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The Diet Industry the Diet Industry Issue: The Diet Industry The Diet Industry By: Lisa Rabasca Roepe Pub. Date: March 5, 2018 Access Date: September 24, 2021 DOI: 10.1177/237455680408.n1 Source URL: http://businessresearcher.sagepub.com/sbr-1946-105904-2881576/20180305/the-diet-industry ©2021 SAGE Publishing, Inc. All Rights Reserved. ©2021 SAGE Publishing, Inc. All Rights Reserved. Will it adapt to changing attitudes? Executive Summary The $70.3 billion industry for diet products and plans is experiencing a shakeout as consumer perceptions shift. The industry still fills a need, since about 70 percent of U.S. adults are overweight or obese, according to government data. But attitudes about how to control weight are changing, as many dieters bounce from one plan to another without finding satisfaction. Many give up on dieting altogether in favor of a broader approach that emphasizes eating a wider variety of foods, exercising and seeking to sustain a healthy lifestyle. In addition, new competitors are entering the field to challenge the traditional industry leaders, but the established firms are finding ways to survive in the changing climate. Key takeaways include: The year 2017 was a period of recovery for the industry after several down years for major players such as Weight Watchers. One well-established company, Nutrisystem, has been especially successful in adapting to a changing business environment by seeking partnerships with major retailers. Fitness apps and trackers, once seen as a potential industry disrupter, have had a mixed record, in part because owners often stop using them after a few months. Click hear to listen to an interview with author Lisa Rabasca Roepe. Full Report Sales of meals offered by Weight Watchers and other diet companies have declined as consumer preferences change. (Michael Nagle/Bloomberg via Getty Images) For the last decade, Michelle Lowrey, 47, has wanted to lose weight. First she tried the SlimFast Plan, but says she could not stay on it for longer than a month. Then she went on the Atkins diet and lost 10 pounds but found that, once she went off it, she quickly gained the weight back. Eventually, Lowrey, who lives in San Antonio, decided to ditch dieting altogether and try to lose weight on her own – but that didn’t work Page 2 of 12 The Diet Industry SAGE Business Researcher ©2021 SAGE Publishing, Inc. All Rights Reserved. either. “I know what’s healthy and what’s not, but it’s hard to do it by myself,” she says. She decided to give dieting another try in January 2017 and turned to the Weight Watchers program. Since then, Lowrey has lost 40 pounds. Lowrey’s weight-loss journey epitomizes many consumers’ experience. They try a diet, get tired of it and then try something else. After several attempts, many give up on dieting and try to focus on healthy eating instead. The difference is one of emphasis: Most diet regimens stress what not to eat and are associated with a mindset of deprivation, while healthy eating focuses on making better choices, such as fruits and vegetables, and achieving a balance of foods. “Diet is really a passé term,” says Jillian Bridgette Cohen, co-founder and CEO of Virtual Health Partners, which offers a platform that provides a personalized nutrition plan. She says most people are looking for something sustainable that focuses not just on weight loss but on wellness, which she defines as balancing fitness, nutrition and lifestyle modification. When consumers see TV shows such as “The Biggest Loser” where contestants lose significant amounts of weight only to gain back every pound – something that has happened repeatedly – they begin to question whether dieting is worth the effort, Cohen says. 1 In fact, the percentage of women who say they are currently on a diet has dropped 13 percentage points during the last two decades, according to the NPD Group, a research firm in Herndon, Va. 2 This changing attitude may explain why the $70.3 billion diet industry is experiencing a significant shake-up. 3 As consumers put more emphasis on being healthy rather than just slimming down, new approaches to wellness have challenged the traditional diet companies that have dominated the industry for decades. Yet many of these companies are finding ways to adapt and to preserve or regain their market share. The diet industry covers a wide range of products and approaches. It includes diet soft drinks; artificial sweeteners; health clubs; commercial diet center chains; multilevel marketing diet plans such as Herbalife; over-the-counter meal replacements and diet pills. The industry also encompasses meal-kit delivery services such as Nutrisystem; low-calorie entrées and low-carbohydrate foods; diet books; exercise DVDs; medical weight-loss programs and weight-loss surgery. The industry instability is reflected in recent sales data. Some prominent traditional players in the diet business, such as Weight Watchers and Medifast, experienced softening revenue from 2014 to 2016. 