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January 3, 2014

The Future of the Weight Management Industry

Mark StrobelAnalyst Insight by Mark Strobel - Consumer Health Analyst

Obesity is a major global health concern.  According to the World Health Organization (WHO), there are more than 1.4 billion overweight and obese adults 20 years or older.  Even more worrisome is the number of children who are considered overweight.  The Center for Disease Control and Prevention (CDC) reported that 12% of children aged 2 to 5 and 18% aged 6 to 11 fall into this category in the United States.  Once thought to be an issue focused in developed countries, the prevalence of obesity is growing in emerging countries and this global epidemic is expected to get worse.  By 2018, more than 3 out of 4 people aged 15 and older are projected to be overweight or obese in Kuwait, Venezuela, and Mexico, as well as the USA.  

Countries with the Largest Overweight and Obese Populations, 2013/2018

CH2014 Largest Obese and Overweight Population Markets.gif

Source: Euromonitor International

This is a major cause for concern as being overweight or obese is linked to a series of health complications, including heart disease, diabetes, certain types of cancers, stroke, and more, and is directly responsible for 2.8 million deaths a year according to WHO.  The enormous potential customer base in combination with the gravity of the condition presents a vast market for weight management and is a key driver for future growth.

Projected Regional Performance

Preliminary Euromonitor International data for the global weight management market shows strong year-over-year gains of 5% in 2013, reaching retail value sales of US$14 billion.  While growth is projected to continue through 2018, with a 3% CAGR, performance varies by region and product type. 

The USA is by far the world’s largest weight management market, accounting for approximately one-third of sales, which is heavily based on meal replacement slimming products and weight loss supplements.  However, the popularity of ‘other slimming products’ (i.e. diet patches, creams, extracts, concentrates) and OTC obesity (orlistat) are on the rise and are expected to post 17% and 15% CAGRs, respectively, through 2018.   

Historically, Asia Pacific has been by far the fastest growing weight management market, with 2013 sales up 88% since 2008.  The majority of these sales are split between China, Japan, and South Korea.  While China and Japan actually posted sales declines since 2008, booming growth in not only South Korea, but also India, Malaysia, Indonesia, and others, were able to offset these drops and boost sales in the region.  OTC obesity is mostly absent from this region.  However, it was introduced in China in 2011 and is expected to grow at a 37% CAGR through 2018 and achieve sales of US$90 million.  On the other hand, slimming teas, for which Asia Pacific currently accounts for two-thirds of global sales, will continue recent declines in the near future.

Future weight management sales are projected to be the fastest growing in Eastern Europe over the forecast period with a 6% CAGR.  Weight loss supplements are the preferred weight management product in this region and are estimated to reach sales of US$514 million in 2018.  Much of this growth is attributable to Russia, where product offerings and promotions have developed substantially, led by Poliaris’ new brand Reduksin-light.

Latin America falls just behind Eastern Europe in terms of forecast weight management growth rates with an expected 5% CAGR through 2018.  Obesity prevalence is growing especially high in this region, most notably in Venezuela.  In this country, a slim body is very desirable and associated with success.  Weight management is increasingly perceived as an easier way to get slim than changing poor diets and sedentary lifestyles.  While meal replacement slimming derives the majority of sales in Venezuela, slimming teas posted year-over-year gains of 94% in 2013.

Weight management growth in Western Europe and Australia is expected to be a low 1% CAGR through 2018 and sales in the Middle East and Africa are estimated to remain a negligible 1% of the global market. 

Factors Limiting Weight Management Growth

Despite forecasted growth, one might expect the weight management market to be much larger given that obesity is such a widespread and serious health condition.  However, weight management accounts for only 7% of the US$205 billion global consumer health market.  There are several factors limiting the weight management market, including natural weight loss techniques, loss of consumer confidence, and alternative prescription medicines.

