The Weight Loss Industry, What an Opportunity to Grow the Bottom Line!
From all of the advertising I’ve been seeing lately for products and services designed to help people lose weight, such as Jenny Craig, South Beach Diet, Atkins, SlimFast, the Special K Diet, Hydroxy Cut, Kraft 100 Calorie Snacks, Quizno's Sammies and GlaxoSmithKline's Alli; my guess is that spending in this category is growing at least as fast as our waistlines. So I wanted to take a closer look at the growth in marketing and advertising in this category and how makers of fast and fat foods are getting a piece of the pie. Here are a few things I uncovered from Adage and corporate websites:

Americans spend over $23 billion last year on weight-loss products, including diet pills, diet and food and ad spending in the weight loss industry is expected to reach a new high this year.

The top leaders in the $60 billion weight-loss industry are Jenny Craig, Weight Watchers and NutriSystem, these three players spent a combined half a billion dollars on TV and print advertising last year, according to TNS Media Intelligence.
• Weight Watchers revenue is estimated $1.5 billion for 2007, up 20% from ’06.
• Jenny Craig’s showed a 50% average annual return since 2002, JC sales for the first three quarters of 2007 are estimated $530 million, compared to about $400 million for the four quarters of the ’06, the brand

• The Atkins Diet ad budget grew from $5.4 million print campaign in 2002 to more than $30 million including TV, print and radio.

This year, GlaxoSmithKline launched, Alli the only over the counter FDA approved weight loss product available without a prescription. The product was launched with a $150 million advertising and marketing budget; spent on TV, direct marketing, in-store displays and web. Sales of Alli were so hot that GSK broke-even on their marketing investment in the first five weeks. Analysts predicted Alli sales would be between $200 million and $500 million for the year, possibly 200% marketing ROI or higher. All that with side effects of “gas and leakage” listed right on the package. 

Marketers that sell products that make consumers overweight now sell products to help them lose that Weight
It seems like the diet product business would be a good one to enter, since it’s a growing market and only a small percentage of dieters who lose weight keep it off, so they need to either keep coming back for more diet solutions, or go back to eating the fatty foods. Based on this insight smart marketers would sell both the products that people like to overeat and also sell the products that help people take that weight off, that way people could continue to buy products from them no matter which cycle they were in feast or fast, and the marketer would always have customers.

Here’s a few that are doing just that…

Kraft Foods and Nabisco, makers of high fat foods Cheez Whiz, Cool Whip, Miracle Whip, Oreos, and Chips Ahoy (as well as low cal Crystal Light and sugar free Jello); have made inroads over the last few years toward solutions to help people lose weight.

Criticized by consumer advocacy groups several years ago for their ads showing sedentary teenagers lying around eating a whole package of Oreo cookies, they developed a set of socially responsible advertising guidelines which included showing healthier serving sizes and active lifestyles. Their new ads showed three young girls dressed in their ballerina outfits (doing something active) dunking only one cookie (portion control), into a glass of milk (healthy nutrition message).

Kraft also launched a line of Nabisco 100 Calorie Packs, pre-portioned, single-serve packages, for those who still want to eat “junk food” but want or need portion and calorie control. The line includes, Chips Ahoy! Thin Crisps, Oreo thin Crisp, Ritz Snack Mix, Planters Peanut Butter Cookie Crisps, Kraft Cheese Nips Think Crisp, and Barnum’s Animal Choco Crackers. I have to say the serving size looks kind of wimpy to me, compared to sticking your fist into a big bag of chips or cookies and eating the whole thing, but its probably the right size snack for someone who wants to watch their weight and a good way to show kid’s what a realistic portion is.

Kraft Foods partnered with South Beach Diet in 2004 (as a way to gain distribution for their healthier Kraft Brands, provide marketing and product development expertise to South Beach and capture consumers who are watching their weight). Kraft is now testing out South Beach Diet vending machines in Florida. The machines are stocked with Kraft foods that meet the South Beach Diet criteria; including Planters nuts, Breakstone's low-fat cottage cheese, Crystal Light drinks, Jell-O sugar-free gelatin snacks, Nabisco Wheat Thins and the new South Beach Diet lunch wraps. All products are co-branded Kraft and South Beach Diet. I wish there was one of those in the lounge at GGU, where I teach.

Nestle is another marketer of fat food, known mostly for making chocolate, they are now expanding their piece of what they call the growing “nutritional” market. They bought Lean Cuisine, Power Bar and most recently, Jenny Craig. They bought Jenny Craig for $600 million in 2006, Jenny Craig was valued at $116 million in 2002, experiencing more than 400% in brand value in four years. The growth was due to in part to increased ad spending and the memorable campaigns featuring the rubinesque celebrities Kirstie Alley, Queen Latiffa and Valerie Bertinelli slimming down right before our eyes, the message, if they can do it so can I.

They can continue to sell us chocolate and then sell solutions for losing weight. Now that’s smart marketing!