Strategic advice for the food and beverage industry

Has a tech-inspired consumer shift pushed Weight Watchers into a spiral of doom?

Weight WatchersA year ago, every warning light was flashing red for weight management giant Weight Watchers, whose sales fell by 6.3% in 2013. In response, the company’s CEO announced that, “We are confident that we are on the right track to execute a successful transformation.”

But one year later, Weight Watchers’ decline is accelerating and the signs are that, thanks to a massive shift in consumer behaviour, things can only get worse.

Born in 1964, Weight Watchers meetings and motivational groups were the first of their kind. Its weight management programme is clinically proven – and actually recommended by health authorities in the US, UK and elsewhere. But what Weight Watchers offers is losing consumer relevance.

There was no good news in the company’s results, announced last week:

  • In the year to January 3rd 2015 sales were down 14%.
  • Fees earned for weight management meetings – the face-to-face support groups which the company invented in the 1960s and which account for 50% of total company revenue – fell by 12.2%. This followed an 8.9% decline the previous year.
  • Even the company’s website – hailed as a way of developing the business in a market in which online is taking over from face-to-face interactions – saw its users decline by 16.7%, following a 6.7% decline the previous year.

Technology has been one of the strongest challenges to the Weight Watchers business model. The proliferation of free apps and online programmes has undermined the value to consumers of paid-for weight management programmes offered by Kellogg Special K, Weight Watchers, NutriSystem and Jenny Craig, all of which have seen sales plunge.

And that’s not the only problem. Food manufacturers in the US and Europe market products under the Weight Watchers brand (paying Weight Watchers a license fee). But if something says “Weight Watchers”, it is no longer a “normal food” in the eyes of today’s consumers. And hence it’s unsurprising that sales of Weight Watchers branded foods are also falling. In the UK, for example, sales were down 12% in 2014, following a 12% fall in 2013.

The whole weight management market has undergone a massive shift:

  • Weight Watchers has to compete against free alternatives online
  • thanks to modern work patterns and demands, fewer people are able to make the time commitment to turn up at a meeting each week
  • weight management has switched from being something specific and separate to an everyday concern with “weight wellness” top-of-mind in people’s everyday eating choices
  • “specially designed” weight management foods are falling out of favour.

Short of a massive shift in its strategy, it’s difficult to see how anything can save Weight Watchers from further declines.

Posted in Editorial, Mainsite

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