Encore: Diet Wars | Losing Streak | 4

0:00A note to listeners, the material in this episode covers the weight loss industry and diet culture, which could be upsetting for some people. This episode also contains adult language. This series originally aired exclusively on Wondery Plus in 2022.

0:21November 2012, Nutrisystem Headquarters, Fort Washington, Pennsylvania. Nutrisystem CEO Dawn Zier looks up at the young executive who's sitting on the other side of the meeting room table. Sorry, run that past me again. We're doing what? We include free shakes or frozen entrees with every 28-day package of food we ship. The 47-year-old Zier became Nutrisystem's first female CEO a few days ago, and she's inherited a mess. In the past five years, sales have fallen by 50%, and the company's racking up serious losses. If Zier can't diagnose and treat the sickness infecting the company fast, her time here will be short.

1:05She questions the executive again. Yes, but why are we giving customers these freebies? Oh, well, it helps with retention and increases sales. Zier's radar goes up. The answer is too quick, too clean. Either he knows his stuff, or he's saying what he thinks she wants to hear. She probes deeper. Are those extra sales profitable? I believe so. You believe so? We sell direct to our customers. There must be data. Yeah, sure. I just don't have it here. I want that data. I want us making decisions on facts, not wishful thinking. So let's end this meeting and reconvene when you've got the numbers. The next day, the executive brings her dozens of Excel spreadsheets.

1:56But he can't put his finger on the data that matters. So Zier halts the meeting and tells him to come back when he's got the key data. The following week, the executive returns, looking sheepish. So I checked the data and I was mistaken. That's okay. That's why I want a facts-based culture. Companies go adrift when they start thinking they know it all. So what did you learn? that the freebies increase sales but not enough to cover the cost. We're losing money on them. Ending the freebies wipes millions off Nutrisystem's sales, but boosts profits. In the months that follow, Nutrisystem starts selling one-week diet kits in Walmart.

2:46It stops selling one diet for everyone and introduces a choice of weight loss plans, including diets for people wanting to lose five pounds and those with diabetes. Zier also alters the ads so they use the pursuit of health rather than vanity to sell Nutrisystem's weight loss programs. For years, the diet industry used beauty as its sales pitch. Diets weren't just about getting thin. They were about mimicking the celebrities hawking those diets on your TV. But the appeals to vanity are losing their power. More and more people are shunning the diet companies and trying to lose weight by themselves.

3:31And with their usual appeals falling flat, the weight loss giants face a stark choice. Reshape fast or waste away.

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5:20From Wondery, I'm David Brown, and this is Business Wars.

5:45On the last episode, the weight loss leaders overcame the 90s slump by getting customers to count points, down diet pills, and buy into celebrity sales pitches. But now the slimming business faces a triple threat, the Great Recession's hammering sales. dieters are turning to calorie-counting smartphone apps, and the pushback against diet culture is getting louder. This is Episode 4, Losing Streak.

6:22Spring 2014. The Wyden and Kennedy Ad Agency, Portland, Oregon. In a breakout area within the building's airy concrete and timber interior, The team working on Weight Watchers' account are lounging on comfy couches. A few weeks ago, Weight Watchers turned to Wyden and Kennedy for help in winning back customers. It hopes the ad agency behind campaigns like Nike's Just Do It and ESPN's This Is Sports Center can spice up its tired brand. Executive Creative Director Joe Staples adjusts his thick-framed spectacles and confesses to his colleagues. I'm a vampire. Whiten and Kennedy's bearded creative director, Michael Taptabai, cocks his head.

7:10A vampire? Yeah. So if you saw me shopping, you'd be at some la-di-da place like Whole Foods, and my cart would be full of vegetables and coconut water. You'd assume I'm healthy, but you put any junk food into my home, I lose control. Put a cake in my house and I'll eat it all. But when there's no junk around, I make good choices. Tep-Tabai nods. You know, I have this thing. I can say no in my head to eating something in particular like maybe ten times, but on the eleventh time, I always crack. Staples claps wildly. Yes, yes, yes. That's what the food addiction documentary I watched was getting at.

