To Bring Those Tracking the Weight Loss Market The Latest Industry News and Company Developments, Marketdata Commentary and Opinions.
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The Latest News...
NutriSystem Reports Q4and Full year 2013 Results
Dawn Zier, President and Chief Executive Officer, said, “With a second consecutive quarter of year-over-year revenue growth and our ongoing track record of improving bottom line results, we are achieving our financial goals and continuing to progress with our turnaround. Revenue growth reflects the success of our product and program innovation as well as improvements in our marketing, segmentation and sales channel diversification efforts. In a market that has become increasingly noisy, we believe winning is all about innovating and connecting with customers in a more personalized way. We are very pleased to see that more consumers are choosing Nutrisystem as the solution they can trust to help them navigate their weight loss journey.”
Ms. Zier continued, “While our performance over the second half of 2013 has created momentum heading into 2014, the real test for our new management team was this diet season. Based on year-to-date sales of our new Nutrisystem® My Way® weight loss program with the Fast 5™ kit, we are off to a good start. We expect this critical first quarter to be our third consecutive quarter of year-over-year top line growth, driven by revenue gains in both our direct-to-consumer and retail businesses. We continue to execute on our four-point plan as we begin the growth phase of our turnaround and expect to achieve full year revenue growth in 2014 for the first time in five years.”See the complete press release and financial tables here:
Full year fiscal 2013 revenues decreased 6.2% to $1.72 billion versus the prior year. This decrease resulted from lower revenues in the meetings business as it experienced weaker volumes globally, most notably in North America and the UK. This decline in meetings business revenues was partially offset by modest revenue growth in WeightWatchers.com.
Full year fiscal 2013 total paid weeks were down 3.9% compared to
the prior year. Online paid weeks increased 1.7% versus the prior year,
while meeting paid weeks declined 10.1%. Full year fiscal 2013 operating income decreased 9.7% versus the prior year.
The company expects 2014 revenues to decline further to $1.4 billion, with a decline in the 20% range. Wow!
Weight Watchers right now is like a ship adrift with no rudder. Sorry to say, but the firm has lost its mojo. Management is basically saying they're throwing in the towel for 2014 and there's nothing they can do. This is the attitude of an industry leader? We disagree. There's PLENTY they can do. They just aren't doing it! More Jessica Simpson ads, no mention of developing more customization, entering untapped markets, no new retail partners, blaming free apps for their decline. Fact is, the firm is being out-innovated by the likes of NutriSystem, Medifast and others. The company's focus is on controlling costs and reducing headcount (financial), when it should be on MARKETING and the development of new services. How about shifting $10 million of that $296 marketing spend, or some of the $175 million cash on hand toward developing new programs and services, and getting them to market quicker? And how about getting out of the UK market, where it has encountered really tough competitors for some time now? And, what happened to "re-imagining our core offerings" that management spoke about a few months ago? Exactly what have they done to re-imagine their program?
See the complete press release and financials here:
The Retail Healthcare Tsunami Is Coming - RediClinic Launches "Weigh Forward" Weight Loss Program
Marketdata has been talking about the entry of national drugstore chains into the weight loss market, via their in-store mini-clinics for some time now. First up was CVS with their Take Care Clinics. Now, a smaller chain, RediClinics has launched. Can Walgreens and other chains be far behind?
Wellness Layers, a leading provider of health and wellness engagement portals, and RediClinic, the nation's largest independent operator of retail-based convenient care clinics, today announced the launch of RediClinic's redesigned Weigh Forward portal.
Weigh Forward, offered at RediClinic's 30 locations inside H-E-B grocery stores in Texas and is licensed to other providers, is a 10 week, 1-on-1, medically supervised program developed in cooperation with Dr. David L. Katz, Director of Yale University's Prevention Research Center. The program offers an innovative behavior change program for weight loss with weekly clinic visits supplemented by an extensive online platform that supports both the clinicians who are delivering the program and the patients enrolled in it.
The personalized planner is a suite of interconnected applications including an action-triggered checklist, a weekly personal plan for addressing behavior barriers, meal planning and tracking, fitness and weight tracking, instructional videos from Dr. Katz, recipes and articles to support each week's plan, bi-directional communication with the clinician, and progress graphs. The clinician console includes coaching applications for patient management and encouragement, training resources, digital visit forms, scheduling, messaging, ecommerce, medical history, calculation of risk, lab results and orders. The experience is further enhanced with a social support network.
RediClinic’s staff consists of more than 100 board certified Nurse Practitioners, Physician Assistants, and Medical Assistants are thoroughly trained in the Weigh Forward system.
Jump Start Program - 2 visits $199 (labs, physical exam, body composition, sample meal replacement bards & supplements, quick start guide)
Complete 10-week program - $499 (weekly 15 min. visits, labs, 24/7 access to tech platform with meal plans, recipes, fitness videos, e-coaching, more)
Boost Program for Maintenance - $20/month (monthly in-clinic visits, access to MyWeighForward.com, ongoing coaching)
Here's the kicker, in terms of this program spreading to other locations (i.e. more competition for existing weight loss companies)....
The complete Weigh Forward program and portal are available for white-label license by certified care providers and can be configured
as a standalone system or integrated with other systems.
The RediClinic weight loss program website with more details is:
New Report: 2014 Weight Loss Market Forecast Released
New Marketdata Status Report Released
Marketdata Enterprises has just released a new 54-page "2014 Weight Loss Status Report & Forecast". This promises to be another challenging year for the diet market, as revenues were estimated to have actually declined 1.8% last year to $60.5 billion, and they are only expected to grow by 1.2% this year.
One of the major findings and predictions is that the market is entering a new phase, where SERVICES become more important and grow faster than diet PRODUCTS, due in part to the Affordable Care Act.
Sales of diet soft drinks, artificial sweeteners and diet dinner entrees are falling significantly as consumers turn away from high processed foods and non-natural ingredients. Commercial chains had a bad year and most other market segments were flat.
The report covers discussions of: 2013 market performance, recent competitor developments and top management turnover, Nestle’s sale of Jenny Craig, new programs for 2014 diet season (by Weight Watchers, Jenny Craig, Nutrisystem), the coming paradigm shift from diet PRODUCTS to diet SERVICES, dieter demographics/latest trends, why the Affordable Care Act can be profitable for companies providing counseling (who qualifies?), CVS drugstore chain enters market with mini-clinic program, threat posed by Walmart, weight loss & fitness apps – how big a threat?, new diet books, reasons why market growth is slow – how diet companies can execute better, customize programs, form new retail partnerships, and more.
See the Table of Contents here:
To Order: Visit the Marketdata website's store here: (report # FS45)
Or, call us weekdays at: 813-907-9090
Dieting Habits in Britain
At least 55% of Briton tried to lose weight last year (almost exactly the 54% share reported in America by the Calorie Control Council's 2010 survey). 2.8 million adult Britons go on a diet each year.
According to Mintel research, the 5:2 diet, which encourages intermittent fasting where followers survive on as little as 400 calories on two ‘fasting’ days a week, is now the UK's favorite, chosen by 39 per cent of dieters. That is followed by low carbohydrate diets, such as the Atkins (32%), and low fat plans like Dukan (25%).
The Paleo Diet, which mimics the diet of cavemen, the Juice Cleanse Diet and Mediterranean Diet were also Google’s top trending diets in 2013.
When it comes to shifting unwanted pounds, exercise now tops the U.K.'s dieting choices however, with 60% of Britons
prioritizing it over dietary changes.
As for the cost of programs across the pond, it has been estimated that starting a new one, including joining a "slimming club", buying shakes or healthier foods, can cost about £160. The average diet, according to a survey by Engage Mutual, lasts just 19 days, and women, in particular, can start three diets per year (vs. 4-5 in America).
Diets that deliver food to your door, such as Diet Chef (with 100,000 customers) will pay £245 a month to dine on specially formulated meals.
Weight Loss May Be Coming to A Walmart Near You!
You heard it here first...
It's no secret that NutriSystem has a partnership with Walmart and one can sign up for the diet program in 4,000 stores. However...did you know that in early 2011, Walmart acquired tech start-up Kosmix for $300 million, and in doing so, established a Mountain View, CA headquarters for innovation? Furthermore, it followed in 2013 with a second acquisition, this time in the patient-focused healthcare space, RightHealth.
According to Xconomy.com: "The dual acquisitions, combined with an influx of capital investment from the parent company, mean the retail giant is poised to make significant waves in healthcare in the coming months...Walmart Labs will likely use the next year to lay out new modes for connecting retail care back into the primary care communications loop."
"Given that Walmart is a global leader in quantifying retail decisions and automating communication, many have speculated about Walmart’s renewed fight for the healthcare space. This time around, I doubt they will try to convince physicians to use a particular electronic health record system, but rather look to develop a patient-centered platform that integrates consumer preferences and health habits to deliver, store, and transmit targeted information. For example, with the acquisition of Reclip.it, Walmart now has the ability to leverage advanced personalization technology and the startup’s big data expertise to develop a more targeted shopping experience."
Further: "As Walmart’s healthcare offerings expand, the record of services delivered (from eyeglass to wellness visits and blood pressure measurements) can also be stored and analyzed in a single mobile interface that the consumer controls.
Connecting this information to the primary care MD via the patient eliminates many cultural and technological barriers that foiled Walmart’s initial attempt at health record integration, while at the same time opening many doors for improving patients’ health and expanding on the scope of their services."
