Piling on the Profit
There's no slimming down for companies selling diet products
Ediets.com, a publicly traded company, has emerged as the single largest dieting location on the Web. Ediets offers bulletin boards for dieters facing specific challenges, such as "suddenly single" and "new mothers," as well as personalized meal planning and shopping lists. It recently added the Atkins and Zone diets. Revenues, $30 million last year, come primarily from the $5 a week it charges members. "The Web gives dieters the convenience and privacy they won't get at Weight Watchers meetings," says CEO David Humble. (Not to be outdone, Weight Watchers ramped up its online presence in 2000 by licensing its name to a separate dot-com company, WeightWatchers.com, of which it owns 38 percent.)
By contrast, after zigzagging through the 1990s, Jenny Craig, which offers one-on-one counseling together with prepared foods, is trying to stage a comeback. It faltered by diluting its emphasis on "real food" when bars and shakes became popular, and by hiring Monica Lewinsky to do a TV commercial. That angered some of its own counselors, who believed the former intern was too naughty a role model. The chain also blurred its image by aligning itself with doctors who prescribed the drug fen-phen, which proved to have harmful side effects.
Today, the big-gest risk facing the weight-loss business would be a new, effective prescription diet drug. Sales of the two leading drugs, Abbott Laboratories' Meridia and Hoffman-LaRoche's Xenical, have been a disappointment--in part because of the legacy of fen-phen. Doctors are nervous about prescribing obesity drugs because of liability, and the weight loss that today's drugs offer is modest compared with the poundage dieters shed using fen-phen. There are more than a dozen diet drugs in development. But no magic pill is likely anytime soon to put the diet industry on the defensive.
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