Weight Loss Business
Current Trends in the Overall U.S. Weight Loss Market
Updated Quarterly
Note: Reprinted with permission. The following information comes from Marketdata’s January 2008 study entitled: “The U.S. Weight Loss Market: 2008 Status Report” (January 2008), and its October 2008 “Online Dieter Research Report”.
Summary & Forecast
Marketdata analysts expect a mild to moderate economic recession and higher gas prices during 2008, affecting disposable income and the consumers’ ability to spend on structured weight loss programs. During this time, dieters may shift somewhat to less costly do-it-yourself diet plans such as: retail non-prescription diet pills and meal replacements, diet websites (an increasing number of which, such as SparkPeople, offer FREE programs), diet books, mail order and infomercials, and the low-end priced diet food home delivery services such as NutriSystem.
However, the stimulus bill being proposed now by Congress, that will likely result in rebate checks worth $600 to $1,800 sent to taxpayers, should help cushion the blow of a downturn. And, the big players such as Weight Watchers are increasing their ad budgets this year, maintaining demand for programs. In addition, two of these players (Weight Watchers and NutriSystem) are still considered fairly low-cost programs.
Industry Size - The Major Market Segments
Marketdata estimates that the U.S. weight loss market was worth $59.7 billion in 2007. We forecast 7.7% growth in the current year, to a value of $64.3 billion. This is higher than our 3-year 6.0% projected rate of growth to 2010. The main drivers of this 2008 growth include three segments:
Commercial programs (driven largely by growth at Weight Watchers, NutriSystem and Jenny Craig), plus growth of faster-growing small chains and new companies (+10.6%)
Medical weight loss chains and MD-based plans (+12.6%)
Bariatric surgery market (+15%)
We are factoring in the effects of an economic recession this year. A recession will likely result in a shift by consumers to less costly do-it-yourself programs (as opposed to structured center-based and residential programs), rather than depress the entire market.
Recent & Emerging Market Trends
Marketdata / BestDietForMe.com analysts have noticed several trends emerging in the overall weight loss market, as we entered the 2008 “diet season”. Basically, there are four things happening…
Program innovations, revamping of diet plans and products – new and improved products, programs, websites, services
Heavy advertising
Celebrity endorsements
Recession, worsening economy
Perhaps the biggest buzz and new entrant to the weight loss market may be the OTC diet drug Alli, by GlaxoSmithKline, approved for retail sale in June 2007. It is a lower-dosage version of Xenical. Although Marketdata analysts believe that sales and demand fell sharply into the Fall of 2007, we cannot discount the effect of a large TV, print and online advertising budget allocated to the drug this year— an estimated $125 million. This heavy advertising had already started as of early January and continued in the 2nd quarter. Glaxo is also planning to offer free nutritional and diet advice.
Demand in 2008 is being driven by heavy advertising, especially by commercial programs such as Weight Watchers, Jenny Craig, Glaxo (Alli) and NutriSystem. Weight Watchers stated that this year it will spend more on marketing its program than ever before. Weight Watchers introduced a “kick start” guide in the U.S. to help dieters through the initial stages of the diet program. The company is also expanding its European programs.
The total weight loss market is expected to grow by 7.7% and reach $64 billion in 2008.
The niche segment of diet food home delivery services is expected to reach $1.25 billion this year, growing 18%. Growth has slowed due to a slowdown in NutriSystem’s growth.
Weight loss surgeries will increase strongly in number, helped by a new J&J lap band device and increased pressure on insurers for coverage
Programs for seniors, men, and children will gain traction, especially the men’s market (stimulated by a focus and ads directed toward men by NutriSystem).
Medical weight loss programs will become more aggressive marketers but still are dwarfed in their marketing clout by the large commercial weight loss providers.
Most Americans still prefer to lose weight on their own and not join a formal structured program that requires several visits per week to a weight loss center, clinic, or hospital. They want the flexibility to diet when they want, how they want, and not pay too much for it.
More Americans are taking the radical approach toward losing weight—i.e. bariatric surgeries. The number of gastric bypass operations has soared in the past few years.
When Americans DO take action to lose weight, they are using both group and one-on-one counseling approaches. As evidence that the group approach is still valid, witness the tremendous success of Weight Watchers the past three years, and since it went public. Enrollments have been growing very strongly. On the other hand, we also see increased demand for Internet-based “anonymous” diet websites (Weightwatchers.com, others), which use email, facilitated chat rooms, bulletin boards and other high-tech methods not using face-to-face contact.