Expect this new legislation in CA to usher in a new
definition of what it means to “make a stop at the pharmacy.” California is becoming the first state to demonstrate a truly
integrated retail and community healthcare experience. And as is often
the case, where California goes, the rest of the country follows.
With 11,000 store nationwide, this could be a game changer for weight loss competition. The writing is on the wall. Just a matter of time before Walmart develops its own weight loss program, OR hooks up with a trusted partner. Will that partner be you?
Jan. 20, 014... Women go on twice as many diets during their lives as they have lovers, according to new research. The average woman diets 16 times, shedding a total of five stone, and has eight lovers in her lifetime. More than half of those polled admitted they had been on more diets than they'd had sexual partners.
According to the study, the average diet lasts just one month, with women most commonly losing between 5lbs and 7lbs. However more than a quarter of women (27 per cent) confessed to ditching their diet after just a week.
number one reason for giving up a diet is a lack of willpower, followed
by boredom and a lapse after a night out with friends. By far the most popular reason for starting a diet is unhappiness with body shape, chosen by half of those polled.
The findings were revealed in a new survey of 1,000 women by the diet firm Forza Supplements.
College Women Are Heavy Dieters - 91%
According to the National Eating Disorders Association, a whopping 91% of college women attempt to control their weight with some form of dieting. This is well above the average for all adults of 54% (Source: Calorie Control Council). This is no surprise to us, since we've known that young women are heavy users of celebrity diets and easily accessible over-the-counter retail diet pills and meal replacements such as shakes and bars. Many female students flock to fad diets and inexpensive do-it-yourself diets such as the Paleo Diet, Special K diet and others, rather than joining costly structured commercial plans such as Jenny Craig, NutriSystem, or even Weight Watchers. Convenience and price are key factors for these college students. The question then becomes, how do weight loss companies reach this group of customers with their offerings? -- We would think online would be the best option. Perhaps testing some kiosks or "stores" at student unions at college campuses as well? (Think Starbucks mini-sites now operating on the college campus.)
$26 Million Cost of Doing Business?
FTC Comes Down on Sensa
The marketers of the weight loss additive Sensa will have to pony up $26 million in redress to consumers to settle charges that the company used deceptive advertising that claimed people could lose weight just by sprinkling the powder on regular food. The FTC said that the company used bogus clinical studies and paid endorsements, generating a whopping $364 million in sales between 2008 and 2012.
The FTC will also collect $7.3 million from LeanSpa, which promotes colon cleanse weight loss supplements via fake news websites.
The agency also announced charges against the marketers of two other products that made unfounded promises:
The FTC charged that California-based Sensa Products, LLC, its parent, and two individuals deceptively advertised that the powdered food additive Sensa enhances food’s smell and taste, making users feel full faster, so they eat less and lose weight, without dieting, and without changing their exercise regime. The defendants did not have competent and reliable scientific evidence to support these claims, according to the FTC’s complaint.
The defendants typically charge $59 plus shipping and handling for a
one-month supply of Sensa. They provide the powder in twelve flavors,
and have marketed it through radio and print ads, retail
chains such as Costco and GNC, a promotional book, TV ads and
infomercials, Home Shopping Network, ShopNBC, telemarketing, and the
The FTC’s complaint names parent company Sensa, Inc., Sensa Inc. CEO Adam Goldenberg, and Sensa creator and endorser and Sensa Products part-owner Dr. Alan Hirsch.
The Arizona-based company HCG Diet Direct, and its director Clint Ethington, marketed liquid homeopathic hCG drops by falsely promising they would cause consumers to rapidly lose substantial weight. The defendants have agreed to enter into a settlement with the FTC that would bar such deceptive claims in the future. The defendants sold HCG Diet Direct Drops, a diluted liquid form of human chorionic gonadotropin.
Let's see...$374 million over 5 years equals an average of about $73 million a year. Subtract production, packaging and advertising costs, plus the cost of what the FTC alleges are "bogus studies", and that still leaves a tidy profit. Would you be willing to spend $26+ million to make $364 million? The $26 million is just another "cost of doing business." About five years ago the FTC slapped a $10 million fine on the makers of Enforma, another bogus weight loss supplement, which was estimated to take in $70 million a year.
Fact is, by the time the FTC builds a case against you in 2-3 years and levies a fine (maybe longer, since the agency is understaffed), you've made a tidy profit. Who cares if you go out of business?! Unfortunately, that's the business model that any bogus weight loss supplement maker knows well and profits by. According to Nutrition Business Journal's annual "Sports Nutrition & Weight Loss" report, there are usually a half dozen weight loss supplements that generate $50+ million per year in sales. The situation has not changed in the past decade and is not likely to unless the FTC moves faster. America's gullible dieters will always try something new if the price is right and the marketing is clever enough.
The complete FTC press release can be found here:
New Marketdata Study: Worksite Weight Loss Programs
Marketdata has just released a new study entitled: "Worksite Weight Loss Programs: A Market Analysis". At-work weight loss programs will become more popular under Obamacare, and as workers seek inexpensive and convenient ways to lose weight. This market is expected to grow 13% per year, from an estimated value of $859 million in 2012.
There are several dozen major players in this market, providing behavior modification and education counseling, health risk assessments, phone and online counseling. Weight Watchers has a good foothold but by no means dominates this market. Marketdata's study finds that the typical employer cost for at-work weight loss programs is $375/year. Some cover all of it, some just part of it.
This 147-page study examines that nature and structure of these programs, national receipts from 2005 to 2018 forecast, dieter demographics, a status report of the overall weight loss market, key market trends, types of programs, ROI, incentives and contests being used, participation rates, expected effects of Obamacare, and in-depth profiles of 24 providers.
The price of the study is $1,395, and it's also sold by chapters. Contact Marketdata to order or for a Table of contents. Call our office at: 813-907-9090. Also order online at www.marketdataenterprises.com.
2014 Diet Season Begins - What's New This Year?
Yes, the annual battle of the bulge has officially begun. The office parties are done, the holiday family gatherings are over, the pumpkin pie and egg nog have been consumed. Now it's time to pay the piper. If history is a guide, then the average American has put on 7 lbs. since Thanksgiving. Now the choice of companies to help them take it off.
Will the diet companies be able to eke out some growth this year? Will they introduce something compelling for dieters? Will they be able to partner with technology firms to address the electronic threats such as mobile apps? Will they begin to tap underserved niches? That's the $64,000 question. So far, the weather is not helping, as snowstorms and extreme cold blanket the Midwest and Northeast (not good for weight loss center meeting attendance). Let's examine some of the offerings...
Weight Watchers is responding to the technological changes in the industry by hosting webcasts for members and will have spokeswoman Ana Gasteyer, the former Saturday Night Live cast member participate in a webinar with clients. Jessica Simpson will tout its new two-week Simple Start program, which gives clients a list of food to eat and has a mobile app. Nothing earthshattering here.
Jenny Craig may not have much new this year until its acquisition by North Castle Partners LLC, announced in November, is complete. Fact is, its plan is still very pricey for the typical dieter. However, Obamacare may be a blessing since the company does provide coaching which may be covered under new insurance company rules. The key is whether the firm's coaches qualify as "qualified healthcare professionals" (such as a Nurse Practitioner of Physician's Assistant). We'll have to get more clarification.
Nutrisystem is banking on customized diet programs to help revive sales that have slumped for five years. The new My Way diet is based on the Mifflin-St. Jeor equation, which uses age, gender, height and weight to calculate the number of calories a person needs. The company aims to have its customers lose 1-2 pounds a week by consuming 1,000 to 2,000 calories a day. Before signing up for My Way, customers answer an online survey about how much they exercise, why they want to lose weight and what they crave. The firm still faces headwinds with the price of its food.
Nutrisystem’s core 28-day menu of fare is $269.99. Also, many users complain about the shelf stable food's quality. We think that management DOES get it - that dieters need customized plans, not one size fits all.
Medifast had 83 corporate stores and 36 franchises as of Sept. 30, and is closing some underperforming centers and plans to double the number of franchises in the next three years. The company also is improving its mobile business and making its website easier to navigate with a simpler layout. The company is working with technology companies about collaborating on potential products such as a mobile-phone application to help its customers track daily activity. Medifast sells a four-week starter weight-loss kit of food for $363.90, lower than Jenny Craig but still high in consumer's minds. To its credit, Medifast is exploring non-U.S. markets and has the most diversified distribution channels (MLM, medical clinics, direct to consumer).
NutriSystem Introduces Fast Five Plan
On December 10, the company announced its first product offering for the 2014 weight loss season, "The Fast Five" -- a trial kit as part of traditional monthly package aimed at attracting users by enabling them to lose 5lbs in their first week on the program ("Fast Five - Lose 5 pounds in your 1st week FREE... It's the jumpstart you need to get on the fast track to that weight loss finish line with Nutrisystem My Way.").
In a conference call, it was revealed that the average customer stays on the program for less than 90 days. The company has had virtually no online strategy and or community to help existing members stay on the program. The company has stated that its primary expenditures for 2014 will be to build out its online offering. Slated for the second quarter of 2014 the company will unveil its online community and mobile marketing strategy.
Add A New, Big Competitor To The List - CVS Mini-Clinics
Has Your Diet Company Missed The Opportunity?
We at Marketdata published a new report about Retail Healthcare Mini-Clinics, in Sept. 2012. We spoke about the opportunity for weight loss companies to align themselves with this growing number of clinics (about 1,500 now) as an entry point and new distribution channel for their programs. We talked about it in March 2013, when we published a new edition of "The US Weight Loss & Diet Control Market". Then we talked about it again and again on this website. Did anyone listen? Apparently not.
