Marketdata reported that Americans consumed more diet soft drinks, and their share of the total soft drink market has reached near historical highs. Diet soft drinks dominated in terms of sales, generating more than $15 billion in 2004, and health clubs ranked second. The most rapid growth occurred in do-it-yourself, over-the-counter diet aids, which are less costly alternatives to medically supervised weight-loss and commercial programs.
With no new prescription weight-loss drugs slated to debut until 2006, (when rimonabant is scheduled to reach the market) and the growing popularity of the African herb Hoodia, Marketdata forecast 16% growth in this segment. Citing the success of heavily advertised products such as Trim Spa, Cortislim, Hyroxycut, and Xenadrine, Marketdata predicted growth of 11.5% per year, to $703 million in 2008.
Marketdata also tracked the increase in weight-loss surgeries, which skyrocketed to a record 140,000 procedures and represented a $3.5 billion market in 2004. On January 1, 2005 several major insurers stopped covering these procedures, which average $25,000, and as a result, Marketdata anticipates a slight decline—about 15% in 2005, as surgeons and hospitals agitate to improve reimbursement and organize consumer financing plans. The Marketdata report predicted that growth in the number of weight-loss surgeries would resume in 2006.
Along with commercial weight-loss centers, medically supervised weight-loss programs, and prescription diet drugs, such products as diet books, audio and video programs, Web-based diet and nutrition services, low-calorie and low-carbohydrate food products, meal replacements, and over-the-counter appetite suppressants compete for consumer dollars. As the low-carbohydrate diet craze subsides, more dieters are returning to structured commercial programs such as Weight Watchers, LA Weight Loss, Jenny Craig, and other chains. Marketdata estimates that revenue from weight loss centers will grow 11% to $2 billion. An estimated 7.1 million American dieters use such programs. Small local or regional chains of ten-fifty centers are growing as well.
The most affluent dieters, primarily in New York City and Los Angeles, are purchasing home delivery of diet foods. Companies including Zone Chefs, NutriSystem, Jenny Direct (Jenny Craig), Seed Live Cuisine, Sunfare, and Nutropia are catering to this market. The cost averages $10-$40 per day for home-delivered diet food, and dieters can spend as much as $1,200 per month. Weight-loss camps are also expected to grow in popularity and enrollment as the childhood obesity rate climbs.
The Marketdata report estimated that 20,500 registered dietitians offer some form of weight-loss counseling, either in private practices or as consultants or employees of health clubs, hospitals, and other health-related facilities. A typical customized, six-month plan costs an average of $802. Nutritionists, who are not licensed dieticians and whose training varies widely from people without degrees to highly-trained professionals with graduate degrees in nutritional science, also provide weight-loss counseling. Their services average $643.
Another study, Weight Loss Market: Products, Services, Foods and Beverages (Norwalk, CT: Business Communications Company, Inc., 2003), described the total U.S. market for weight-loss products and forecast growth to $157.64 billion in 2007. Like the Marketdata report, this study confirmed the preeminence of the low-calorie food and beverage market, and predicted increasing use and greater acceptance of artificial sweeteners in non-carbonated beverages, including refreshment, sports, and energy products. Supplements such as coenzyme Q10 (an antioxidant), the amino acid carnitine, and the mineral chromium (believed to aid glucose tolerance) were named the third largest product/service segment, after low-calorie foods and low-calorie beverages.
There is no question that the array of low-calorie, low-fat, and low-carbohydrate food products and dietary supplements to promote weight loss is expanding. Further, many of the most popular diet regimens promote their own high-priced brands and formulations, including frozen dinners, snack bars, muffin mixes, and ice cream. In "The Atkins Low Evidence Revolution" (Nutrition Action, vol. 31, no. 1, January-February 2004), David Schardt reported that Atkins dieters pay a hefty price for Atkins-brand foods—a twelve-ounce box of pasta cost $5.99, four cups of instant soup cost $12, and fifteen brownies cost $32. However, the 2005 bankruptcy filing by Atkins Nutritionals and a cooling of the "low-carb craze" diminished enthusiasm for the firm's diet foods, many of which have been relegated to the "sale" and "bargain" sections of markets.
Schardt observed that even Dr. Phil McGraw, the therapist turned talk-show host and weight-loss adviser, promotes his own line of nutrition shakes, bars, and weight management supplements. Dr. Phil offers two different supplement formulations, designed for either apple- or pear-shaped body types, that involve taking a basic regimen of twelve pills containing twenty-three vitamins and minerals, carnitine, and a variety of herbs. The basic regimen costs $60 dollars for a one-month supply, and Dr. Phil recommends taking an additional regimen of ten pills to intensify weight loss, which cost an additional $60 for a one-month supply. Schardt observed that scientific evidence supporting the claims that these supplements enhance weight loss is scanty and that consumers wishing to supplement their diets with vitamins and minerals could easily do so by consuming far fewer pills, at a fraction of the price of these brand name products.