4 But things turned around in 2017, according to Marketdata LLC, an independent market research firm in Tampa, Fla., that has tracked the U.S. weight loss industry since 1989. Sales for commercial diet chains rose 14 percent that year and one major company, Nutrisystem, posted an estimated 27 percent gain, Marketdata reported. 5 Why the sudden reversal? Similar to Lowrey’s experience, about 500,000 do- it-yourself dieters decided to join structured programs such as Jenny Craig, Nutrisystem and Weight Watchers because they were not seeing results, says John LaRosa, Marketdata’s research director. “People are not able to lose weight and keep it off successfully on their own,” he says. For a time there was much talk of apps such as MyFitnessPal disrupting the industry, but research shows that most people stop using apps and fitness trackers after three or four months and that the apps are not as effective as a commercial diet program for long-term success. A survey of 6,223 U.S. adults in 2014 found that while one in 10 owned an activity tracker such as a Fitbit or Jawbone, more than half said they had stopped using it; one-third said they stopped during the first six months of ownership. 6 These trends are playing out against a backdrop of heightened public concern about the health risks associated with excess weight. About 70 percent of U.S. adults are either overweight or obese, according to the U.S. Centers for Disease Control and Prevention (CDC). 7 Rates of obesity – defined as having an adult body mass index (BMI) that is 30 or higher (the normal range is 18.5 to 25) – have climbed steeply in recent years, according to CDC surveys. 8 A report from the Robert Wood Johnson Foundation, a public health philanthropy, predicts that by 2030, 13 states could have adult obesity rates above 60 percent, 39 could have rates greater than 50 percent and the national rate could be above 44 percent. 9 The report predicts that this increased obesity will lead to more than 6 million cases of type 2 diabetes, 5 million cases of coronary heart disease and stroke and more than 400,000 cases of cancer in the next two decades. 10 South Suffers From Highest Obesity Rates Percentage of obese adults by state, 2016 Page 3 of 12 The Diet Industry SAGE Business Researcher ©2021 SAGE Publishing, Inc. All Rights Reserved. Source: “Percent of Adults Obese: (State) (2016),” SAGE Stats/Centers for Disease Control and Prevention, last updated November 2017, https://tinyurl.com/y99ehpgt Most of the 10 states with the highest obesity rates in 2016 were in the South. West Virginia had the highest rate, at 37.7 percent; the national median was just under 30 percent. Other market forces also are at work. The rise in rates of obesity and diabetes creates an increased need for medical weight-loss programs. But uncertainty about the future of the Affordable Care Act (ACA) has led fewer people to enroll in weight-loss programs offered by physicians, hospitals and clinics, LaRosa says. Meanwhile, Millennials – now the largest age cohort in the United States – are less interested in eating processed foods with artificial ingredients and more likely to shun diet sodas. 11 And while most traditional weight loss programs are aimed at the 35-year-old woman with a couple of kids and a few pounds to lose, says LaRosa, diet programs are finding ways to expand their services to overweight men, teenagers and senior citizens. LaRosa predicts that the commercial weight loss programs’ 2017 rebound will continue. Marketdata forecasts an 11.7 percent gain for Weight Watchers to $1.3 billion, a 5.7 percent gain for Jenny Craig to $334 million and an 8.1 percent gain for Medifast to $296 million, he says. In fact, Nutrisystem sales have been growing in double digits during the last three or four years, LaRosa says. Part of the reason for Nutrisystem’s success is that it has broadened its retail distribution by enlisting a variety of partners, including Costco, QVC, Walmart and Amazon, which offer a $49 trial Nutrisystem pack that allows consumers to test it before spending nearly $300 on a 28-day supply. Nutrisystem aims to simplify dieting by shipping prepackaged meals and desserts directly to the client, who supplements the meals with fruits, vegetables, nuts, fresh meat and dairy. In contrast, programs such as Weight Watchers and Jenny Craig have shunned using outside channels to deliver their program and products, LaRosa says. Participation in Weight Watchers or Jenny Craig requires going to their meetings, where their shakes, minibars and proportioned snacks are for sale. “You can’t always ask people to come to you and commit to a weekly meeting,” LaRosa says.
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