We recetly picked up a brochure at a local CVS in Tampa to find out that they are now offering a personalized weight loss program by a nurse practitioner. It includes: online tools, meal plans, exercise tips, recipes and coaching sessions.They'll do a health risk assessment, measure your body mass index (BMI), do an evaluation of your lifestyle, create a personalized plan, and give you a membership in DASH For Health (an online resource built around the DASH diet - Dietary Approaches to Stop Hypertension, rated the #1 diet by U.S. News).
This is a 6-month program. They will propose a number of coaching sessions for you, check your labs on an ongoing basis, and it's all covered by insurance.
Cost: $122 for the first exam, including lab blood tests. Then $59 per visit for the first 4 visits (weekly), then $59 per visit for the remaining 10 visits (once every 2 weeks). Total cost: $948.
We predicted it 15 months ago. We recommended that diet companies approach CVS, Walgreens and Rite Aid. So, now, instead of having another PARTNER and a new distribution channel, they have a significant new COMPETITOR! Hello...Is anyone in the top managements of the large diet companies listening? Walgreens and Rite Aid are still up for grabs.
Can You Be Overweight or Obese, But Still Healthy? - NO
A new review, conducted at the Lunenfeld-Tanenbaum Research Institute at Toronto’s Mount Sinai Hospital, analyzed eight previous studies from the past decade. Researchers concluded that obesity consistently carries a higher risk of cardiovascular issues and premature death.
Despite the normal metabolic readings, the review found that an obese person had a 24% higher risk of experiencing cardiovascular events (like a heart attack or stroke) or premature death compared to an individual with normal weight. A person who was overweight, but not obese, had a 21% greater risk.
“We found that obesity stood out as the key risk factor for premature death from any cause, including cardiovascular events,” study co-author Bernard Zinman, MD, Senior Investigator at the Lunenfeld-Tanenbaum Research Institute, said in a news release. “That’s true for obese people with so-called healthy metabolic status as well as obese people with poor metabolic status.”
That’s an important finding from a policy perspective, says the study’s lead author, Caroline Kramer, MD, PhD, a post-doctoral fellow at the Institute. The notion that health care resources don’t need to be directed toward obese individuals whose lab tests are ‘normal’, she says, is simply mistaken.
Weight Watchers To Debut "Simple Start" 2-week Plan
Dec. 16, 2013.. According to a company press release:
"With weight loss being at the top of traditional resolution lists, we know that the first couple of weeks are very important to one's motivation and success. Focusing on a big weight loss goal at the start can feel overwhelming, but we believe the powerful combination of Simple Start and our supportive approach will bring added optimism to making losing weight and getting healthy a reality," said Cheryl Callan, Senior Vice President of Marketing, Weight Watchers.
For the third quarter ended Sept. 30, 2013, Medifast net revenue fell 5% to $86.5 million from net revenue of $91.0 million in the third quarter of 2012.
Revenue in the direct sales channel, Take Shape for Life, increased
1% to $56.2 million in the third quarter, compared to $55.6
million in the same period last year.
Medifast Direct channel revenue decreased 19% to $17.1 million, compared to $21.2 million in the third quarter of 2012.
Medifast Weight Control Centers and Wholesale Physicians channel revenue decreased 7% to $13.2 million.
Gross profit for the third quarter of 2013 decreased 5% to $64.9 million, compared to $68.3 million in the third quarter of the prior year.
For fiscal year 2013, the company expects net revenue in the range of $360 million to $365 million and narrowed its earnings per share guidance to $1.70 to 1.75. Revenues last year were $357 million, so this is basically zero growth for 2013.
Complete press release and financials can be found here:
Jenny Craig's New York Employees Obtain Class Action Certification - Dispute Over Work Hours
Oct. 31, 2013...A New York City trial judge has certified a class of 751 current and former Jenny Craig workers who claim the company changed their time cards to show that they had taken 30-minute meal breaks when, in fact, they were pushed to work through the pause. This, the complaint claims, was a policy that began in 2005. Despite denials by the company, "The court finds that plaintiffs have submitted sufficient evidence" to move forward as a group, the judge found.
First, Weight Watchers group leaders complained about low pay. Now, Jenny Craig employees are alleging a shaving of their hours by management. One more negative hit for Jenny. Sounds like this could be an industry-wide systemic problem with these low-pay, high-turnover weight loss coaches and counselors. Time to think about upgrading this job function?
Weight Watchers Reports 3rd Quarter Results: Suspends Dividend, Sees Tough 2014
On Oct. 31, 2013, the company reported Q3 revenues of $393.9 million, down 8.5% on a constant currency basis versus the prior year period. "While progress on cost cutting has allowed us to exceed our Q3 profit expectations, we expect Q4 revenues to be down low double digits given our continuing negative recruitment trends," commented Jim Chambers, the Company's President and Chief Executive Officer.
- Q3 2013 total paid weeks were down 6.6% vs. last year. Online paid weeks declined 11.2% vs. 2012.
- Third quarter 2013 meeting revenues for the North American meetings business (NACO) were down 13.4% on a constant currency basis versus the prior year period driven by lower enrollment volumes.
- Third quarter 2013 International meeting revenues were down 11.1% on a constant currency basis versus the prior year period, primarily driven by lower revenues in the United Kingdom (UK). UK: Third quarter 2013 UK meeting revenues decreased 17.8% on a constant currency basis. Results were negatively impacted by a difficult competitive climate. Third quarter 2013 paid weeks declined 21.1%. Continental Europe: Third quarter 2013 Continental Europe (CE) meeting revenues decreased 5.4% on a constant currency basis versus the prior year period
- Third quarter 2013 Internet revenues grew 0.9% on a constant currency basis versus the prior year period. This growth in Internet revenues was a deceleration from the period-over-period increase of 6.6% experienced in Q2 2013. This deceleration was driven primarily by declining sign-ups in the US business as consumer trial in the category continued to be influenced by activity monitors and free apps.
- First nine months 2013 revenues decreased 5.0% on a constant currency basis versus the prior year period.
All in all, bad results across the board. Consequently, the company's stock price was hammered, down 20% for the day, settling at $32.11. Management admitted that it has a lot of work to do, that it's "one size fits all" approach is not working and more customization and personalization is needed. The problems run deeper than the competition for free apps and activity monitors. Progress has been made on cost controls, but the company admits being lax in keeping up with new technology and reaching customers in the early stages of their search for a weight loss program. More details to come on changes and 2014 program in a presentation next week.
Is a 5% decline in 9-month year to date revenues a disaster for a diet company in this consumer environment? No. Will the company be able to address its issues and engineer a turnaround? Not overnight. Will the company revamp its program and attract dieters for the upcoming 2014 diet season? We'll see. Is the stock a good investment for long-term investors at $32-33 currently --absolutely. It just has to leverage its assets and competitive advantages better, and develop programs to serve the niche markets that represent the market's future growth (i.e. men, Blacks, Hispanics, overweight adolescents, diabetics).
The complete press release and financials can be found here:
NutriSystem Reports 3rd Quarter Results
* Adjusted net income for the quarter was $4.3 million or $0.15 per share versus $2.9 million or $0.10 per share in the third quarter of 2012. Net income for the quarter was $356,000 or $0.01 per share.
"Members of Weight Watchers and other popular diet programs like Jenny Craig®, Nutrisystem® and Atkins® are turning to our exciting incentive programs to make weight loss more fun and competitive, ultimately allowing them to capitalize on their success with cold hard cash that's paid out immediately," notes David Roddenberry, co-founder of HealthyWage.
HealthyWage is founded on research that proves cash rewards triple the effectiveness of weight loss programs. "Studies show that monetary incentives serve to enhance the effectiveness of, and duly complement, weight-loss programs of any and all sorts, especially when paid out quickly like our various programs," notes Roddenberry. "
This drug works by targeting the body, not the mind, and unlike rivals tthat suppress appetite, Zafgen's drug, beloranib, is designed to make the body produce less fat and burn off the excess as fuel.
"This is in contrast with other agents that really only
affect hunger, and don't actually restore balance of the fat,"
according to Zafgen Chief Executive Thomas Hughes."
Preliminary data from a study testing beloranib showed the highest dose of the drug caused an average weight loss of about 22 lbs. (10 kg) after 12 weeks of treatment.
By comparison, patients taking the highest dose of Vivus's Qsymia in two separate late-stage trials lost about 30 lbs. and 37 lbs. on average after 56 weeks of treatment.
However, even if all goes well, the drug is years away from hitting the market.
It expects to complete the sales over the next year to 18 months.
Medifast net income grew to $7.1 million, or 51 cents per
share, from $2.8 million, or 20 cents per share. Revenue rose to $97.1
million from $93.6 million. Analysts were expecting net income of 51 cents per share and $101.3 million in revenue.
The company said it still expects to earn between $1.70 and $1.80 per share in 2013, but it now forecasts $375 million to $385 million in revenue. Medifast's last guidance called for $385 million to $400 million in revenue.
Considering the market condition and competitors' results, Medifast did not do badly. However, for a company used to reporting 20% top line sale gains, this definitely shows a slowdown, to an expected 6-7% for 2013.
