Having been on the Weight Watchers program, I always had a lingering thought there was something amiss about their business model. After learning more about the Weight Watchers and Heinz Connection, now I know why. When a diet company tells you that you can continue to eat the same foods that got you fat as long as you track it, do not trust them. Sure some people find success on Weight Watchers, but the former connection of Weight Watchers and Heinz was nefarious at best. Heinz owned Weight Watchers and was playing both ends against the center. There was no losing to their business strategy.
Heinz capitalized on what we do not know about food!
In the nineteen seventies, the CEO of Heinz, a fellow named Tony O’Reilly, took charge of our eating habits as no company ever had before. He capitalized on what consumers do not know about food. O’Reilly gave us a larger variety of foods and condiments, and also began providing us with foods that we had only been able to get from restaurants. Heinz advertising said they now allowed us to have fast food at home, “without the wait at a drive through window”.
In 1978, O’Reilly discovered another way to take advantage of a new market of people struggling with weight problems. With obesity beginning to surge, there came a market for weight loss products which carved the path for Heinz to enter the dieting business too.
Their first move was to acquire a company that made frozen meals that contained fewer calories than other conventional brands. There was only one problem with the business deal O’Reilly wanted to make. He was wanting to buy Foodways National, but they had a customer so critical to their success, Foodways had granted them veto power over any change in ownership. That customer was no other than Weight Watchers. This was a huge opportunity for O’Reilly to nail down for Heinz. Weight Watchers reigned supreme in the dieting field.
Weight Watchers conducted meetings, sold advice and assistance to millions of people wanting to lose weight. They also sold prepared meals to support their diet plan. As it turned out, Weight Watchers had already been looking for a partnership with a company such as Heinz. O’Reilly thoroughly understood the potential for this partnership. Weight Watchers had a system catering to women, aged 25 to 55, which were also the prime demographic of shoppers in grocery stores.
Weight Watchers at that time boasted 27 million members and each of them were a ready made customer for ready made, low calorie meals. Were Heinz to buy both the lower-calorie food and the Weight Watchers programs, it would own the full spectrum of the eating habits of millions of people. The Weight Watchers and Heinz merger was a dream come true.
With the Weight Watchers and Heinz merger, one parent company would now be making the foods that make us fat, and it would also be making foods that were supposed to make us thin. To sweeten this deal was the third market of people who moved between fat and thin. It was a win from all angles for Heinz. This deal was shrewder than if Phillip Morris, the cigarette manufacture also owned the market on nicotine patches. Or if an alcohol beverage manufacturer also owned AA.
In February 1978, Heinz bought Foodways for $50 million, and in May of that year, they also purchased Weight Watchers for $72 million. Heinz was now a full service stop for our disordered eating, no matter where we might be on our journey between failure and success with weight loss.
Heinz was unfamiliar with the dieting business, but…
Heinz was a wholesale producer of food and not of diet programs, but they caught on fast. They moved to remake Weight Watchers in their own image. Heinz realized that selling memberships was the same as retailing.
With the Weight Watchers and Heinz merger, came new marketing strategies. Heinz recruited marketing people from the fast food restaurants such as Burger King and Pizza Hut to manage Weight Watchers meetings. They also revamped the foods being sold. They handed this task over to their subsidiary Ore Ida who began work on making Weight Watcher meals more tasty and attractive. In 1983, Heinz introduced a new line of desserts which soon flopped. Their answer was to add more sweeteners, and a line up of thirteen items such as chocolate mousse, brownies, and strawberry cheesecake. The intent was to make these desserts very indulgent to the consumer.
With the Weight Watchers and Heinz merger, the sale of foods rose from $90 million in 1982 to more than $300 million in 1989, with total revenue hitting $1.1 billion. O’Reilly referred to the merger of Weight Watchers and Heinz as the “McDonaldization of the world”.
Unintended consequences were in order for Heinz.
In 1993, Heinz and Weight Watchers was charged by the FTC, along with four other diet business, for deceptive marketing. The charge was that they were making unsubstantiated weight-loss claims and used claims from successful dieters without evidence their experience was typical for people using their programs. As a result of this lawsuit, Weight Watchers finally settled the case four years later, and agreed to provide more information on weight-loss results. They also agreed to include this concession in their ads” “For many dieters, weight loss is temporary”.
Annals of Internal Medicine
In 2005, the Annals of Internal Medicine published a review of the trials which had been done to measure the success of Weight Watchers and other diet businesses. It was found the studies were largely paid for by Weight Watchers and the other weight loss businesses in the suit themselves, which runs the risk of bias to say the least. What was found is that Weight Watchers only produced an average loss in body weight of just over five percent.
And it gets even worse, much of even that weight loss is fleeting at best. At the end of two years of study, participants had put back on enough weight that the net loss was barely three percent. In other words, a 200 pound woman could expect to get down to 189, and then bounce back to 194. For evidence to see how true this is, all one has to do is peruse the Weight Watchers social media forum Connect to see for themselves. Many of these people cycle on and off the program, hoping to one day find success.
As former Weight Watchers Chief Financial Officer, Richard Samber comparing Weight Watchers to playing the lottery stated in an interview with the BBC: “If you don’t win, you play it again. Maybe you will win the second time”. When asked how Weight Watchers remains in business despite a high failure rate of dieters, Samber stated: “It’s successful because the other 84% have to come back and do it again. That’s where your business comes from”.
Weight Watchers and Heinz did sort of part company in 2005.
Heinz sold Weight Watchers to Artal Luxembourg SA, a European group of private investors, for $735 million. From the website Industry Week , under the agreement, Heinz, whose products include Heinz ketchup, Ore-Ida frozen potatoes and Star-Kist tuna, will retain control of certain Weight Watchers brands, including frozen meals, desserts and breakfast items, and the UK-based Weight Watchers operation. Heinz CEO William R. Johnson said the services orientation of the weight-control business does not fit with the company’s long-term growth strategy, and that the disposal enables Heinz to focus on Weight Watchers foods and other global food businesses. However, the Pittsburgh-based Heinz said it will use $14 million of proceeds from the sale — in which the division’s management has been invited to take part — to retain a 6% stake in the operation.
The final take away point:
When a weight loss business is telling you that you can still eat the same foods you got fat with, while taking possession of your hard earned money, you need to seriously reconsider their deal. Most businesses have profit as their motive over that of your health and well being. I do not believe Weight Watchers is any better today for their consumers than when Heinz owned them. They say you can still eat anything you want while knowing that will only sabotage your efforts at weight loss.
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