WeightWatchers 2005 Annual Report Download - page 12

Our licensing revenues have been rapidly growing in both the United States and internationally.
Companies are showing an increased interest in licensing our brand and other intellectual property as a
platform to build their businesses since the Weight Watchers brand brings high credibility and access to
the weight conscious consumer. By partnering with carefully selected companies in categories relevant
and helpful to weight conscious consumers, we have created a highly profitable business as well as a
powerful vehicle to reinforce the Weight Watchers brand in the minds of our target consumers.
The Global Weight Management Market
We participate in the global weight management market. According to Marketdata Enterprises, the
weight management industry had revenue of approximately $46 billion in 2004 in the United States
alone. The number of overweight and obese people around the world has steadily increased over the
past 20 years and is now estimated at over 1 billion, primarily driven by improving living standards and
changing eating patterns, along with increasingly sedentary lifestyles. According to the Centers for
Disease Control and Prevention, between 1999 and 2002, 65% of Americans over the age of 19 were
considered overweight and almost half of these were obese. Numerous diseases, including heart disease,
high blood pressure and Type II diabetes, are associated with being overweight or obese. We believe
the growing population of overweight people who are motivated by both an increasing awareness of the
health benefits of weight loss and the desire to improve their appearance is fueling the growth in
demand for weight management programs. This growth is also a result of an increasing willingness of
employers and governments to promote and contribute towards the cost of weight management
programs.
Our Services and Products
Our Weight Management Plans
In each of our markets, we offer services and products that are built upon weight management
systems tailored to local tastes and habits. These weight management systems are comprised of a range
of nutritional, exercise and behavioral tools and approaches. For instance, we currently offer
TurnAround in the United States and Canada. One of the features of TurnAround is to give consumers
the choice of two weight management plans to follow, the Flex Plan, also known as the POINTS weight
management system, and the Core Plan.
Under the Flex Plan, each food has a POINTS value determined by a patented formula based on
the food’s calories, fat and dietary fiber. Subject to certain nutritional guidelines, consumers on this
plan can eat any food as long as their total food consumption stays within their POINTS value
‘‘budget’’ for the week. Since nutritious foods generally have low POINTS values, this approach guides
consumers toward healthier eating habits.
Under the Core Plan, consumers eat from a list of wholesome foods from all the food groups, i.e.,
core foods that provide eating satisfaction without the need to count POINTS values. These core foods
are intended to satisfy consumers’ hunger by directing them to foods with low calorie density that do
not trigger over-eating. The Core Plan also permits consumers to eat non-core foods within an allotted
weekly POINTS value.
Meetings
Clinical studies have shown that consumers who attend Weight Watchers meetings are more likely
to lose weight than those who diet on their own. Our group support system remains the cornerstone of
our meetings. Members provide each other support by sharing their experiences, their encouragement
and empathy with other people experiencing similar weight management challenges. This group support
provides the reassurance that no one must overcome their weight management challenge alone. Group
support assists members in dealing with issues such as emotional eating and finding time to exercise.
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