Complete financial tables can be found here:
eDiets.com Prepares for Comeback
The company today (Aug. 5) announced the appointment of tabloid content writer John McGran as Chief Editor along with health professional and registered dietitian Susan Burke March as Chief Nutritionist. Mr. McGran and Ms. March join the eDiets team as prior employees of the company, marking the brand's transition back to a tabloid approach to news and weight loss advice. The eDiets website will re-launch next month as a one-of-a kind destination for people looking to lose weight and get in shape together with their favorite celebrities.
Mr. McGran has a background in both the diet and tabloid industries. For 12 years, Mr. McGran worked for Globe Communications, where he became editor. From 2000 to 2007, Mr. McGran was Editor-in-Chief of eDiets.com, overseeing editorial growth from a single weekly newsletter and 770,000 subscribers to 17 weekly and bi-monthly newsletters and a combined 12 million subscribers.
Ms. March is a registered and licensed dietitian and certified diabetes educator. Ms. March served as Chief Clinical Nutrition Manager at Mt. Sinai Hospital, New York, and as Vice President of Nutrition Services and Chief Nutritionist for eDiets for six years.
Industry veteran Richard Gray has also joined eDiets to manage Business Development. Mr. Gray has over 25 years experience working with a wide range of mid-size businesses to develop nutritional and culinary health products, vitamins, nutraceuticals, functional foods, meal plans for diet and chronic conditions, and consumer products packaging.
Weight Watchers Reports 2nd Quarter Results, CEO Resigns
Marketdata Commentary - Lots of Questions, No Answers
* Why did David Kirchoff abruptly resign, after 14 years with the company? No advance warning, not even 30 days? Troubling. Did he simply give up on the company after seeing that things are just not working?
* Why isn't management talking about the compensation situation with the group leaders' complaints about low pay? Did they raise wages and quell the rebellion, or not? Group leaders are a critical competitive advantage. If there's a mass exodus, that's major trouble.
* Why doesn't management discuss their progress on revamping and modernizing the 850 U.S. leased retail sites? Is it done, 75% complete? Did it have a positive affect on attendance. What? They were supposed to extend hours open to capture walk-in traffic. Meetings only held one day a week--major underutilization of these facilities.
* Any tests in the China market? No news.
* Time to admit that WW.com is cannabalizing meetings business and deal with it?
* Any new plans on how to respond to the 2014 implementation of Obamacare and all the new people entering the healthcare system?
WHAT THE HECK IS GOING ON GUYS????
* And, just as surprising, why aren't the Wall Street analysts that follow Weight Watchers asking these questions during the Q&A portion of the conference call?
James Chambers has been appointed President and CEO effective July 30, 2013. He has also been elected to the Company's Board of Directors as of such date. Chambers succeeds David Kirchhoff who notified the company's Board of Directors of his resignation, effective as of July 30, 2013, as CEO and a Director of the company to pursue other opportunities. Mr. Kirchoff had been with the company for 14 years.
Second quarter 2013 revenues decreased 3.9% on a constant currency basis versus the prior year period, resulting from lower revenues in the meetings business as it experienced weaker volumes globally, most notably in North America and the UK.
Q2 2013 total paid weeks were down 2.5% as compared to the prior year period. Online paid weeks increased 4.4% versus the prior year period, while meeting paid weeks declined 10.4% versus the prior year period.
First half 2013 revenues decreased 3.5% on a constant currency basis versus the prior year period, to $952 million. This decrease resulted from lower revenues in the meetings business as it experienced weaker volumes globally, most notably in North America and the UK. This decline in meetings business revenues was partially offset by revenue growth in the WeightWatchers.com business.
First half 2013 total paid weeks were down 0.6% as compared to the prior year period. Online paid weeks increased 7.3% versus the prior year period, while meeting paid weeks declined 9.3% versus the prior year period.
First half 2013 operating income increased 0.6% on a constant currency basis versus the prior year period. The increase in operating income was driven by lower marketing expense, primarily in the United States from the elimination of inefficient digital advertising and the lack of a men's campaign in the first half 2013.
Full Year Fiscal 2013 Earnings Guidance
The company has revised its full year 2013 earnings guidance to a
range of between $3.55 and $3.70 per fully diluted share as compared to
its previously provided range of between $3.60 and $3.90 per fully
See complete financials and segment, regional breakdowns here:
Belvig Sales Start off Slowly
Arena reported $1.3 million in Belviq net product sales in the second quarter, which is 31.5% of the $4.1 million in net product sales recorded by Eisai.
Belviq hit pharmacy shelves in the beginning of June, so it's only about a month of sales in the second quarter. Still, $4.1 million in net product sales is light, especially considering that number includes inventory stocking.
Belviq's reported net sales underwhelmed, in part, because Eisai
is giving away tons of free samples--an estimated 60-70% of all Belviq prescriptions filled are gratis. Separately, Eisai reported $10 million in gross sales of Belviq,
which means the gross-to-net discount was a huge 60%.
NutriSystem Reports 2nd Quarter Results
Ms. Zier continued, “On a parallel path we are working hard on initiatives to stabilize and then grow revenue in future quarters. We are focused on diversifying sales channels, building our innovation pipeline, and developing new creative and programs for the 2014 diet season launch. Results from our research show that our new product concepts, enhancements and messaging are resonating with customers and we believe this will help us to broaden appeal and interest in Nutrisystem for the upcoming diet season.”Complete financial data for the quarter can be found here:
Last Fall, Vivus botched the commercial launch of its Qsymia prescription weight loss pill and is now fighting off a dissident shareholder, First Manhattan, which wants to replace the company's board of directors and management team. For Arena, the first few weeks of prescription data reported for the early Belviq launch have done nothing to impress anyone.
For the third new diet drug in the mix, producer Orexigen is still conducting a large cardiovascular safety study
of its obesity pill Contrave. An interim analysis and results are
expected in the third quarter. If Contrave gets a passing grade from the
study, the drug will be resubmitted to the FDA by the end of the year
or in early 2014, the company has said.
According to IMS Health, which tracks prescriptions brought to pharmacies and sells the data to stock analysts and drug companies, Belviq was prescribed 1,087 times in its first week on the market, which ended June 14; 1,829 times in the week ending June 21; and 2,222 times in the week ending June 28. That includes scripts that are being given away free or with significant rebates.
By comparison, Xenical, from Roche, the last big weight loss drug to hit the market, managed those kinds of numbers from the very beginning when it went on sale in April 1999. By May 28, 1999, it was being prescribed 40,000 times a week, according to data in a 2000 Morgan Stanley Dean Witter analyst report. For its first month on the market, Xenical was prescribed 131,000 times.
Obesity Now Considered A Disease
Obesity is now it's a disease, according to the American Medical Association, considered the voice of America's doctors.
Some local doctors and who work with the obese are applauding the action, and predicting it will lead to better insurance coverage for weight loss counseling, drugs and surgery, while others worry it might cause people to expect a medical cure for a condition that is often best addressed by behavior changes.
Dr. Ann Rogers, the head of surgical weight loss at Penn State-Hershey, compared it to the recognition of alcoholism as a disease, which she said caused more people to seek treatment and made treatment easier to obtain.
She further expects the declaration
will reduce stigma associated with obesity, including perceptions that
it's mostly the result of lack of willpower. "There is definitely a huge
genetic and biological basis for obesity. It is not just lifestyle
issues," she said.
The federal government hasn't taken steps needed to assure that weight loss surgery and weight management, although covered by Medicare, will be covered by all coverage available through the Affordable Care Act. The hope is that the AMA action will lead to federal acknowledgement of obesity as a chronic disease that should be fully covered.
NutriSystem Raises Production of NutriSystem D Jumpstart Kit, Expands to 3,700 Walmart Stores
June 13, 2013… In order to meet growing consumer demand for its Nutrisystem(R) D(R) 5-Day Jumpstart Weight Loss Kit, the company has ramped up production and will offer its product in 3,700 Walmart stores by the end of June. Nutrisystem is a national strategic partner of the American Diabetes Association and the Nutrisystem(R) D(R) plan meets the nutritional guidelines of the American Diabetes Association**.
This new retail program for the Nutrisystem D weight loss kit and its expansion marks important progress in Nutrisystem's overall turnaround plan, led by Chief Executive Officer Dawn Zier, who joined the company in late 2012. Nutrisystem D 5-day kits were first made available at retail earlier this year in 2,000 Walmart stores, making a renowned diet with proven benefits even more accessible to Americans nationwide.
The Nutrisystem D complete program, combined with counseling, is clinically proven and was developed specifically for people with type 2 diabetes who want to lose weight. It is a low glycemic diet (Low GI) based on more than 40 years of research. With six eating occasions a day, it is designed to help keep blood glucose levels stable and to prevent appetite spikes.
At $44.98, the Nutrisystem D kit is an economical option for consumers looking to make the most of their weekly grocery budget. The kit includes five breakfasts, lunches, snacks and dinners. Nutrisystem(R) foods are intended to be combined with fresh grocery additions such as low fat yogurt, salad, fruit and vegetables. A free sample meal planer and grocery shopping guide is included with all kits.
Purchase of a kit also includes unlimited access to Nutrisystem's Certified Diabetes Educators, registered dietitians and weight loss counselors.
Consumers can also take advantage of free online trackers to track glucose levels, fitness, food, weight, water and more.
Jenny Craig Slide Continues - 101 Centers Closed
Jenny Craig announced that it is closing 101 of its retail stores in North America, and that it will be devoting more attention to its online services (Jenny At Home), "as part of a long-term strategic plan". Closures will be completed by June 28th, and are centers that affect the least possible number of clients and clients will be referred to other centers within a 10- 20 mile radius. Existing clients will be given food discounts if they have to transfer to another center.
