Nestlé has become the latest multinational to take a bite out of the diet food market by acquiring US brand Jenny Craig for $600m (£324m). Meanwhile, WeightWatchers is preparing a marketing blitz after handing its £2m advertising account to Vallance Carruthers Coleman Priest (VCCP) (MW last week).
Established brands such as Slim Fast and WeightWatchers, made under licence by Heinz, have already beaten off challenges from fad diets such as Atkins, but many food manufacturers now view healthier options as a key growth category.
Although Jenny Craig is currently available across the US, Canada and Australasia, Nestlé has no plans to launch it in the UK or Europe. But Unilever is relaunching its Slim Fast brand and investing £6.5m in marketing, a packaging overhaul and new product development such as smoothies. With sales of £24.2m (source: IRI), Slim Fast is the leading brand in the weight-loss category.
The slimming foods market is worth £39.4m, according to IRI data for the four weeks to May 20. As well as Slim Fast and WeightWatchers, supermarkets have a large part of the market with their own-label ranges such as Sainsbury’s Be Good to Yourself and Tesco’s Healthy Living.
Despite consumers becoming increasingly aware of the need to eat a healthy diet amid the obesity debate, the diet products market faces a number of issues. It is subject to seasonal peaks, such as New Year and the early summer months. Products are also prey to negative perceptions about their nutritional integrity: for example, if a product is low in fat, it often has high levels of added sugar.
Low cal – low quality?
One industry insider says: “It is hard to make low-calorie or low-fat food without additives, meaning it’s difficult to meet demand for better quality products. It’s important to spend on advertising, which does lead to an uplift in sales. But the market is seasonal and all brands tend to advertise at the same time, so it gets very cluttered.”
Matthew Cullem, marketing manager for the WeightWatchers from Heinz range of frozen products, believes that the brand has become trusted through its foods and WeightWatchers slimming clubs. He adds: “We support dieters through what can be a very emotional time. But consumers who buy the food products don’t always attend the classes.”
The industry insider points out that WeightWatchers also suffers from being in the frozen category, where even the big brands such as Birds Eye and McCain struggle to maintain sales. He says: “Frozen ready meals is a very static category at the moment. It’s the chilled category where the innovation is.”
There have been suggestions that Heinz was looking to sell WeightWatchers as it did not fit with the company’s core areas of infant feeding, sauces and dressings, beans and pasta meals, but these plans appear to have been put on hold.
Cullem points out that the brand has a 52% value share of the frozen healthy ready meals category. He says that the introduction of new packaging and a range of recipes “for dieters, by dieters” have helped to increase volume sales by 26% in the 12 weeks to May 20. VCCP will develop a TV and press campaign for autumn.
‘Better’ brands bad for sector
Diet brands should be well placed to take advantage of the growing concern about the UK’s expanding waistlines, but manufacturers are likely to come under pressure to improve nutritional content. A trend towards traditional food brands trying “better for you” products as a route to growth is likely to squeeze such brands further.