There is a definite increase in the “medicalization” of weight control: a) more bariatric surgeries, b) continuing use of prescription drugs (Xenical, Meridia, Phentermine) and those obtained via a black market on the Internet via mail order pharmacies, c) growing enrollments at nearly all of the VLCD (very low calorie diet) fasting programs, d) more attention paid by the media, the Surgeon General, the IRS, and employers to the obesity problem, and e) more Americans are seeking the help of professionals such as nutritionists and dietitians.
Colon cleansing regimens abound. There are plenty of Internet ads and radio ads out now for colon cleansing plans to “detoxify” one’s body and lose weight at the same time. This is achieved by water weight loss, basically an enema. Americans are still patronizing scam artists as much as they did, if not more, than a decade ago. Indeed, a recent FTC study found an alarming increase in the number of companies with weight loss products touting blatantly false and misleading claims and information.
How Much Will The Recession Hurt?
Yes, we are not afraid to say it – we ARE in a recession, despite what economists may say about GDP growth.** Gas at $4.00 per gallon, rising commodity prices, auto sales tanking, housing prices still falling, foreclosures rising, tighter credit terms, a bear stock market, jobs being cut—it doesn’t get much worse. So, the question is, what effect will it have on diet companies and products, and when might it turn around, and which companies are positioned best.
Stock analysts question how the public diet companies will the weather consumer spending slowdown. Investors and analysts are questioning how well diet companies that require customers to pay for food, support groups, or fees will fare.
Much of the problem, analysts say, stems from last summer’s launch of GlaxSmithKline’s over-the-counter weight loss drug alli, which allows dieters to eat any food they like as long as it’s low fat. That, in Marketdata’s opinion, is a minor part of the whole story. The main issue now is the economy, not Alli.
During tough economic times, dieters don’t stop dieting. There is too much peer pressure and media pressure to be thin and attractive. Rather, they shift to less costly or free do-it-yourself methods, such as:
- Diet websites (free or paid) - Sparkpeople.com, WeightWatchers.com, etc.
- Diet books
- Mail order and infomercial products sold via the Internet
- “Black market” diet pills sold via the internet that people can get without a prescription (phentermine, Xenical, Meridia, others)
- OTC non-prescription diet pills found in drugstores, mass merchants, supermarkets, discount chains.
- Retail meal replacement shakes and bars
- Less costly “structured” programs, such as Weight Watchers
- Lower price tier diet food delivery plans (NutriSystem, Medifast, and away from fresh gourmet daily delivery programs that cost $1,000/month or more.)
- Do-it-yourself exercise regimens (walking, jogging, biking—instead of joining a health club like Bally’s).
This Summer is likely to be a market share dogfight among competing weight loss companies, both online and offline. The Summer season is usually slow anyway, and coupled with a recession, is likely to be even slower. It will be a challenge for diet companies that have significant shipping costs, or that require customers to commute to their centers. Consumers will be driving less and grouping their trips to counter rising gas prices.
ALL diet companies will be affected to some degree. Many are revamping their technology platforms and websites to make the user experience valuable and “sticky”. It’s even more critical today to get the most out of one’s online advertising dollar, to run special promotions, discounts, and to promote the usage of free or low-cost phone counseling or other support vehicles.
Calorie Control Council Predicts Top 5 Trends in Dieting and Weight Loss in 2008: Moderate Changes Are “In” For 2008
A recent Dec. 2007 survey from the Calorie Control Council indicates that for 95 million Americans, dieting is a constant concern. (The Council is a non-profit trade association that has tracked dieting and weight loss trends for the past 20 years). With dieting a constant concern, health professionals are recommending moderate changes in the daily routine to help eliminate unwanted pounds and keep the weight off long-term.
“Making small changes such as being more physically active throughout the day, cutting back on calories by reducing portions and using reduced-calorie products and avoiding fad diets are all key to weight loss success,” says Beth Hubrich, R.D., executive director of the Council.