These closures bring the number of centers in the U.S. and Canada down to 497 sites. About 195 employees will be terminated and another 400 reassigned.
The company plans to roll out new online tools during the Summer, with more e-commerce and mobile tools available later in the year.
Is this the beginning of the end for Jenny? Have they finally realized that maintaining a large network of high overhead centers is too difficult in today's DIY, low-cost diet environment? Are they trying to jump on the high-growth online bandwagon that WeightWatchers.com has had so much success with? Are they too late to the party? We'll see. They will have to create something really compelling online to bring people to their website.
We've said this before, from experience. When large conglomerates take over companies that were successful in their niche (i.e Unilever buying out Slim-Fast), its usually doesn't work out. Unilever did not support the Slim-Fast brand with enough marketing and turned it from a $600 million/year brand into a $180 million/year brand. We think the same outcome is possible with Jenny and Nestle. Nestle also owns Optifast. When was the last time you heard anyone mention Optifast? Unilever is a FOOD company, not a service company, and Jenny's food is just too expensive.
Diet Drug Belviq Finally Launches in The U.S.
Arena Pharmaceuticals says its prescriptionweight loss drug Belviq will be available to U.S. patients beginning next week, nearly a year after the drug was officially approved by federal regulators.
The FDA approved Belviq last June for adults who are obese or who are overweight and have at least one serious medical condition, such as diabetes or high cholesterol.
Belviq's launch was delayed for months by logistical hurdles, including classification by the DEA. According to the drug's label, Belviq will be classified as a Schedule IV controlled substance, which means it has a low potential for abuse. A small segment of patients in company studies reported experiencing euphoria and hallucinations.
Arena Pharmaceuticals and partner Eisai Co. said the drug will be available beginning Tuesday, June 11. Under an agreement between the companies, Arena will manufacture and supply the drug from its facility in Switzerland and Eisai will market the drug in the U.S.
Arena's studies showed that patients taking Belviq, known generically as lorcaserin, lost just 3% to 3.7% of their weight over a year. About 47% of patients without diabetes lost at least 5% of their weight or more, which was enough to meet FDA standards for effectiveness.
The FDA said patients should stop taking Belviq after three months if they fail to lose 5% of their body weight. Patients are unlikely to see any significant weight loss by staying on the drug, the agency said.
Side effects with the drug include depression, migraine and memory lapses.
Nestle, the owner of Jenny Craig since 2006, and which has seen sales stagnate in the US recently, entered the market in the United Kingdom in 2010 to take on dieting heavyweight Weight Watchers. The brand, whose ambassadors include Spice Girl Mel B, is closing from next month because sales have failed to meet expectations. Weight Watchers is not the only competitor there. Slimming World and others are also in the market and The Dukan Diet has been popular in Europe.
Rx Diet Drug - Q1 2013 Qsymia Sales Still Paltry
Qsymia sales for the first quarter were weighed down by continued reluctance of insurers to reimburse obesity treatments and the drug's retail unavailability.
Net product revenue, reflecting sales of Qsymia, doubled to $4.1 million from $2 million in the preceding quarter, but missed analysts' estimate of $5.2 million.
Despite the rising sales of the pill, first-quarter net loss
widened to $53.6 million, or 53 cents per share, from $18.8
million, or 20 cents per share, a year earlier.
Vivus Inc said it has begun talks with large pharmaceutical companies to accelerate the marketing of its diet pill after coming under pressure from hostile investors over slow initial sales.
The checkered past of obesity drugs is often cited as a big reason why physicians and patients are cautious while taking up the use of Qsymia. That's why, in Marketdata's opinion, we don't expect Qsymia or Belviq for that matter, to be obesity "blockbusters" this year or in the foreseeable future.
Medifast Reports 1st Quarter Results
According to management: "Our ongoing efforts to execute on our strategic goals enabled us to generate results ahead of our expectations with first quarter earnings per share 48% higher than the prior year period," commented Michael C. MacDonald, Medifast's Chairman and Chief Executive Officer. "For the remainder of 2013, we remain optimistic that our profitable growth will continue as we increase consumer reach and grow Medifast's brand awareness. As the strength of our business continues, our team remains focused on realizing further operational efficiency improvements to maximize profitability throughout our Take Shape for Life, Medifast Direct, Medifast Weight Control Centers, and Wholesale Physicians sales channels."
For the first quarter ended March 31, 2013, Medifast net revenue increased 8% to $96.0 million from net revenue of $88.9 million in the first quarter of the prior year.
Revenue in the direct sales channel, Take Shape for Life, increased
12% to $59.4 million in the first quarter of 2013 compared to $53.0
million in the same period last year. Growth for Take Shape
for Life was driven by increased customer product sales. The company
ended the first quarter with 11,300 active health coaches
and the average revenue per health coach per month for the quarter
increased 4% to $1,720 compared to $1,650 in the first quarter of 2012.
Net income was $5.9 million, or $0.43 per diluted share based on approximately 13.9 million shares outstanding compared to net income of $4.0 million, or $0.29 per diluted share, for the comparable quarter last year.
For fiscal year 2013 the Company reiterated its previous guidance of net revenue to be in the range of $385 to $400 million and earnings per diluted share in the range of $1.70 to $1.80.
Complete financial tables can be found here:
Packaged Diet Foods Produce More Weight Loss - Medifast Study
According to Dr. Michael Dansinger, a nutrition expert at Tufts Medical Center, said having less freedom in choosing meals seems to help people meet their dieting goals.
In a head-to-head comparison with a traditional diet, people who stuck to a diet of portion-controlled packaged foods lost almost twice as much weight as those who only got advice on how to trim calories, according to a new study.
"When there's less structure, then participants are making more decisions, and I think too often they're making decisions that undermine their goal to stick to a calorie target," said Dansinger, who was not part of the study.
The diet the researchers studied was the Medifast
5 & 1 Plan. It consists of five pre-packaged meals each day, along
with one meal of vegetables and protein prepared by the dieter. (Note: Medifast funded this study and one of the researchers has performed paid consulting for the company.)
Weight Watchers Reports 1st Quarter Results
Following are financial highlights for the quarter ended March 31, 2013:
"As we previously indicated, the winter diet season proved to be
challenging for recruitment across our businesses given a weak consumer
backdrop and an intensely competitive environment. In response, we have
made several adjustments to improve our position in the market with
consumers, including new advertising campaigns. Further, we are gaining
early traction with our cost savings program while continuing to work
to innovate our core product offerings to better enable us to
increasingly address the ever growing obesity epidemic," commented David Kirchhoff, CEO.
In the conference call on May 2, management did admit that the explosion of free weight loss apps were having an effect on their business. They also mentioned new online ads featuring Sat. Nite Live's Ana Gasteyer. Changes will be made to NACO group leader compensation, in response to the uproar over low wages.
The company will not be investing in ad campaigns targeted to male dieters, and the firm will cut its marketing spend by $40 million this year. Tight cost controls continue. Management said that WW spent $344 million on marketing in 2012, equal to 19% of total revenues. The UK market and continental Europe remain weak, but the firm cites success in the B2B market, hospital systems and Chico's.
Complete financial tables can be found here:
Drug Qsymia Approved For Retail Pharmacy Sales
On April 16, the FDA approved a modification of VIVUS' Risk Evaluation and Mitigation Strategy (REMS), to allow sales of the Rx obesity drug Qsymia in retail pharmacies. REMS are established by the FDA when drugs are potentially harmful. Initially, the FDA told VIVUS that it would only be able to sell Qsymia at mail order pharmacies.
The modified REMS will help boost sales of Qsymia, since patients are used to picking up prescriptions at pharmacies rather than ordering them via a mail-order pharmacy. The change will also make things easier for the physician. However, VIVUS still faces hurdles to get insurers to pay for the drug.
New Report: Marketdata Releases New Edition of
"The U.S. Weight Loss & Diet Control Market"
March 2103 420 Pages 160 tables 30+ Company Profiles
Marketdata today released the 12 edition of this incisive analysis of ALL 10 segments of the weight loss market. Some Major Findings:
- Growth of the total market slowed to just 1.7% last year, to $61.6 billion, as most market segments were flat or saw minimal growth. Revenues are forecast to grow 2.6% in 2013.
- The number of American dieters was raised to 108 million, but 82% of them now want a do-it-yourself, low-priced, home-based program, accessed by phone or the Internet.
- The diet food home delivery market contracted 7-8% to $858 million, as leader NutriSystem saw flat revenues in 2012.
- Multi-level Marketing (MLM) became the engine of strong growth for Herbalife, Visalis Sciences and Medifast. In fact, Herbalife took over the #2 spot among diet companies with $529 million in North American sales. Visalis' sales grew five-fold in 2011.
- Online dieting is a $1.1 billion market that's growing 8%/year. Dieters continue to patronize WeightWatchers.com, which leads by far with 1.7 million subscribers and $504 million in sales.
- Weight loss surgeries fell about 15% from 2009-2012, as new government data contradicts estimates by the American Society for Bariatric Surgery. There were 114,000 procedures performed - not 209,000.
- The new Rx drugs Qsymia and Belviq are NOT expected to be a significant threat to other weight loss products or programs this year. Qsymia sales were poor in Q4 2012. All Rx diet drugs last year had sales of $525 million.