7:51Food is the hardest addiction of all to kick because you have to eat. So it's not about weight. It's about our dysfunctional relationship with food, like birthday cakes. We're told cake equals happiness, but we're also told, don't eat cake because it's bad for you. And then you got supermarkets and fast food chains spending billions to get us buying more food. So it's become normal and human to have a screwed up relationship with food. The team smiles. They sense that they're closing in on the big idea Weight Watchers needs.

8:28Summer 2014. Weight Watchers headquarters, Manhattan. In a meeting room, Michael Tabtabai is presenting the team's ideas to several Weight Watchers executives. The ad should emphasize the unique face-to-face nature of Weight Watchers. You also need to show people that you understand that eating is an emotionally charged issue. Lacia Lise, the president of Weight Watchers North America, smiles. She hired Wyden and Kennedy because she wants to reshape the company's marketing. But the older hands sitting with her were more skittish about wild ideas that might damage the company they love. Tep Taba continues the pitch.

9:10Start acknowledging that weight loss is hard. Those celebrity ads with before and after photos make it look easy, but it's not. So be honest. Tell people it can't be fixed with a one-week diet. it. Say, yeah, it's hard. Real hard. But Weight Watchers is there offering... Tab Tabai brings up a slide showing the words, help with the hard part. Help with the hard part. Lise grins. I like it. But one of her colleagues is less convinced. What about points? You haven't mentioned points. Most of the Weight Watchers team nod in agreement. Quiden and Kennedy's Joe Staples responds. You're right. We haven't mentioned points.

9:53And we're not going to. The executives look horrified. No points? But points are fundamental. With points, people can eat whatever they want. Points make Weight Watchers what it is. Well, that's great. But TV talks to the heart, not the head. The point system is functional. It appeals to the brain, not the heart. To change perceptions of your brand, you have to connect with people emotionally. The Weight Watchers executive who raised the points issue lobs another question. What about celebrities? Are you keeping them? Jenny Craig tried dropping celebrities last year, but has already gone back to them.

10:33Lise replies. They did that because no one could recall if Jennifer Hudson was promoting us or them. They saw the problem, but didn't solve it on first try and lost their nerve. But the problem's still there. I think we need to go with this. The White and Kennedy team glance at each other. It's clear not everyone in Weight Watchers is ready to break with the past. But with customer numbers falling, the executives know they need to try something new. In September 2014, Weight Watchers' Help With a Hard Part campaign kicks off with an ad where people turn to food to deal with emotional highs and lows.

11:15If you're happy and you know it, eat a snack. If you're sad and you know it, eat a snack. If you're bored and you know it, eat a snack. If you're lonely and you know it, eat a snack. If you're sleepy, if you're guilty, if you're stressed or if you're mad. If you're human, eat your feelings, eat a snack. Next comes an ad where a woman talks about trying for years to downsize her butt until realizing that wasn't the real issue. It was how she thought about her body. Then comes another ad that drives home how our relationship with food is akin to a drug addict and their dealer. Hey, want to get baked?

11:57And then glazed, iced, fried. Not what you want. Just have a taste. Cooked it up, special for you. And guess what? If you buy more, I'll cut you a deal. No one's telling you what to do. You're in control. you can stop whenever you want. Well, sort of. I mean, you gotta eat. Right. The underlying message is that Weight Watchers understands that losing weight isn't just a question of calories in and calories out. It's about changing behaviors. And that's where Weight Watchers can help. But with its membership shrinking and stock price at rock bottom, Weight Watchers needs that message to bring people through its doors.

12:46Stat.

