At this time of year, when Americans step on the post-holiday scale and wince, they often end up calling on weight loss companies to help them return to their svelte selves.
The business of losing weight has been gaining momentum. The pep-talking empathetic commercials – from our now slim friends Courtney Thorne-Smith and Jennifer Hudson – began to roll out in early December, when some of us are still happily snacking mindlessly from party trays.
This reliable bulk-up/slim-down cycle, which First Research industry editor Patrice Sarath discusses in today’s Bizmology post, is what helps to boost the bottom lines of some weight loss companies. “The challenge,” she says, “is not only to keep the clients from giving up in the summer but also continuing to sign up new clients throughout the year.” They want more of you throughout the year, not just during the first quarter when your favorite jeans make you look like JELL-O rather than JLo.
Companies that cater to consumers outside the push to capture New Year’s resolution business are the real fat cats in the industry. Top provider Weight Watchers, which generates more than half of its revenue from meetings fees, has achieved its lofty status and $1.4 billion in revenue by extending the reach of its business beyond the post-holiday cycle and the consumer market. The industry heavyweight makes a point to pound the pavement year-round. It has also deepened its relationship with companies in recent years, building on its role as a corporate wellness partner. Employers have begun to offer its Weight Watchers at Work program as an incentive to help workers slim down and, in turn, earn discounts on health care costs.
In the spirit of the slimming season, I spent some time checking in with some of the industry’s leading names in weight loss. To keep the list more manageable (and let you get on with your life), I won’t be discussing each type of service provider that helps us lose unwanted pounds — the Bariatric surgery centers, plastic surgeons, private chefs and coaches, and fitness clubs and equipment makers. I have, though, included a few popular names in the industry that offer up supplements to aid consumers in losing weight. As many ways as there are to gain weight, there are as many people lined up to help us shed it.
1. Nutrisystem, Inc.
The first quarter of the year is one of the most important for Nutrisystem, which typically logs about a third of its revenue. Nutrisystem customers in the US and Canada order monthly food packages typically priced at $11 per day that contain 28 breakfasts, lunches, dinners, and desserts, supplemented by customers with fruits and vegetables. It also offers individualized calorie plans, one-on-one diet counseling, behavior modification, and exercise education and maintenance plans. Nutrisystem also sells its weight-management products through a partnership with television-marketer QVC (4% of revenue) and club retailers such as Costco. Going into 2012, the company had been limping along due to fewer new customer starts — its primary source of revenue — as it has yet to see its business return to its happier days. With fewer new customers, the company has seen a negative effect on its reactivation revenue, which comprises customers who aren’t new customers and are not customers within their first nine months on the program. In the meantime, Nutrisystem has invested in overhauling its e-commerce platform, enhanced its fresh-frozen foods, introduced a Nutrisystem D program (for diabetics) through its retail channel, and created a Culinary Council that is working to update its food choices and improve taste.
2. Weight Watchers International, Inc.
A force in the industry, Weight Watchers hosts nearly 45,000 weekly meetings worldwide facilitated by some 12,000 leaders. In the form of a support group,
per se, meetings cover nutrition advice and exercise tips to help its about 1.2 million members lose weight. Weight Watchers, which is 59%-owned by European investment firm Artal Luxembourg, also sells recipe books, a magazine (10.8 million readers in the US), food, and vitamins. The PointsPlus plan, which serves the US and Canada, doesn’t restrict types of foods but limits dieters to a points budget that is based on a calculation of calories, fat, and fiber. ProPoints is the similar plan that is geared toward customers in the UK and Australia. The company encourages participants to log onto its website for recipes and general support, particularly to supplement its corporate wellness unit Weight Watchers at Work. Weight Watchers has grown the site’s subscriber base to more than 1 million active subscribers and its revenue generated from WeightWatchers.com from 10% in 2007 to 16% in 2010. One way it’s doing this is by attracting more men to its products and services through a customized subscription product for men. “Lose like a Man” ads spotlighting former NBA pro Charles Barkley’s weight loss journey supports this company effort. Strengthening its brand and expansion opportunities, Weight Watchers entered a 51%-owned joint venture partnership, which extends through 2018, with France’s Groupe Danone to establish a weight management business in sought-after China. Weight Watchers earns 10% on all the JV’s royalties.
3. Atkins Nutritionals, Inc.
Atkins traded in its once meat-heavy Atkins diet to become a leading maker of nutritional bars and shakes. At the height of the low-carb craze, its portfolio included more than 300 items; its business has since slimmed down to manage some 30 products, which are sold in grocery stores and other retail outlets worldwide. Affiliates of Roark Capital Group have owned Atkins since late 2010. Insisting that Atkins is “misunderstood,” its investors have been working to redo the company’s image. To this end, it uses celebrity spokespeople to tout the Atkins diet’s “good” fats, lean protein, vegetables, and nutrition bars and shakes. Its primary competitors are Kraft Foods, which makes and sells foods for the low-carb South Beach diet, along with Weight Watchers and
Jenny Craig, both of which have their own diet regimes and associated food products. Other competitors include Clif Bar & Company, Nestlé (Power Bar), and Slim-Fast maker Unilever.