- The B2B corporate worksite-based weight loss market is estimated to be worth $859 million, and is just one example of untapped niches that diet companies need to tap for future growth. Other untapped niches include programs for: Hispanic dieters, Blacks, adolescents, the Canadian market, diabetics, and men.
- Meal replacements are becoming more popular as an easy, low-cost DIY diet option. They are safe and easy to make, and are increasingly being private labeled for new start-ups.
** For a complete Report Table of Contents or to order
(single chapters may be purchased, with a BOGO 2 for 1 special) see Marketdata's website:
http://www.marketdataenterprises.com/FullIndustryStudies.htm (Report #FS22)
Or Call Us at: 813-907-9090 M-F, 9-5.
Marketdata's 1st Quarter 2013 Online Dieter Report - Findings:
Since 2005, Marketdata, via the online weight loss survey provided at its website BestDietForMe.com, has tracked 110 online dieter metrics. This gives us an insight to what dieters prefer, online and off-line. Our latest report, for Q1 2013 has recently been released. It is 78 pages long and costs $595 (price just recently reduced). An annual subscription, 4 quarterly reports, is just $2,195.
Here are some major findings:
Here's a link to Marktdata's website, for more information about this report and other weight loss market studies:
He's Baaack... Richard Simmons' New Venture
Gaiam, Inc., a leading distributor of lifestyle media, fitness and self-improvement products, recently announced the launch of Richard Simmons' all new at-home fitness program called Project H.O.P.E. – Health, Optimism, Passion, and Energy. Available exclusively through television and online, the new comprehensive 90-day weight loss system features a combination of an effective workout routine, a three-month meal plan, and Simmons' all new electronic FoodMover program, which provides the tools necessary for one to achieve optimal fitness results.
Project H.O.P.E. is Simmons' most efficient exercise program yet. It consists of nine workouts on three DVDs, which combine cardio and toning.
Project H.O.P.E also includes Simmons' brand new 3-part FoodMover system, which provides a guide for making smart food choices and keeping track of calories and intake. (Sounds like an electronic version of his previous Deal A Meal exchange card system.)
Two versions of Richards Simmons' Project H.O.P.E. are available at: RichardSimmonsHope.com. The Deluxe Edition is available for 2 payments of $29.99 plus $9.99 S&H, while the Ultimate Edition is available for 3 payments of $33.33 plus $12.99 S&H. Both versions come with a complete 90-day money back guarantee.
NYC Super-Sized Soda Ban Fizzles Out
A judge on Monday march 11 invalidated New York City's plan to ban large sugary drinks from restaurants and other eateries, one day before the new law was to take effect. State Supreme Court Justice Milton Tingling in Manhattan ruled the new regulation was "arbitrary and capricious" and declared it invalid, after the American Beverage Association and other business groups had sued the city challenging the ban. Mayor Michael Bloomberg had touted the ban as a way to reduce obesity. But beverage manufacturers and business groups had called the law an illegal overreach that would infringe upon consumers' personal liberty.
Are Weight Loss "Counselors" Obsolete?
Do dieters really need or want weight loss "counselors" (coaches, consultants, group leaders) today? That's a question we at Marketdata have been pondering lately. All the evidence seems to support the theory that weight loss counselors in general are not adequately trained to serve client needs, they are underpaid, they have high turnover and frequently, no career path, and dieters don't want to pay extra for their services.
We seem to be moving toward to more anonymous model in the diet market, shifting away from the high overhead brick & mortar weight loss center where the client meets with a diet coach once or several times per week.
Consider these facts:
1. NutriSystem provides FREE counseling as part of its program, yet management says that only 20% of their customers use this service.
2. The Jenny Direct service (food shipped to your home, no in-person counselor meeting) is the fastest-growing part of their business.
3. LA Weight Loss Centers was one of the largest commercial chains with 800+ centers, and it went bankrupt and closed all of them. Consumer complaints about high pressure and deceptive sales practices to buy company supplements brought the company down.
4. Weight Watchers is currently facing a rebellion of group leaders over low pay.
5. Most "counselors" have little or no training or background in nutrition, exercise physiology, or the psychological issues facing dieters. Rather, most are trained mainly in SALES and meeting quotas.
6. NutriSystem abandoned the brick & mortar model long ago.
7. The fastest-growing part of Weight Watchers (20%+ growth/year the past 4-5 years) has been WeightWatchers.com, which now generates $504 million in revenues - nearly 28% of their total. This is an anonymous model, especially favored by male dieters. North American meeting attendance was down significantly in 2012.
8. Commercial weight loss centers are used by 9% of U.S. dieters today, vs. 14-15% in the early 1990s.
9. Few commercial weight loss companies today are selling franchises.
10. Data from visitors to Marketdata's weight loss portal BestDietForMe.com reveal that the "preferred location of a weight loss program" were as follows in 2005 and 2012:
weight loss center: 26.6% preferred in 2005, 10.3% in 2012
In addition, the preferred counseling format percentages changed from 2005 to 2012 as follows:
self-directed: 60% in 2005, 81.6% in 2012
one-to-one: 26.9% in 2005, 13.0% in 2012
small group: 12.5% in 2005, 5.1% in 2012
large group: 0.5% in 2005, 0.2% in 2012.
Herein lies the disconnect.... Also according to BestDietForMe.com's 10-year data - 75% of dieters need emotional eating support and 57% need stimulus control support. So, if they're NOT getting it from weight loss counselors, who do they get it from? Their doctors? Not likely. Most MDs' schedules are packed and they have little time for meaningful discussions about weight, nutrition, etc. And they are afraid that they'll offend their patients.
Need we say more? Maybe it's time to re-think the whole concept of counseling. Most dieters don't seem to want it at all, or don't want to pay extra for it. They'd rather just get the food and do the exercise themselves. Maybe diet companies should just scrap counseling altogether, and lower program prices, because it just doesn't seem to be working. It would probably significantly improve diet companies' bottom line, profits, since they would no longer need to recruit and train coaches, pay them salary & benefits, motivate them to stay/train them in-house, etc.
Diet Companies' Dirty Little Secret - Low Pay
Today's article in the NY Times, about Weight Watchers group leaders and their complaints about low pay brings up a critical topic foe the weight loss industry that's been around since the beginning - poor pay for weight loss "coaches", "counselors" and "group leaders" - the people in the trenches that do the daily grunt work of signing up, meeting with and motivating members.
Weight Watchers has traditionally paid the best, and attracted some of the best people. But, with people struggling in a still bad economy, they have every right to complain if they are underpaid. This comes as somewhat of a surprise to us at Marketdata. We've all heard the horror stories about diet coaches at LA Weight Loss Centers and how they are forced to aggressively sell company bars and supplements, and browbeat clients into paying up front for yearly contracts. That's a big reason why they went bankrupt and nearly disappeared as 800A+ centers closed. LA Weight Loss was far from the only diet company with this problem, however.
Low pay and high turnover are par for the course in this industry, and it has been this way since Marketdata began tracking the market in 1989. In the early 1990s, when we published a newsletter called the Diet Busine$$Bulletin, we did extensive research and surveys, and found that the typical weight loss counselor made $15-19,000 per year, with a big part of that coming from commissions. Alas, little has changed with that pay scale in 20 years.
Weight Watchers group leaders are complaining about being paid the minimum wage and being pressured to work many hours unpaid--while celebrity spokespersons like Jennifer Hudson and Jessica Simpson earn millions. Some leaders say the $18 base rate for running 2-3 hr. meetings has not been raised in 10+ years. No mileage reimbursement either. Many leaders stay because they truly care about their clients, and were successful losing weight on the program.
These leaders are usually more highly educated people than the average weight loss consultant (which are usually just clients that lost weight with a program and are internally trained (mainly in sales). Two years ago, Weight Watchers reached a $6.2 million settlement to end a class action lawsuits in California where employees complained about minimum wage violations, off-the-clock work, and paychecks that didn't explain how wages were calculated.
We'll be watching to see how WW handles this situation. Its employees have always been one of its strongest assets, and it's critical to keep them happy.
Atkins Nutritionals Now Sells Diet Foods
yMarketdata analysts just noted a magazine ad in a women's magazine that features a line of new frozen meals, for breakfast, lunch and dinner. This is new for the company, which used to sell just meal replacements (shakes bars). A store locator on the Atkins website refers you to stores in your are (by zip code) that supposedly carry these meals. However, when we checked a few zip codes around the country, the only listing that came up were for Walmarts. Many cities or zip codes came up with "not available" results. Atkins also has a Quick Start kit consisting of 3 free bars, plus and workbook and guide.
Weight Watchers Reports Q4 and Full Year 2012 Results, Analysts Disappointed, Stock Price Falls
Feb. 13... Full year 2012 revenues increased 1.8% on a constant currency basis versus the prior year as the Company continued to benefit from strong global growth in the WeightWatchers.com business. Revenues for 2012 were $1.826 billion, vs. $1.819 billion in 2011. This growth in the WeightWatchers.com business was in large part offset by lower sales in the meetings business as the company experienced weaker volumes particularly in North America and the UK. Full year 2012 total paid weeks were up 9.3% as compared to the prior year, on top of the 37.3% growth reported for the full year 2011 versus the full year 2010. Full year 2012 meeting paid weeks and attendance decreased 5.4% and 11.0%, respectively, versus the prior year. Online paid weeks for the full year 2012 increased 26.7% versus the prior year, on top of the 67.6% growth reported for the full year 2011 versus the full year 2010.
Full year 2012 operating income decreased 5.3% on a constant currency basis versus the prior year.
