Newspaper article THE JOURNAL RECORD

Weight Watchers Hopes to Stay Course after Being Unloaded by H.J. Heinz

Newspaper article THE JOURNAL RECORD

Weight Watchers Hopes to Stay Course after Being Unloaded by H.J. Heinz

Article excerpt

NEW YORK -- Weight Watchers spent the past two years simplifying its diet program, beefing up its advertising and paring down its product line.

Those moves, coupled with the rising safety concerns about certain prescription diet pills, generated a surge of new customers at Weight Watchers meetings in 1998 after years of declining enrollments.

But now that H.J. Heinz has put the world's best-known weight- loss program up for sale, analysts doubt another diet marketer will want it, and question why any other player would want to enter the $30 billion topsy turvy diet industry. "It will be a tough sell for Heinz," said David Allen, a diet industry analyst with Granite Financial Group in San Diego. Despite a generally stellar image, analysts say potential buyers might be scared off. About 60 percent of the Weight Watcher system is run by franchises, making it difficult for a parent company to introduce systemwide changes, and the administrative costs associated with holding meetings in rented schools and churches are high. Pittsburgh-based Heinz said last month it was selling the Weight Watchers name and diet classes as part of a restructuring that also includes cutting up to 4,000 jobs during the next four years. Heinz will concentrate on its food products, including ketchup and Ore-Ida potatoes, and will keep the Weight Watchers frozen food division. Although it has lost ground in recent years to Healthy Choice and Lean Cuisine, the meals are still one of the more profitable parts of the diet business. Wall Street has long wanted Heinz to shed Weight Watchers because it did not see a connection between selling food and pushing people to lose weight. Heinz, though, seems to have waited until Weight Watchers was on an upswing in hopes of getting the best price for the company it bought 21 years ago. Attendance at Weight Watchers meetings had tumbled from 32 million in 1990 to 18 million in 1998. While the popularity of fen-phen played a role, Weight Watchers officials also attributed part of the decline to overexpansion. …

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