4. Slim-Fast Foods Company
The company sells some 50 Slim-Fast and Slim-Fast Optima branded drink powders, ready-to-drink shakes, and snack and meal bars at retailers throughout the world. Registered Slim-Fast dieters have the option to consult with dietitians and weight-loss advisors and to join online support groups of other Slim-Fast dieters. Unilever, which bought the company in 2000 for about $2.6 billion, strategically touts Slim-Fast’s ability to control hunger for four hours. That claim and ongoing promotional tactics of enlisting celebrities as spokespeople, sponsoring fashion shows, running a rewards program, and holding sweepstakes seem to be working, as Slim-Fast is its market leader.
5. Beachbody, LLC
Beachbody, founded in 1998 by executives Carl Daikeler and Jon Congdon, creates and sells fitness and weight loss DVDs, including top-selling brands P90X, Hip Hop Abs, and Turbo Jam. The company’s also responsible for those Brazil Butt Lift workout ads. Besides videos, it has found success marketing nutritional supplements and, in particular, its Derm Exclusive beauty and skincare products (peddled with help from actress Minnie Driver). Commissioned salespeople, called coaches, sell Beachbody products directly to consumers. A marketing veteran from Guthy-Renker, Daikeler uses TV infomercials to keep Beachbody products in front of potential customers.
6. eDiets.com, Inc.
To help them lose weight, eDiets.com sells customers a customized, software-generated program. Some of its more than 20 plans include the Bill Phillips’ Eating for Life plan, the Glycemic Impact Diet, and the Living with Diabetes Plan. eDiets.com supports its plans with message boards, an e-newsletter, expert nutrition advice, vitamins, a meal-delivery service (69% of sales), and a corporate services unit for employee health programs. It also operates eDiets Europe overseas. Investment firm Prides Capital Partners owns about 62% of the now ailing dotcom, which is operating as a going concern. Following a net loss of some $43 million in 2010, the weight loss company is hoping a timely investment can help keep it from filing for bankruptcy, one of its considerations, among selling off parts of its business or liquidating. eDiets.com points to several reasons for its woes, including similar services that are offered for free, increased competition (as you are seeing in this list), and a decline in ad spending. Also, while the company spent time to shift its focus to further diversify its revenue channels, the move came too late. In the meantime, eDiets.com is concentrating on selling food and other weight-loss products to leverage cross-selling opportunities and existing customer relationships.
7. Fit America MD
Claiming that hormones are the biggest culprit in weight gain and retention, Fit America is focused on designing and selling products that are intended to restore hormone balance. The company helps clients lose weight by offering more than a dozen vitamin and mineral blends under such names as MetaboFit, Corti-Control, and Thyroid Balance. Fit America was founded a decade ago by Debi Davis and her husband Byron after she lost 85 pounds in six months using her own nutritional supplements and high protein diet.
8. Herbalife International
Operating through holding company Herbalife Ltd., the big name in weight loss makes and distributes meal replacements, snacks, nutritional supplements, energy drinks, and skin care products. Herbalife‘s global multilevel marketing program boasts some 2 million independent distributors. (A third of this group is actually individual customers registered as distributors.) The company’s fastest-growing markets include Brazil, China, Mexico, and Russia. In China it’s able to sell products through stores and a sales force, as well as direct-selling outside its stores in some cities. It expanded to Mexico in 2010.
9. Jenny Craig, Inc.
One of the world’s largest diet companies, Nestlé-owned Jenny Craig provides products and services to more than 5 million clients. Its Jenny’s Cuisine prepared foods, as well as DVDs, CDs, journals, and cookbooks, are sold to participants at its more than 750 centers globally. Nestlé took full control of Jenny Craig in early 2011 when it acquired all the shares held by the group that controlled the Jenny Craig franchise in Australia and New Zealand. In its battle against Weight Watchers and other diet programs for market share, the company has been increasing media exposure by partnering with celebrities as spokespeople and clients. Famous faces have included Valerie Bertinelli, Queen Latifah, Phylicia Rashad, Carrie Fisher, Jason Alexander, Sara Rue, and Nicole Sullivan. Having a large stable of spokespeople broadens Jenny Craig’s appeal as it looks to attract men, like Weight Watchers, and women of a variety of ages and sizes.
10. Medifast, Inc.
The company’s subsidiary Jason Pharmaceuticals sells health and diet products under the Medifast brand name. These include meal replacement shakes and bars, as well as items to help diabetics manage their disease. Indeed, Medifast has been working to tailor its products to cater to the growing population of diabetics. The company maintains an in-house call center and support staff that includes registered dieticians. Once sold solely through doctors’ offices, Medifast products today are peddled through its website, making product distribution easier. Its Take Shape For Life coaches actually direct customers to the website or call centers and receive commissions for orders placed there. Doctors can sign on as coaches, as well. The company is busy expanding its Medifast Weight Control Centers, a unit that contributes about 10% to its bottom line. The centers offer weigh-ins and counselors, as well as in-stock products. Seeing promising growth in this segment of its business, Medifast is aggressively expanding its portfolio of corporate-owned centers beyond existing locations in Texas, Florida, Maryland, and Washington, DC, (to now span a dozen states) while also boosting its network of franchise centers nationwide.
Recent Comments