What trends will emerge in 2008? The Council predicts the following five trends when it comes to dieting, weight loss and obesity efforts in 2008:
Convenience will be key. The schedules of Americans today are busier than ever and people are constantly on the go. Consumers will increasingly prefer convenient, healthy food options over meals that require a lengthy preparation time. When consumers were asked why they would choose to make a particular dish for a meal the top reasons were “it required little or no effort” (53%) and “took little or no planning” (50%), according to the NPD Group’s 21st Annual Eating Patterns in America Report. Food options that can be eaten on the go will also prove popular with consumers, as many products can now be eaten directly out of the container and fit in a cup holder.
Exercise will become a family affair. Families will focus on activities that allow them to interact while being more active. Finding activities that are fun for everyone and making the activities a part of the regular schedule will become a top priority in 2008. Such activities may include running/walking in the park, a friendly game of softball or soccer and going to the gym as a family.
Food companies will help promote healthy messages. As part of the Children’s Food and Beverage Advertising Initiative, ten major food companies in the United States have pledged to voluntarily include healthier messages in marketing to children, including incorporating “healthy lifestyle messages” into interactive online games.
Consumers will learn to “budget” calories. Consumers will better understand the role of reducing calories to lose weight. By incorporating low-calorie foods such as diet sodas, light juices, and light yogurts, consumers can control their calories while still enjoying their favorite foods. In fact, 86% of Americans (194 million) are using low-calorie, sugar-free products, according to the Council’s consumer survey. In addition, foods with a lower energy density, such as fruits, vegetables and broth-based soups, will be incorporated into a reduced-calorie eating plan.
Fad diets will be overshadowed by sensibility. Although numerous diet books on the latest quick fix to lose weight will continue to be published, Americans will grow wary and instead opt for sensible, lifestyle choices. The Council’s consumer survey indicates that only six percent of dieters follow restrictive weight loss plans as a means to control weight.
According to the Council, the trends for 2008 will focus on achieving and maintaining a healthy weight through sensible choices and simple substitutions in lieu of the latest fad diet. Overall, the Council has high hopes for consumers in 2008 when it comes to practical weight loss.
Advertising & Marketing Trends: Celebrities Abound…
The major diet companies are once again using celebrity spokespeople for their TV ads. Jenny Craig is using Valerie Bertinelli and recently added Queen Latifah. NutriSystem’s newest spokesperson is Marie Osmond, and the firm has been using Don Shula and Dan Marino (former NFL players). Weight Watchers is now using Jenny McCarthy. Medifast is using former soap opera star Genie Francis (General Hospital). Medifast will spend at least $20 million for an ad campaign featuring these two actresses. The company also launched an updated web site in the middle of January.
New print ads featuring Genie Francis’ success on the popular Medifast 5&1 Plan ran in major national publications in January such as People Magazine, Better Homes & Gardens and US Weekly. The ads featured customer testimonials. New television spots featured spokeswomen Francis and Kristy Swanson in separate ads.
As part of the marketing campaign, both Francis and Swanson will continue to share their personal weight-loss journeys with Medifast customers on choosemedifast.com. The celebrity’s pages feature interactive journals, chats, meal plans and updated photo galleries form both stars.
Jenny Craig’s decision to sign the very popular actress and singer Queen Latifah was an excellent choice. Latifah is very popular and likeable, and creates a connection for Jenny Craig with a younger customer demographic. As a spokesperson, Latifah says that her goal is to lose a moderate 5-10% of her body weight and increase her weekly activity. By doing that, you greatly reduce your risk of developing Type II diabetes and other health problems.
Using celebrities as spokespeople can be risky in that they are very visible to the public and if they gain the weight back it will reflect badly on the effectiveness of the program. A perfect recent example of this is Kirsti Alley, who has gained back a large amount of weight. That’s why in recent years most of the diet companies have tended to use “regular people” that were successful on the program. Using regular people for testimonials is also a lot less expensive.
Weight Loss “Challenges” Are On
A hot new marketing vehicle that seems to be popular is the weight loss “challenge”, touted by several media properties. Weight loss has become a “contest”, almost a game show, to be marketed to the American TV viewing and reading public.
Examples…
People magazine currently has a weight loss challenge, involving eight people from Mississippi (the fattest U.S. state). They are providing these dieters with exercise trainers and nutritionists.
