Nestle’s Sweet Success Line to Be Bought by Nutrisystem
With more Americans indulging in rich foods, “diet” has become a dirty word to most food manufacturers, including Glendale-based Nestle USA, which Monday announced plans to sell off its line of Sweet Success diet drinks and bars.
The company said it would sell the low-calorie products line to diet e-commerce Web site Nutrisystem.com for 900,000 shares of Nutrisystem stock, or 3% of the company.
Nestle officials say they are no longer interested in selling dietetic items and will focus instead on meal replacement and nutrition aids, such as its PowerBar energy bars and Carnation Instant Breakfast drink. They declined to comment further on terms of the deal or its relationship with Nutrisystem. Based on Nutrisystem’s closing price Monday, the deal was worth $10.5 million.
Sales of diet aids such as appetite-suppressant candy and pills and low-calorie meal replacement shakes have plunged in the last few years, as many people have turned from counting calories to counting carbohydrates on high-protein diets, and as a wider variety of candy-like energy bars and smoothies have become meals for busy consumers.
“People are still dieting; they just aren’t doing it with [low calorie] products anymore,” says Marion Nestle, a professor of nutrition at New York University.
Sales of Sweet Success, which was introduced at the peak of the low-fat craze in 1993, declined 34% last year--its third-consecutive year of decline--to $25 million, according to data from Information Resources Inc.
Nutrisystem officials believe they can turn around the sales slump by putting more advertising behind the brand and tying it in with its weight-loss program, now run exclusively over the Internet after hard times forced the company to shutter its bricks-and-mortar outlets.
Getting the Nutrisystem name on Sweet Success labels will also drive dieters to its Web site, which dispenses free diet advice and sells packages of prepared meals, said James D. Brown, chief financial officer of the company.
“We think there’s a great opportunity here to cross promote between the diet plan and this product,” Brown said. “We’ll gain some additional visibility.”
Nutrisystem, like much of the rest of the weight-loss industry, has suffered as products such as fat blocker Xenical and diet supplement Metabolife have hit the market promising people they can eat what they want and still lose weight.
“It’s a very competitive industry, and the public has shown a preference for the quick fix, instead of really working on it,” says David Allen, an analyst with San Diego-based Granite Financial Group. “Whether this is just a cycle or not remains to be seen.”