12:50January 4th, 2015. Weight Watchers headquarters, Manhattan. In his office, CEO James Chambers is at his desk. His eyes are fixed on his computer screen. And his stomach is in knots. Today is the first Sunday of the year. the day when the first wave of post-holiday dieters vow to fight the flab and enroll in diet programs. But for the past four years, fewer and fewer folks have started the year by joining Weight Watchers. Chambers hopes this year will be different. The Help with the Hard Park campaign is winning a claim for acknowledging that weight is an emotional battle. Chambers sits up as the graph on his screen comes to life.

13:35It shows, in real time, the number of people signing up for Weight Watchers. With the post-holiday diet rush on, this is the moment of truth. Four hours later, Chambers phones Weight Watchers Consumer Insights Chief Deb Benevitz. Deb, it's another blowout, even worse than last year. There's silence as Benevitz absorbs the news. Oh, I really thought it'd be different this year. Same, but we're not even close. New customers are down 20%. I don't know what's gone wrong. All I know is what we're doing isn't working, so here's what I need you to do. Pack your bags, go tour the nation, talk to customers, and find out what the heck is going on.

14:25Chambers ends the call and sinks into his chair. Weight Watchers' losing streak won't be ending this year. Weight Watchers concludes Wyden and Kennedy's attempt to reposition the brand failed. So it sacks the agency and goes back to the usual celebrity mouthpieces. But Chambers knows this is not a fix. It's barely a Band-Aid. He just prays Benevitz's tour of the nation can uncover some way to get Weight Watchers back into shape.

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17:18February 2015, Madison, Wisconsin. In a rented meeting room, Weight Watchers Consumer Insights Chief Deb Benevitz is hosting another focus group with carefully selected women. Weight Watchers chose these women because it thinks they should be customers. They all want to lose weight, but most of them have let their membership lapse or never signed up. Benevitz wants to know why. So, basic question. Why do you all want to get thin? A 30-something millennial replies. I don't want to get thin. I want to be strong. A 50-something woman clutching a can of Diet Coke nods. Same for me. I want to be fitter, not skinnier.

18:03So what comes to mind when I say the word diet? The Diet Coke woman replies immediately. Disappointment. Failure. What makes you say that? Diets don't work. I've tried them all. You lose weight, then pile it back on, and hate yourself for it. Ah, all right. Um, anyone else? What does the word diet mean to you? The millennial replies. Something my grandma does. Dated. Anti-woman. Anti-woman. Yeah. It's like diet culture, right? We're told we're no good as we are, that we need fixing, and only one body type will do. Help me understand that. Because you were a Weight Watchers member. Yeah, but I didn't join to achieve some fake ideal.

18:56Sure, I wanted to lose some weight, but mostly I wanted to eat clean and feel confident in the gym. Benevitz has been hearing similar messages everywhere she goes. The old terminology is passé. Weight loss is no longer about mimicking airbrushed supermodels. It's about the pursuit of a healthier life. Armed with Benevitz's findings, Weight Watchers re-engineers its program to cover more than what to eat. It adds meditation classes and lessons that teach members cognitive behavioral strategies for handling their emotions without resorting to food. It also stops setting weight goals. It calls the new program Beyond the Scale, but it still has to convince millions of doubters that Weight Watchers has changed.

19:50And that means it needs more than just another celebrity cheerleader. That won't cut it in a world where diet has become a dirty word. Weight Watchers needs someone who can change attitudes in an instant, and it knows exactly who to call.

20:13July 2015, Maui, Hawaii. Outside her farmhouse-style mansion, Oprah Winfrey hovels across the lawn towards some wooden chairs arranged beneath a large tree. Last month, the 61-year-old media mogul sprained her ankle, and the recovery's taking a toll. Since the injury, she's gained 17 pounds. It's another twist in Winfrey's long public struggle with weight. That battle entered the spotlight in 1988, when she shed 67 pounds in four months on a liquid protein diet. She celebrated by pulling on some tight Calvin Klein jeans and wheeling a wagon loaded with 67 pounds of animal fat onto her TV show.

