The magic is back

Prepared Foods, July, 1992 by Margaret Littman

Diet foods have been in the news for several years. From Healthy Choice frozen dairy desserts to Slim-Fast snacks to Lean Cuisine entrees, slim is still in. Somewhere in the proliferation of new product introductions, Weight Watchers - the granddaddy of them all - developed a stodgy, old-fashioned reputation.

But the high-profile, innovator of the 1980s is back, promises David Sculley, senior vice president at H.J. Heinz, who has been challenged to resuscitate the brand. Wall Street speculators say Sculley will be named president and COO in the near future, and eventually chairman after the high-profile CEO O'Reilly retires.

But Sculley's concern for now is Weight Watchers. Acquired in 1978, the Weight Watchers Division has undergone a complete reformation, beginning last July, resulting in what Sculley calls "a new Weight Watchers food company."

The thrust of the reformation was to get "the product line in tune with the time." This was achieved, Sculley says, by making the nutritionals competitive, keeping a focus on good taste, introducing innovative new products (like Weight Watchers Stir Fry), creating a new advertising campaign, and making prices competitive. The new product lines, like the Stir Fry and Weight Watchers 200 (products with fewer than 200 calories), display different graphics from the main brand.

The results are already becoming clear. As of April, market share for the frozen entrees was up 18% over last year, to a 12.3% share. The dessert line is far and away the market leader with a 36.5% share, up over 46% from last year. The different package graphics and new ad campaign have targeted a broader audience than before, although the focus group is still the 60% of women who go on a diet in any given year, according to a Weight Watchers consumer study.

Emphasis on health and fitness versus strict weight loss has helped the brand appeal to men, as well as those interested in maintaining their weight. The new tagline, "Total indulgence, zero guilt," enables the brand to compete against weight-loss-targeted competitors like Ultra Slim-Fast and health-focused brands like Healthy Choice.

Affiliation with Weight Watchers International, the classroom arm of the brand, still plays an important role in the promotion and brand-awareness of the line. Says Sculley, classroom participants are "heavy users of the products. They have helped propel food sales." When asked if the affiliation with the classes could be seen as a liability, Sculley answers with a resounding, "No." The media advertising doesn't stress the connection between the two, plus, he adds, the classes do attract some men. In addition, the division is scheduled to introduce a line of frozen foods, called Smart Ones, sometime this summer, with an emphasis on health, not weight loss.

Prudential Securities analyst John McMillin cites the Weight Watchers products and classroom affiliation as one of the areas where aggressive promotional spending has helped boost company domestic volumes. McMillin estimates the brand holds a 10% market share in the total diet food category, while the classroom arm holds close to 50% in its category.

Today the brand has worldwide sales of approximately $1.6 billion. Sculley predicts double-digit growth in the next three to four years. Plans already in action to make his estimate a reality include active product introductions in non-frozen lines. Cheese products have been reformulated so that they're "significantly better tasting."

From cookies to novelties, the company is active in expansion, and Sculley is quick to reassure. "These are not copy-cats or me-toos. We were the innovators in the 1980s. . .and I think the magic is back."