Discoveryhealth.com (TV’s The Discovery Channel) had a National Body Challenge. The Discovery Channel began airing shows on January 7th, Fridays at 8PM. This was a 15 week challenge where various sets of twins were challenged to lose 15 -20 pounds each. They get the support of a doctor, fitness trainer, and dietitian. You can join online and receive a free 8 week membership to Bally Total Fitness.
Oprah Winfrey’s Jan. 14th show kicked off “Oprah & Bob Greene’s Best Life Challenge”. Its goal was to get one million people to sign up to lose weight in 2008. They will round up inspirational weight loss stories and will feature People magazine’s Half Their Size contestant Jennifer Marnell. Bob Greene has been Oprah’s favorite fitness expert for several years now, and she endorses his Best Life books and program.
Ian Smith’s “50 Million Pound Challenge” – Ian Smith is a celebrity fitness expert and a physician best known for his participation in the VH1 reality show “Celebrity Fit Club.” He created the challenge, which is a weight loss campaign that encourages blacks collectively to lose 50 million pounds. According to the website 50 millionpounds.com, the challenge’s website, nearly 80% of adult black women and 67% of adult black men are overweight.
The challenge’s free website provides an individual weight loss tracker, diet and nutrition tips, and recipes. The site also offers forums where people may chat about their weight loss struggles and accomplishments. There is no time limit to meeting the goal. The challenge was launched in April 2007 and since then, participants have lost 3,084,000 pounds.
Mr. Smith, also a best-selling author, helped launch the weight loss campaign in Baltimore, Detroit, Memphis, TV, Oakland, CA, and other cities. The National Medical Association and other organizations have endorsed the campaign and State Farm Insurance is sponsoring it. Their agents have challenge packets including a pedometer, literature and a DVD containing diet and exercise information.
Live Healthy America 100 day challenge – This is a team based weight loss and physical activity program that will assist you and your teammates in making positive changes that lead to a healthier lifestyle. By competing in LHA you will begin to form healthy habits through physical activity and improved nutrition.
Live Healthy America is a non-profit program that is funded by the Iowa Sports Foundation and the Richard O. Jacobson Foundation. Live Healthy America is a nationwide, Web-based, and teamwork-driven program that will motivate and teach individuals and organizations how to make positive and lasting changes to achieve a healthy lifestyle through increased physical activity, improved diet, and weight loss over the course of 100 days. Live Healthy America is modeled after the successful Lighten Up program that originated in Iowa. Today, 18 states offer Lighten Up programs based on the Iowa model.
This past year more than 36,000 people and 200 business and organizations participated in the team-based Live Healthy America program.
Program Dates: 1/16/2008 - 4/24/2008, Registration dates: 12/10/2007 – 4/1/2008, Cost: $15.00 per registrant
Dieter Demographic Trends & Fads
Caloric restriction, is an idea around since the 1930s when scientists discovered that mice being fed about half their caloric needs lived longer than the mice given standard lab food. Studies have shown that other animals, including apes, can extend life by eating less. How does that apply to other humans?
The Caloric Restriction Society web site (www.calorierestriction.com), shows that some people are voluntarily restricting calories by 30 to 40% of what is recommended by the Dietary Reference Intakes for healthy adults.
To get the proper amount of nutrients, a Caloric Restriction diet has to ensure that malnutrition doesn’t shorten your life span by weakening your immune system. Some people who follow CR diets call themselves “CRONies” for Calorie Restriction With Optimal Nutrition. The diet is mostly fruits and vegetables with a few whole grains and very little meat. CR also reduces the production of free radicals.
Japan’s New Morning Banana Diet
This plan is simple. You eat a banana (or as many as you want) and room temperature water for breakfast. Then eat anything you want for lunch and dinner. A 3 pm snack is OK, but no desserts after meals, and you have to go to bed before midnight. Apparently, a pharmacist in Osaka designed this diet plan to help raise the metabolism of her husband, who was overweight. Mr. Watanabe lost 37 pounds and introduced the diet plan on “mixi”, one of Japan’s largest social networking sites. Morning Banana Diet books published since March have sold more than 730,000 copies, and the diet became even more popular after a TV program featured a singer who did well on the regimen. Bananas suddenly started selling like hotcakes.
Based on past fad diets in Japan, most don’t expect this one to last more than a few months. So far in this decade, there have been plans using black vinegar, carrot juice, soy milk, beer yeast, and toasted soybean flour.
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