Meeting fees for 2012 stood at $935 million. Product sales at these metting were $253 million. Internet revenues was the bright spot, rising 26% to $504 million. NACO (North American) meeting fees were down 5.6% to $799 mill. and International meeting fees were down 9.0% to $389 million. Total attendance was down 11%.
The company provided full year 2013 earnings guidance of between $3.50 and $4.00 per fully diluted share.
"While 2012 set a company record for combined global meetings members and global Weight Watchers Online subscribers, we have been disappointed by our recruitment trends thus far in 2013," commented David Kirchhoff, Chief Executive Officer of the company. "Our current marketing has not been as effective in this tough economic and increasingly competitive environment."
Find details and financial tables here:
Marketdata Opinion & Conference Call Details
In the conference call after release of Q4 2012 and full year results, WW management revealed that early 2013 trends for the first 6 weeks of the new year are not good. Jessica Simpson getting pregnant again, after her success losing 50 lbs last year did not help. Also cited was the negative effect on consumer confidence related to the fiscal cliff situation and the higher payroll taxes that kicked in Jan. 1. Severe weather in the U.K. did not help either. Management also reported that they have not yet convinced many of its online users to convert to the regular program.
WW is retreating somewhat on the men's program, citing a too high cost per acquisition. As well, the firm is reducing its advertising spend on banner ads online. They are eliminating all non-productive ad spending.
The company doesn't see any real threat from mobile weight loss apps or from social media, and reports good progress in the B2B market. They also don't see much impact from the new Rx diet drug from VIVUS, since it still has a high out-of-pocket co-pay. The drug is also viewed as an adjunct to lifestyle changes, not a replacement for them. However, they do concede this could be a rough year. We'd also like to hear what progress the company has made in its multi-year retail site modernization. How many of the 850 or so leased sites have been refurbished? No one's talking about that.
All these factors may be true, but we at Marketdata don't think they fully explain why the response from consumers has been so weak. The simple fact, in our opinion, is that consumers (and Marketdata) just don't see much that's new with the 360 degree program. It's a very minor modification and tweaking of the Points system, but nothing to rave about. That said, in this environment of slow economic recovery, flat revenues or even a gain of 1-2% is no minor accomplishment. Flat is the "new growth". The company still generated $1.8 billion last year and its Internet revenues are still growing 20+% annually. When compared to other weight loss brands, that's not all that bad.
Jenny Craig Is New Partner of Canadian Obesity Network
Jan 29, 2013 -- The Canadian Obesity Network (CON-RCO) announced that Jenny Craig has become its newest "Vision Partner". "Vision Partners" commit significant support toward the network's operations and provide their invaluable perspective as CON-RCO shapes the future of obesity management and prevention in Canada. CON-RCO is Canada's only not-for-profit organization that focuses on the needs of Canadians coping with excess weight and related health issues. Funded completely through its corporate partnership program and individual donations, the network strives to identify and promote best practices in prevention and treatment among health care providers, researchers and policy makers while working to eradicate widespread bias and discrimination against those living with obesity.
Diet Soda Sales Were Flat in 2012
Diet soda sales constitute a significant share of the total diet market sales - $21.78 billion in 2011. The latest data show that diet soft drink sales represented 30% of all soft drink sales--no change. The soda companies are working hard to develop zero or low-calorie natural sweeteners, but progress has been slow and consumers have turned to other beverages. Pressure from government agencies and cities such as New York, to cut down the consumption of sugary soft drinks, has not helped.
A recent Wall St. Journal article reported that the large beverage companies have been raising prices over the past 8 years, to keep sales growing, but lower volume consumption has outpaced the price rises. According to retail tracker SymphonyIRIGroup, total soft drink sales in dollar terms fell 2.5%, with volume dropping 1.8%. Symphony data do not include sales in restaurants, vending machines and other outlets. When taking these figures into account, industry analysts say that soft drink sales probably barley rose last year.
Meal Replacements Growth Outpaces OTC Diet Pills
As we at Marketdata had predicted in our May 2011 "U.S. Weight Loss & Diet Control market" report, growth of meal replacements (shakes, nutrition bars) has outpaced that of OTC (retail) diet pills/appetite suppressants. According to Chain Drug Review's May 2012 issue, retail sales of meal replacements by drug stores, for the year ended March 18, 2012, were up 10.6% to $243 million. On the other hand, sales of retail diet pills fell 3.2% to $148.7 million.
Of course, this is just one distribution channel of the market for such products - not including sales via supermarkets, mass merchants like Walmart, MLM channels, mail order, and the Internet. When you add these channels, the market is much bigger in dollars. However, this data (from Symphony/IRI Group) does show the direction these products are headed.
Costs Per Pound of Weight Lost by Top 3 Companies?
Savvy Spender host and personal finance expert Vera Gibbons reports that, taking into account all costs including food and services, the following are the estimated costs to lose a pound:
Weight Watchers $86
Jenny Craig $163.
How Big Is The January Diet Surge?
According to a Dec. 31 article in the NY Times, in a recent unusual study, two psychologists sought an answer in data on diet-related searches provided by Google. The researchers focused on a 6-year period beginning in 2005, during which diet-related searches, involving keywords like “diet,” “Atkins,” “Weight Watchers” and “Nutrisystem”, followed an annual trend. Searches for these keywords spiked on average 29% nationwide from December through Jan. 31st, then fell month by month until the same period the next year. No surprises - the greatest surges in diet-related searches in December and January occurred in states with the highest obesity rates. The greatest increases were in South Dakota (a 54 percent surge), Tennessee (50 percent) and North Dakota (46 percent). States with lower obesity rates had smaller keyword surges. Vermont had the lowest (18 percent), followed by Hawaii (22 percent) and California (27 percent). Survey findings are only a crude indication of nationwide interest in dieting. But they correlate well with previous research showing that many people resolve to lose weight in January but gradually lose interest. The same is probably true for health club memberships.
Marketdata's 2013 Diet Market Forecasts
Dec. 31, 2012... As we transition into the 2013 "diet season", it's time to look back at what happened in the weight loss market in 2012 and look forward to what's in store for 2013. This next year promises to be as dynamic as ever, as diet companies tweak their programs with a new twist for the new year, new companies enter the market, advertising campaigns ramp up, new diet books are written, drug companies continue their search for the magic pill, and dieters look for the "next big thing".
We will not go into ALL the details and forecasts here, but here are a few of our predictions:
The total U.S. weight loss market is expected to grow 4.5% in 2013, to a value of $66.5 billion, as consumer discretionary income increases, new diet drugs enter the market, and the large players such as Weight Watchers boost enrollments. We see good growth in medical programs, and heavy advertising that should fuel demand.
For complete press release and financials, see this link:
More technology-based weight loss programs will appear in 2013, that are well funded by venture capital firms. One example is Retrofit. They will attempt to sell not only direct to consumers but via large healthcare systems and corporate wellness departments.
The first priority in our turnaround plan has been to focus on margin improvement and cash efficiency, because this immediately increases shareholder value and frees up financial resources to reinvest in our business to drive key strategic initiatives. We are already making progress on this front, as we have improved year-over-year gross margins, optimized marketing spend by channel, and reduced operating expenses.”
Ms. Zier added, “Re-energizing top-line growth will require the execution of a number of initiatives with varied lead times. Reinvigorating our creative assets, monetizing our customer database, and restoring direct marketing discipline to drive profitable new customer growth, length of stay, reactivation, and revenue per customer are critical to our short-term success. We are also focusing on product and program innovation to be able to offer consumers a more customized and personal approach to weight loss that meets their varied needs. In addition, we are optimistic about our long-term opportunities within the retail and digital space to attract new customers to our brand.
To view complete financials, see this link:
The top diet programs, according to the magazine, are: Weight Watchers, the DASH Diet, and The Biggest Loser. The list by the high profile news magazine started last year, with Weight Watchers taking the top spot.
U.S. News Names Best Diets for 2012
An Improved BMI Formula On The Horizon?
Medicare will pick up the tab for obesity screening and intensive behavioral counseling, the Centers for Medicare and Medicaid announced late Tuesday.
CMS, which first floated the obesity coverage plan last September, said it expects more than 30% of the Medicare population to qualify for the new benefit.
Beneficiaries with body mass index values of 30 or more can receive weekly in-person intensive behavioral therapy visits for one month, followed by visits every two weeks for an additional five months, fully paid by Medicare with no co-payment.Counseling must take place in a primary care setting such as a physician's office. It will not be covered when provided in skilled nursing facilities, hospitals, emergency departments, outpatient surgery centers, or hospices.
However, may are already criticizing this restriction, pointing out that many good weight loss programs provided in other settings (hospitals, commercial and medical weight loss centers) would not qualify. Also, if people are obese when they reach old age, they probably have a lifetime of bad habits that will be difficult to break.
According to GIA: "The landscape is vast with contenders including biotech companies such as Arena Pharmaceuticals and Orexigen Therapeutics to giant pharmaceutical companies gearing up to develop safer anti-obesity drugs with lower side effects."The research report titled: "Anti-Obesity Drugs: A Global Strategic Business Report" announced by Global Industry Analysts, Inc., provides a comprehensive review of trends, issues, strategic industry activities, and profiles of major companies worldwide. The report provides market estimates and projections in US$Million across geographic markets such as the US, Europe (France, Germany, Italy, UK, and Rest of Europe), and rest of World.