Weight Loss Market: Products, Services, Foods and Beverages also anticipated continued growth of weight-loss centers, where the AOA estimates as much as $2 billion is spent each year, and predicted growth of the Internet-based weight-loss programs. Weight Watchers, one of the acknowledged market leaders in the weight-loss program market sector (with U.S. membership of about nine million people in 2005), suffered a drop of 2.4% in attendance in 2003 at its North American meetings. Industry observers attributed the decline to the current enthusiasm for such low-carbohydrate diets as the Atkins and South Beach regimens. However, the popularity of low-carbohydrate diets peaked in 2004, and many analysts believe that Weight Watchers' tried-and-true formula of portion control, healthy diet, and exercise will continue to attract people seeking to lose weight, reenergizing corporate finances. Kathleen Heaney, an analyst with the Maxim Group in New York, asserted that consumers "typically end up at Weight Watchers after several other diet attempts have failed" and asserted that if anything, Weight Watchers' potential market in the United States has been drastically underestimated—its potential is about 100 million clients (Eric Wahlgren, "The Skinny on Weight Watchers," BusinessWeek, November 17, 2003).
A review of popular diets in Consumer Reports ("Rating the Diets from A to Zone," vol. 70, no. 6, June 2005), gave Weight Watchers high marks in terms of safety, efficacy, and flexibility—its program allows people who prefer not to cook to use its branded controlled-calorie meals. This review, coupled with endorsement from celebrity spokesperson Sarah Ferguson, the Duchess of York, will likely stimulate a resurgence of interest and participation in Weight Watchers. In "Diet Stocks for the Post-Atkins Age" (Fortune, October 31, 2005), Matthew Boyle noted that Weight Watchers had indeed seen an increase in attendance during 2005, as dieters turned away from low-carb lifestyles and returned to more traditional programs.
In addition to Weight Watchers, the Consumer Reports article recommended the very low-fat Ornish diet for vegetarians and the Slim-Fast diet for people who are not inclined to cook since Slim-Fast drinks and bars replace part of breakfast and lunch and dieters need to prepare just one meal per day.
Medical and Behavioral Treatments
Although the greatest proportion of outlays for weight loss are for food products and commercial weight-loss programs, in "Screening and Interventions for Obesity in Adults: Summary of the Evidence for the U.S. Preventive Services Task Force" (Annals of Internal Medicine, vol. 139, no. 11, December 2, 2003), Kathleen McTigue and her colleagues observed that medical and behavioral treatment options for obesity involve considerable cost. "Intensive counseling programs require a large amount of time and a substantial staffing commitment. Based on average wholesale price, one-year supplies of orlistat (brand name Xenical, 120 mg three times daily) and sibutramine (brand name Meridia, 15 mg daily) cost $1,445.40 and $1,464.78 respectively." It is important to note that consumers generally purchase prescription drugs at retail rather than wholesale prices, so their costs are considerably higher than those reported by McTigue and her colleagues.
The average weight-loss surgery costs about $25,000, and the availability of medical insurance coverage for these surgical procedures varies by state and health insurance provider. Researchers at the Agency for Healthcare Research and Quality (AHRQ) found that while surgical and drug treatment of obesity have skyrocketed since 1998, with the number of surgeries increasing by 400% between 1998 and 2002, coverage policies remain uneven among insurers. Hospital costs for bariatric surgery grew to $948 million in 2002. Surgical costs reflect both the fees associated with the invasive procedure and the long-term follow-up that patients who have undergone the surgery require (William E. Encinosa et al., "Use and Costs of Bariatric Surgery and Prescription Weight-Loss Medications," Health Affairs, vol. 24, no. 4, July-August 2005).
Long-term Savings
While surgical treatment of obesity is a relatively recent phenomenon, research has revealed that its costs are offset by a reduction in future utilization of healthcare services and a resultant reduction in health-care costs. Nicholas Christou and his colleagues followed 1,035 patients who had undergone bariatric surgery and a control group of age- and gender-matched severely obese patients who had not undergone bariatric surgery for five years. The researchers found that weight-loss surgery significantly decreased overall mortality as well as the development of new health-related conditions in severely obese patients. During the five-year period, the number of hospitalizations, total in-hospital days, and physician visits were significantly lower in the surgery group compared with the controls. Similarly, the total direct health-care costs were significantly lower in the surgery group when compared with the controls for all diagnoses except digestive disorders. On average, the total direct health-care costs for individuals in the control group was 45% higher than those of the bariatric surgery patients (Nicholas V. Christou et al., "Surgery Decreases Long-term Mortality, Morbidity, and Health Care Use in Morbidly Obese Patients" Annals of Surgery, vol. 240, no. 3, September 2004).
The finding that weight loss reduces health-care utilization and costs was confirmed by research performed at Kaiser Permanente Northwest Center for Health Research in Portland, Oregon. Gregory Nichols and his colleagues compared medical costs for two groups of patients who participated in the Kaiser weight-loss program, "Freedom from Diets" from 1996 to 2000: 458 patients who lost more than 5% of weight and 457 patients who failed to lose weight. The investigators also created a control group of 2,290 patients who did not participate in the program and did not lose weight. The investigators found that the regional health plan saved nearly $850 overall in per-person medical costs the year after an overweight member lost 5% or more body weight in a voluntary program. They calculated that the health plan would save $2,500 over five years, and observed that the savings would be real, even in view of the observation that most patients would regain the weight lost. Another Kaiser Permanente study described drug savings as the key cost efficiency during the first two years after bariatric surgery. Pharmaceutical costs decreased by $510 per person among surgical patients, but costs increased in candidates who did not have the surgery (North American Association for the Study of Obesity 2004 annual scientific meeting, Las Vegas, Nevada, November 16, 2004).
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