Jan. 6 (Bloomberg) -- Let the 2014 diet wars begin.
For this year’s weight-loss season, Nutrisystem Inc. is trying to capture resolution-making Americans with a plan that uses an algorithm to calculate the calories an individual needs and then sends them food from a menu personalized to their tastes. Weight Watchers International Inc. has a new two-week jumpstart plan with a mobile application, while Medifast Inc. is adding store locations through franchising.
No matter what products they introduce or new spokesmen they put in commercials, diet companies are facing two major obstacles. One is growing competition from digital upstarts that give away their products for free, and the other is the age-old problem that people typically fail to keep off the pounds and eventually quit dieting.
“You’re going to need a coach and to have a support system that will make it last beyond the first week, first month, first quarter of 2014,” George Blackburn, a professor of nutrition at Harvard Medical School, said in an interview. Blackburn, who’s also director of the Center for the Study of Nutrition Medicine in Boston, estimates those types of diets don’t work for three quarters of people.
Not that the daunting odds will stop Americans from signing up for a diet plan to shed pounds gained during the annual holiday bacchanal. The industry, having struggled during the economic downturn as consumers cut spending, is counting on a lift amid rising disposable incomes and growing awareness of the nation’s health problems. About 36 percent of adults in the U.S. are considered obese, according to the Centers for Disease Control and Prevention.
U.S. weight-loss industry sales will rise an estimated 3.2 percent this year, following a projected 3.1 percent increase to $2.4 billion in 2013, according to a July report from researcher IBISWorld Inc.
Yet many Americans seeking to shed pounds are turning to free mobile diet and fitness applications, such as MyFitnessPal LLC, which received $18 million from venture-capital firm Accel Partners in August. MyFitnessPal users can track exercise and calories from a database of more than 3 million foods for free. Other free smartphone apps include Nutrino, where users can build a personalized menu, and My Diet Coach, which sends nutrition reminders and motivational photos and slogans.
Free mobile apps have “really hurt” Weight Watchers and other diet companies, Kurt Frederick, an analyst at Wedbush Securities Inc. in San Francisco, said in an interview.
“If you could use MyFitnessPal for free, why would you sign up for Nutrisystem or something else?” he said.
Weight Watchers, the largest U.S. diet company, is using singer and actress Jessica Simpson to tout its new two-week Simple Start program, which gives clients a list of food to eat and has a mobile app. For those who want access to meetings and online tools, the New York-based company charges $32.95 for the first month’s pass. That’s less expensive than Nutrisystem and Medifast because it doesn’t include any food. Medifast sells a four-week starter weight-loss kit of food for $363.90, while Nutrisystem’s core 28-day menu of fare is $269.99.
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 and actress in the musical “Wicked,” participate in a webinar with clients.
Jenny Craig may not have much new this year until its acquisition by North Castle Partners LLC, announced in November, is complete. The Greenwich, Connecticut-based private-equity company is combining Jenny Craig with its Curves fitness clubs for women. Jenny Craig sells meals such as beef chow mein and cheese omelets and also has in-person and over-the-phone weight-loss coaching.
The company is poised to gain new customers as the implementation of the Affordable Care Act gives health-care providers new opportunities to be reimbursed for obesity prevention and treatment, Laurie Masonson, a spokeswoman for the company who works for MSLGroup, said in an e-mailed statement.
Jenny Craig’s system of personalized consultants is a more proven system than do-it-yourself fitness apps and helps members keep weight off effectively, she said.
Medifast, which had 83 corporate stores and 36 franchises as of Sept. 30, is closing some underperforming centers and plans to double the number of franchises in the next three years. The Owings Mills, Maryland-based company also is improving its mobile business and making its website easier to navigate with a simpler layout.
Chief Executive Officer Mike MacDonald said in an interview that 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.
“There has to be a combination of technologies now because the younger generation is much more technology-savvy,” said MacDonald, who declined to name the firms Medifast is working with. He said his company’s plans, which give people five meals and snacks for about $10 a day, are affordable and offer benefits free apps don’t.
Medifast shares fell 0.8 percent to $25.36 at 3:22 p.m. in New York. Nutrisystem declined 5 percent to $16.18 while Weight Watchers lost 1.5 percent to $31.88. Medifast shares fell 1 percent in 2013, while Nutrisystem more than doubled and Weight Watchers lost 37 percent.
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 Fort Washington, Pennsylvania-based company aims to have its customers lose 1 pound to 2 pounds a week by consuming 1,000 to 2,000 calories a day.
“We don’t live in a one-size-fits-all world,” Chief Executive Officer Dawn Zier said in a telephone interview. “People really want personalization and choice.”
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. For a 40-year-old, 5-foot-4-inch woman who weighs 180 pounds and doesn’t do much physical activity, the plan recommends taking in about 1,200 calories a day to lose weight. It also suggests menus that satisfy cravings with food including ice-cream sandwiches, soft pretzels and tortilla chips.
In the latest Consumer Reports survey, Nutrisystem’s meal-replacement programs ranked the lowest of commercial diet plans based on how well participants were able to maintain their weight loss. Respondents ranked the company worse than Weight Watchers, Medifast and Jenny Craig.
Nutrisystem’s new diet worked for Lori and Oscar Balderrama, a married couple in Rancho Cucamonga, California. The pair, which love to each pizza and spicy foods, needed help losing about 37 pounds each. They started the diet in late September, before it was offered to the public, through the television show “The Doctors” and have each lost about 32 pounds so far. Nutrisystem provided their food but didn’t compensate them.
“We joke that the local pizzeria knew us by name,” Oscar said in an interview. They had tried losing weight in the past - - Oscar had spent $600 on a personal trainer while Lori had lost about 15 pounds on Weight Watchers before gaining it back.
It isn’t easy to keep pounds from creeping back on, especially if dieters aren’t actively watching portion sizes and learning about healthful eating, said Dawn Jackson Blatner, a registered dietitian and nutrition consultant in Chicago.
“Don’t just close your eyes and put your fork in your mouth,” she said. “If you don’t learn from it, you will just go back to regaining weight.”
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