For more details about this market research report, visit:
Diet e-Book Published By John LaRosa & Susan Burke March:
"The Common Cent$Diet For The Busy Girl: Simple Do-it-
Yourself Weight Loss" - October 2011
John LaRosa, Marketdata's President and the former VP of Nutrition for eDiets.com, Susan Burke March, RD, have teamed up to co-author a brand new e-book. The CommonCent$Diet For The Busy Girl: Simple Do-it-Yourself Weight Loss, is a plan based on the use of 2 microwave "healthy" frozen entree meals per day, plus snacks, salads, etc. This is a 1400 calorie/day plan that is lower in sodium than the recommended daily allowance of 2200 mg.
Best of all for the frugal consumer, this is basically a ZERO COST, home-based program that IS sustainable long-term, using tasty brands such as Weight Watchers Smart Ones, Healthy Choice, Lean Cuisine, Amy's and Kashi. And, frozen entrees are portable, easily microwaved at work.
The only cost is $1.99 for the e-book, plus the cost of food a person would have to buy anyway--about $5/day for 2 frozen entrees. The typical American now spends $12/day on food eaten at home and away from home.
The 115-page book contains a 14-day regular and lower sodium meal plan, plus tips on stress management, exercise, the true cost of all the major diet programs, and much more.
In addition, purchasers of the e-book get free access to a supporting website: www.TheCommonCentsDiet.com, which contains, articles, videos, news, tips for online dieting, weight tracking tools, and a Blog by John LaRosa and Susan Burke March.
See the Press Release with more details here:
Common Cents Diet, Oct. 17 Press Release
Purchase the e-book at Amazon.com (Kindle reader) here:
Global Weight Loss Market to Reach $672 Billion? Really?
That's what a new study by MarketResearch.com says will happen by 2015. The report is entitled: "Global Weight Loss & Diet Management Products & Services Market (2010-2015)" and covers foods, beverages, drugs, surgeries, services, fitness equipment and accessories.
The global weight loss and diet management products & services market was expected to be worth $390 billion in 2010 and is estimated to grow to $672 billion by 2015, growing at a compound annual rate of 11.5% over that period.
The device and accessories market accounts for the largest chunk, worth $143 billion in 2010. According to MR.com, weight management services (i.e. programs) is growing at a fast pace and is expected to reach a size of $216 billion by 2015, growing at a CAGR of 16.2%.
We don't know where all this enthusiasm is coming from but we certainly don't see commercial or medical programs growing anywhere near 16% per year. Surgeries have been flat for several years and the diet soft drinks market has been flat to slightly down. Health club revenues in "normal" years grow about 7% annually. Maybe we're missing something. Maybe MR.com is expecting some tidal wave of overseas growth in China and developing countries, a move away from the current frugal do-it-yourself dieting trend, or several blockbuster prescription obesity drugs to be approved and enter the market.
However, considering the state of consumer confidence and the weak global economy, we just don't see any justification for these wildly optimistic projections. An 11.5% CAGR for the industry is nearly DOUBLE the historical pace of the past 20 years (about 6%/year). Will the period 2010-2015 really be that good? We'd take this report's forecasts with a BIG grain of salt.
Weight Loss Conference - "Marketing To The Overweight American" - Key Takeaways...
John LaRosa here... Got back from the MDPA's first annual weight loss industry conference in Silver Spring, MD on 9/27-28. If you weren't there, you missed a great event. Small turnout but very high level and interesting presenters. See www.mdpaconference.com for the agenda.
* The industry's growth has slowed with the recession, but individual companies (like Weight Watchers, Medifast) can still post strong results with great ad campaigns, service and innovative thinking.
* Small weight loss companies can out-market and out-perform giants by being creative and entrepreneurial.
* Look for a major new health information portal called Sharecare to be launched for consumers in Q1 2012. Dr. Oz is a partner. Now offered to hospitals, MDs and other healthcare providers. Very robust platform of tools and community features. See www.droz.com for his $1 million Transformation Nation challenge.
* Weight Watchers recognized by all as the best performer right now - hitting on all cylinders.
* Social media is critical to include in a weight loss marketer's arsenal.
* FTC very active in policing diet frauds and outrageous claims, but staff is limited. They more than have their hands full. In 2007, 4.8 million Americans were victims of diet product/service frauds or scams--more than any other product. FTC has jurisdiction over diet PROGRAMS and SERVICES as well, not just products.
* Glaxo looking to divest itself of the Alli OTC brand.
* Revolution Health bought out by Everyday health.
* Red flag products today for the FTC: Hoodia, HCG, Acai Berry claims.
* Health is not a popular topic for mobile apps. People look for this information via websites, using their computer.
* TV advertising on diet products: Q2 is the biggest spending period--not the 1st quarter. Best to reach female dieters via early morning news, men at night. States where people really take action to lose weight are NOT where you'd expect (i.e. deep South with high obesity rates), but in KY, FL, TX, Montana, Idaho, Wyoming, Colorado.
* Newspapers ranked #3 in media watched by the obese. These people are more likely to treat their obesity. Obesity rates vary by state and by county, newspapers lend themselves well to local targeting.
* The best performing diet company advertisers are customer "advocates" rather than "advertisers". There's a big difference. An advocate finds a shared purpose--what can we do to help each other? Advocates listen and create "ambassadors" that multiply and go viral. Engage potential customers.
See John LaRosa's Powerpoint slides (industry status report, forecasts for 2011, 2014) from the conference here:
Dieting Is Big Business in Canada Too...
Obesity is apparently big business in Canada too--about one tenth the size of the United States market. Many of the large U.S. weight loss companies have outlets in Canada (Weight Watchers, jenny Craig), along with many home-grown chains. According to The Star, at least $6 billion is spent annually by Canadians for weight loss surgeries, diet pills, special diets and meal replacements.
However, say obesity experts north of the border, it's literally a "free-for -all", Wild West market, in terms of regulation. Almost a third of that $6 billion is spent by the highest risk persons that are obese.
Health Canada rules sate that "medical devices must not be advertised to the general public making any claims related to obesity." Medical procedures in general are a provincial responsibility..
A study by the Canadian Obesity Network claims that 3 million people considered obese in Canada spend an average of $580 per year for quick fix solutions. Much of that money goes to non-prescription weight loss products such as herbs and supplements. Those products are approved by Health Canada's Natural Health Products Directorate.
Regulations regarding marketing have essentially been abandoned amid the sheer volume of weight loss products, which makes monitoring almost impossible. The agency Health Canada has the power to crack down, but doesn't, say those following the market.
Diet Plans Ranked by The Magazines - How Good Are The Rankings?
U.S. News & World Report
U.S. News's first-ever rankings, released last week, evaluated diets in seven categories, including short-term weight loss, long-term weight loss, easiness to follow, and nutritional completeness. The government-endorsed DASH Diet (Dietary Approaches to Stop Hypertension) snagged the top spot overall.
Weight Watchers came in #1, while Jenny Craig and the Raw Food Diet came in #2. The Glycemic Index (used by NutriSystem) and the Paleo Diet came in at the bottom, due to their alleged lack of scientific evidence and long-term weight maintenance. The Dean Ornish diet came in best for heart health.
The best commercial diet plans included Weight Watchers, Jenny Craig, then Slim-Fast, while the Atkins Diet and Medifast came in last.
Best Diets cuts through the clutter of claims and half-truths to deliver the facts about 20 diets, including many, such as Weight Watchers, that are household names and others, such as the DASH Diet, that should be.
A U.S. News team spent six months researching the diets, mining medical journals, government reports, and other sources. An in-depth profile was then drawn up for every diet that explains how it works, whether its claims add up or fall short, and what risks it might pose, along with insights into living on the diet, not just reading about it.A panel of 22 recognized experts in diet and nutrition and specialists in diabetes and heart disease reviewed the U.S. News profiles. Then the experts rated each diet from 1 to 5 in seven categories: short-term weight loss, long-term weight loss, how easy it is to follow, its nutritional completeness, its safety, its ability to prevent or manage diabetes, and its ability to prevent or manage heart disease.
Consumer Reports Magazine
In Mid-May, Consumer Reports released its own rankings on the leading diet programs on the market. They had Jenny Craig, Slim-Fast and Weight Watchers taking the top 3 spots, derived by aggregating hundreds of published studies over the past six years. They measured nutrition, daily calories, drop-out rates and both short and long-term weight loss scores from clinical studies.
The CR study does admit that it was not able to measure the effectiveness of counseling, community or a support system element in a successful diet program due to lack of published information. But, they note that Weight Watchers, Jenny Craig and NutriSystem all are known for their counseling and support--whether it's in-person or online.
National Institute of Health Obesity Plan
More than a third of adults and nearly 17% of children in the United States are obese, increasing their chances of developing health problems including type 2 diabetes, heart disease, high blood pressure, fatty liver disease and some cancers.
"This plan is a bold blueprint that will encourage the research community to examine the epidemic of obesity from diverse perspectives," National Institutes of Health (NIH) Director Dr. Francis Collins said in a statement.
The NIH spent $971 million in fiscal year 2010 on obesity research, with $147 million of that in one-time stimulus funds.
Under the plan, NIH will fund studies to test new ways to reach and maintain a healthy weight in real-world settings and diverse populations.
It also will focus on understanding biological processes that regulate weight, and factors that contribute to obesity and the health issues it causes.
Obesity-related diseases account for nearly 10% of U.S. medical spending, or an estimated $147 billion a year.
Studies have shown that obese children are more likely to stay obese as adults, and that they develop chronic conditions at younger ages, burdening the healthcare system.