20:58Half of America's daytime TV audience tuned in to watch the slimmed-down Winfrey declare that diet dreams do come true. But after the show, she started eating solids again. Two days later, those Calvin Kleins no longer fit. And ever since, she's been on a rollercoaster weight loss journey familiar to millions. Winfrey sits beneath the tree and takes in the ocean view. Her phone interrupts the tranquility, but she knew this call was coming. This is Oprah. Is that James? Weight Watchers CEO James Chambers replies. Yes, I really appreciate your finding time to talk with me. Sure. Now, tell me something.

21:45Are you spying on me? I've been putting on weight, and I've been desperate to do something about it. And then my people say, hey, Weight Watchers wants to speak to you. I was like, wow, I must be way worse than I think. It's a coincidence, I promise We've reimagined our weight loss program to make it healthier and more holistic We'd like you to join our program and, well, just do what you do We think you could bring us to a whole other level Winfrey knows her seal of approval means guaranteed sales But that's because she's picky about what she endorses Well, I can't endorse it unless I actually go on the program I've never, you know, been a spokesperson for anybody.

22:33So let me try it and see if I like it.

22:39The following month, Winfrey joins Weight Watchers and quickly becomes a convert. But she's not interested in being just another diet industry mouthpiece. No. If she's going in, she's going all in. She negotiates not a fee, but a business partnership. Winfrey agrees to invest$43 million in Weight Watchers in return for a 10 % stake and a board seat. When the news breaks in October 2015, Weight Watchers' stock price doubles. Then, in January 2016, Winfrey tweets a video to get people excited about Weight Watchers' new Beyond the Scale program. This is the joy for me. I love bread. I love bread.

23:33I now just manage it, so I don't deny myself bread. I have bread every day. I have bread every day. That's the genius of this program. I lost 26 pounds, and I have eaten bread every single day. Winfrey's ode to Brad becomes an internet meme, remixed and re-shared endlessly. As it pings around the internet, Weight Watchers' stock rises, adding another$12 million to Winfrey's fortune. But the Oprah effect isn't enough to overcome the company's troubles. Weight Watchers' membership creeps up for the first time in years, but it's far from the stunning comeback Wall Street expected. By the end of 2016, Weight Watchers' stock is down 58%, and CEO James Chambers is out, leaving the business seeking a new leader.

24:36Spring 2017, Los Angeles. In her office, Oprah Winfrey is meeting one of the candidates on the shortlist for Weight Watchers' CEO. That candidate is Mindy Grossman, a glamorous 59-year-old blonde who's spent the past few years transforming the home shopping network. Grossman looks confident and capable as she tells Winfrey why she wants the job. When I heard that you bought into Weight Watchers, I ran into my husband's office and said, we've got to buy Weight Watchers stock. His reaction was, what are you talking about? But we invested, and I've followed the business closely ever since. It seems...

25:15Actually, can I ask you something? Sure. What was it about Weight Watchers that made you buy in? Winfrey leans back into her seat. Well, the program worked for me. And more than that, I felt the program could empower people to live their best life. Also, I learned from owning my TV show that if I'm in, I should go all in. Okay, your turn. What excites you about Weight Watchers? Weight Watchers still markets its program like a diet. But I see Weight Watchers as a program for living a healthier, happier life. Winfrey's eyes widen. Yes, yes, exactly. Millennials are on track to become the most obese generation in history, with all the health consequences that entails.

26:03Weight Watchers is the most livable weight management plan around. I believe it could take the pursuit of health and wellness into the mainstream. So what changes are you thinking of? There are massive opportunities online. And my sense is a lot of people don't know that they can do Weight Watchers online now. Winfrey smiles as Grossman sketches out her vision. She's already made her decision. Grossman's the one. But Grossman isn't just going to try and fix the world's number one weight loss company. She's going to gamble the future of the 54-year-old diet icon by jettisoning its most valuable asset, its brand.