that consumers no longer want to tolerate obscure chemicals and otherwise highly processed or artificial ingredients (many of which are used as preservatives) that they feel are potentially detrimental to their health in their frozen and packaged foods.  Instead, consumers are rapidly adopting foods that stress natural, organic and nutritious ingredients, and particularly those that sound less processed and artificial.  Packaged weight loss foods, in many cases, have historically contained substantial lists of artificial or highly processed ingredients.

This is a lesson that has been learned the hard way by another Nestle SA unit, Lean Cuisine.  From 2010 through 2014, Lean Cuisine’s unit sales declined by about 25%, despite the fact that it has been well established and had a loyal following for decades.  While Lean Cuisine slid, newer rivals stressing natural or organic foods soared, such as Amy’s Kitchen.  Lean Cuisine has responded by introducing its new Marketplace line, featuring options such as gluten-free, organic or extra-veggie.  The weight loss foods industry needs to follow this lead while looking for highly innovative ways to adopt the latest in mobile, social and online technologies in an effective manner.



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