As health literacy and knowledge about health risks grows, including the highly detrimental impact of being overweight or obese, more people are making significant lifestyle changes with the hope of lowering weight and improving fitness.  The first thoughts that come to mind for many consumers when approached about weight loss are diet and exercise.  Consumers in some of the largest weight management markets, including the USA and Japan, are opting for this traditional weight loss approach.  Regarding diets, “Better For You” foods and beverages expenditure, which include reduced fat or sugar products, is up 4% and 12%, respectively, since 2008.  Fresh food consumption has also grown 13% by volume.  Relevant to exercise, sports nutrition sales have posted 67% gains since 2008.  Also, retail value sales of sportswear have increased 8% worldwide, including 33% in Latin America and 32% in Asia Pacific.  Governments and health organizations are also promoting weight loss through lifestyle changes.  The WHO indicates that the best way to combat obesity is to “limit energy intake from total fats and sugars, increase consumption of fruits and vegetables, and engage in regular physical activity.”  Also, in a somewhat comical fitness campaign, the Russian Olympic Committee sponsored free subway tickets for passengers able to complete 30 squats in two minutes.  These traditional practices, which are effective in lowering body weight, limit consumer dependency on weight management products.

Another issue regarding these products, especially weight loss supplements, is a loss in consumer confidence.  Weight loss supplements have been under fire recently as they have been linked to a series of serious illnesses and injuries.  One of the most notorious cases in 2013 involved the “fat burner” OxyElite Pro by USPlabs, which was linked to 48 cases of liver damage, several of which required liver transplants, and one death.   As reported by the New York Times on 23 December 2013, dietary supplements account for approximately 20% of drug-related liver injuries, which has increased 7 percent since a decade ago.  A number of weight loss supplements have also been identified as containing banned substances.  For example, in November, the US Food and Drug Administration (FDA) announced that the weight loss supplements Super Slim, Diet Master, Slim Max and several others contained the prescription ingredient sibutramine and/or the laxative ingredient phenolphthalein, both of which are banned in the US.  Unsettling to many consumers, the FDA does not have the authority to approve or evaluate most supplements before entering the market and essentially rely on consumers being harmed before taking any regulatory action.  Another damaging development to the image of the supplement market was an investigation by USA Today released on 20 December 2013 finding that a variety of supplement companies are run by executives with criminal backgrounds.  The growing infamy of these products will continue to be a barrier to future growth.

Yet another challenge for the weight management industry is the recent developments in prescription obesity medicines.  Qsymia (phentermine/topiramate ER) by Vivus Inc. was launched in September 2012 and Belviq (lorcaserin) by Arena Pharmaceuticals Inc. was launched in June 2013.  These prescription obesity pills have increased in popularity by cutting down on undesired side effects and are expected to gain considerable traction in the near future.  This will further cut into the weight management customer base.

Integrating Weight Management into Lifestyle Changes

There will always be consumers who are willing to try weight loss products that promise results regardless of diet or physical exertion, but as they become more knowledgeable, health and fitness conscious, and realistic about expectations, the future of weight management lies in complementing overall lifestyle changes.

In the spirit of going beyond simply providing a consumer good for weight loss, Merck & Co. announced on 20 December 2013 that the company will be launching a new business through a collaboration with Health Management Resources Corp.  The new business will provide comprehensive “weight management interventions that combine a structured diet, behavior coaching and monitoring and physical activity to achieve clinically meaningful weight loss.”  This service complements drug development and could provide a strong platform to promote weight management products.

Penetrating consumers’ everyday lives will also be key to the future of weight management.  As we spend more time using various technological devices, leveraging online tools will become more effective.  For example, Weight Watchers, which is tracked by Euromonitor International in packaged foods, developed the weight loss plan and companion app called Simple Start that offers sample meal and snack ideas that ease the use of the program.  Creating an online presence or sponsoring online weight loss programs such as Retrofit, which offers users personalized weight loss programs with expert consultations by video chat and a dashboard that tracks results, could open up significant opportunities for willing weight management companies.

 

Have a question or thought to add?  Leave us a comment below.


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