Diet Plans Feed An Industry

By:  Cheryl Tully Stoll

From 2006 Archives

 

Estimates suggest that diet industry revenues this year will be $40 billion as we continue to pile on the pounds. Just for comparison, McDonald’s only did $20 billion in revenue in 2005. That $40 billion figure does beg the questions: how effective is the diet industry, and are its players just taking advantage of a serious public health threat?

Candy company Nestle’s recent announcement of their intent to purchase Jenny Craig suggests Nestle is trying to have its cake and eat it too. The weight loss business has had an annual revenue growth rate of 14 percent over the last five years; it’s unfortunate that trend is directly opposite the movement Americans are seeing on their bathroom scales. As diet company profits continue to grow, so does America’s waistline. If these diets were truly effective, wouldn’t our belts be looser and our pant sizes smaller?

There are a plethora of diets and plans to choose from. They’ve been named after beaches, cities, people, foods, things that sound like chemical compounds and voyeurs. They come in the form of centers, meetings, books, on-line activities and you name it. You can’t open a women’s magazine without finding diet advice of one kind or other — even advice on how to look thinner without ever losing a pound.

The one name that seems to be missing however is the Yo-Yo Diet. That is what most people end up doing when they try to follow one of these plans. It means that many folks initially lose weight then gain most, all or more back.

There are plenty of people who achieve short-term success with diets and even some others who are able to manage it for the long haul. The problem is that going on “a diet,” implies an event, not a lifestyle change. It makes sense that if we reduce our caloric intake and increase our exercise level that we will lose weight. The problem is that many people, even when they do reach their goal weight, revert back to their former habits. After all, “the event” is over, how long can the average person afford to continue to pay fees for membership or to buy special foods? It’s expensive and very inconvenient.

Some physicians and nutrition professionals concede that out of the major diets and diet programs available Weight Watchers has one of the better models. Unfortunately, when researching this piece I learned something very troubling. On their financial information Internet home page Weight Watchers states that members “have historically demonstrated a consistent re-enrollment pattern across many years.” Their marketing page, on an entirely separate Web site coincidentally, only talks about successes. A quote from that page says, “Coaching and real-life insights to help you lose weight and keep it off.”

It’s interesting how they tell prospects one thing, but boast to potential investors that so many people fail to keep the weight off that those souls provide an annuity stream of repeat business. Given this fact, it should come as no surprise that the Weight Watchers brand had worldwide sales of over $3 billion in 2005 alone. I wonder what that equates to in the cost per pound that was permanently lost?

According to their 2005 annual report, NutriSystem had 52,000 new customer starts in 2004 and 347,000 in 2005. Note that they use the word “starts.” Sounds like some repeat business to me. And it obviously works for them. The company had total net revenues of $213 million in 2005, which was an increase of 459 percent from the previous year and net income of $21 million, which was almost 2000 percent higher than in 2004. Not too shabby for a brand that they just began “reawakening” in 2003; however I’m sure it was a rude awakening for some of their clients no doubt.

            If you look at NutriSystems advertising, it’s not hard to figure out how they garner new clientele. They run the famous before and after photo ads. What I want to see a diet program do is run a before photo, an after photo and then a three-years-after photo. That’s true testimony to lasting weight loss.

And speaking of true testimony, I was very interested to learn that after each of these tremendously motivational success vignettes, there was a small asterisk that appeared. When I went to the bottom of the two-page ad, I found that the asterisk meant, “Results not typical.” Translated into English, this phrase means, we’re only interested in clients who look at the pictures and can’t read. Yep, I’d be hot to hand over money to a company that prowls for customers with such mind-bending integrity.

Their ads also say, “Eat free for a week!” Obviously there are still people out there who haven’t realized that there’s no such thing as a free lunch. As a matter of fact, in 2005 NutriSystem found 347,000 of them.

Unfortunately going on a diet implies temporary behavior modification instead of permanent lifestyle change. Healthy eating and physical fitness shouldn’t be events, they should be the way we live our lives. If you read the medical literature on weight loss and fitness, the majority of it recommends lifestyle changes, not diets, for permanent success. This fact makes LA Weight Loss’s value statement on their home page, “With LA Weight Loss, you lose the weight, not the lifestyle,” just a little incongruous.

Privately held LA Weight Loss claims 700 centers worldwide. They also claim “easy, effective, affordable weight loss.” You’d think if it were that “easy” to lose weight their way, they’d have at least as many centers as McDonald’s has restaurants (30,000).

I’d be remiss if I concluded this piece without mentioning the fad diets that have been sweeping the nation for the last 35 plus years.

Diets of the past include Scarsdale, Grapefruit, Pritikin, Ice Cream, Stillman, the ghoulish Blood Type Diet and the Cabbage Soup Diet. I remember when I was in high school the whole neighborhood tried the Cabbage Soup Diet for a week. I don’t think anyone who lost weight actually kept it off, but the entire neighborhood is now located 50 feet north of where it was when the diet began.

Recent diets include Atkins, South Beach, Dr. Phil, Slim-Fast, The Zone and lest me not forget the Kellogg’s Special K diet plan. It seems their pinching-an-inch diet didn’t work out as well as planned; so now that folks can grab a couple of fists full, they’re back at it.

So, if the diet industry wins $40 billion in revenue this year compared to McDonald’s $20 billion last year and people get even heavier next year, who loses?

 

Copyright Ó 2006, 2008 by Cheryl Tully Stoll