Weight Watchers CEO: We will outlast the Keto craze

CEO Mindy Grossman tells CNN's Poppy Harlow why Weight Watchers shares have fallen this year, and how the Keto craze has affected the company.

Posted: Apr 29, 2019 9:08 AM


Mindy Grossman was 14 when she went to her first Weight Watchers meeting with her mother.

"She had a very big weight issue," Grossman recalled in a recent Boss Files interview with CNN's Poppy Harlow. "And I just saw the toll it took."

Her mother suffered her first heart attack at 50, she said. Later, when Grossman's own daughter was born, her mother's health limited what they could do together. "She couldn't travel with us," Grossman said. "She couldn't do things."

Now CEO of WW, formerly Weight Watchers, Grossman is trying to help people like her mother live healthier lifestyles.

As US obesity rates rise and people's health fails, Grossman knows WW's customers need an effective weight-loss plan now more than ever. But she also recognizes that the conversation around health and losing weight has changed. When Weight Watchers was founded in 1963, body positivity wasn't part of the mainstream cultural discourse. Weight loss was discussed as a fitness goal. Today, more people are talking about health as the goal, with weight loss as a means to that end.

WW has also lost ground to new weight-loss regimens like the Keto diet, which prohibits the eating of bread and other carbohydrates.

In February, the company shocked Wall Street when it reported earnings that were well below expectations. In a call with analysts, Grossman attributed the shortfall to a "Keto surge."

WW's stock has taken a hit as a result. The shares are down about 54% this year. Over the past 12 months, the stock has plummeted about 74%.

Still, Grossman, who spent about a decade as CEO of Home Shopping Network before taking the helm at WW in 2017, believes in the brand. She is focusing on modernizing the company's image and methods, and using data to better understand consumers — all while walking the line between promoting healthy weight loss and trying to outlive trendy new diets.

From Weight Watchers to WW

Last year, as part of a massive re-branding effort, Weight Watchers became WW. Now, Grossman explained to Harlow, "we are a wellness company with an expertise and a focus on weight loss."

At WW, some things remain the same: The company is sticking to the points system, which assigns a certain number of points to foods based on nutrition. People are encouraged to track their consumption using the points, rather than avoid certain foods altogether, to develop and maintain healthy eating habits.

But the company has made some changes, as well: In 2017, the company launched WW Freestyle, which added more "zero point" foods, which it touts as one advantage it has over the restrictive Keto diet. Last year, it opened a Freestyle Cafe at the Barclays Center in Brooklyn, New York, to sell healthy meals that work within WW diets at the venue. The company has also relaunched its product line to exclude artificial ingredients, sweeteners and preservatives. It's also partnering with Blue Apron to capitalize on the meal kit trend.

The power of social media

To reach new customers, WW continues to rely on Oprah Winfrey, an investor, board member and spokesperson, to spread its message. But it is also trying to reach a more diverse customer base by tapping new brand ambassadors like actor and gospel singer Tamela Mann and producer DJ Khaled.

And the company is also using social media and online platforms to bring users together and learn more about them. On Connect, WW's social platform, for example, people talk about what works for them.

"We recently launched Connect Groups, so you can identify with people like yourself," Grossman said. "So, young moms or people who travel a lot on business, or guys ... we see what they're sharing and what is important to them."

The platform also shows WW when people stop participating in its programs. "One of the critical strategies and investments, whether it be in our data science or technology, is really around our being able to anticipate behavior and then personalize it for people," Grossman said.

WW can use that information to nudge customers to come back. "We can prompt them in a different way. If we see you stop tracking, we can say, 'You know what? Here's some ideas,'" she said.

An uphill battle

Turning WW around won't be easy. The company will have to contend with trendy diets, which unlike WW, are often free.

After a bump in subscribers in 2018, the company started to see subscriber sign ups slow at the beginning of this year.

Freestyle was "delivering on the brand, but it wasn't recruiting and it wasn't bringing back lapsed members," Grossman said during the UBS Global Consumer & Retail Conference in March.

But Grossman remains confident in WW's ability to lure people away from fad diet programs: "We've been through this before and we know that we are the program that works," she said.

"The reason why people come back to what we do, is we are not a short-term mechanism," Grossman told Harlow. "We are the most livable program on the planet."

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