Weight Watchers Changes Name to ‘WW’ in Big Bet on Wellness

September 24, 2018, 4:01 AM UTC

Weight Watchers International (WTW) is getting a leaner name.

The company is dropping the “Weight Watchers” name that has been part of popular culture for 65 years to become known as “WW.” The change, effective Monday, marks the latest move by the company to retool itself as a wellness organization that goes beyond weight loss.

WW has enjoyed a renaissance since media mogul Oprah Winfrey became a major investor and director in 2015. The company wants to leverage its expertise in nutrition to follow the recent consumer shift in which people are focused on their overall health and lifestyle, not just their weight.

The new identity sets the stage for WW to sell more services and products to its membership, which numbers 4.5 million people—1 million more than a year earlier, though slightly below the record number earlier this year. That total figure includes 1.6 million people who attend its meetings, as of last quarter. (The company is seeing especially fast growth coming from online subscribers.)

Dropping its well-known Weigh Watchers name presents some risk for the company, though it has telegraphed its intentions for several years by using a WW logo in its mobile app and for its WW Freestyle weight-loss program launched late last year, which adds many so-called zero-point foods, points being a proxy to calories. The WW brand also nods to the company’s new tagline, “Wellness that works.”

WW CEO Mindy Grossman tells Fortune that the branding and strategy change was necessary to keep the company primed to win more of the booming health and wellness market and positioned to hit its target, announced in February, of hitting $2 billion in revenue by 2020, up from $1.3 billion last year.

“We will never abdicate our authority and our position as the best healthy, sustainable weight loss program on the planet,” Grossman says in an interview ahead of her appearance Monday evening at Fortune’s inaugural Brainstorm Reinvent conference in Chicago. “But we can be so much more to people.”

Besides, Grossman says, fewer and fewer people want to only diet—an activity she calls “soulless.”

The executive is right not to downplay the continued importance of weight management to WW’s business. According to the U.S. Department of Health and Human Services, 39.8% of American adults were obese in 2016, up from 30.5% at the turn of the century. But Grossman sees the changes as a launching pad to expand WW’s businesses.

Beyond the new name and logo—two Ws, one on top of the other, vaguely recall Volkswagen’s famous emblem—WW is in the process of shaking up its food and related products so that come January, none of them have any artificial sweeteners, flavors, colors or preservatives.

That’s no small matter: Products with those ingredients represent 70% of its sales in a category that includes products like bars, snacks, and cookbooks and generated 13% of WW’s sales last fiscal year. The company believes the category could grow dramatically. The bulk of WW’s revenue – 80%- comes from membership subscriptions, which start at $3.99 a week and extend to personal coaching plans, which begin at $12.69 per week.

WW is also launching “Connect Groups” in its mobile app to cater to specific subsets of its members. For example, people who want to eat gluten-free food can swap tips with like-minded members. It’s very much a modern version of the socializing that has been central to Weight Watchers business model for decades, since its founding in 1963 by Queens, N.Y. homemaker Jean Nidetch, who had the insight that endeavors like weight loss are easier with like-minded people who can share tips and provide support so you don’t cheat.

“Community is essential,” Grossman says. “People want purpose.”

Indeed, technology has played a big part in WW’s efforts to reinvent itself. The company is beta-testing the integration of its services with Amazon‘s Alexa personal assistant and Google‘s Assistant to let a member, say, verbally ask how many points a given food count for, or track what they eat. It’s also adjusting its signature point system, which assigns points to individual items, so a person can use WW’s mobile app to budget their caloric intake based on his or her height, weight, age, sex, and activity.

“If we’re really going to be about holistic wellness, we have to provide people with the tools for all parts of wellness,” Grossman says. “That means what they put in their body, how they move their body, how they think, what’s going to make them feel accountable to themselves.”

$2 Billion or Bust

Getting to $2 billion in sales by 2020, which means 15% growth per year, might seem a tad ambitious. In reality, it’s where WW should have been by now: Revenue peaked at $1.84 billion six years ago and fell all the way to $1.16 billion in 2014 before starting to rebound.

It was a stunning decline, given the company’s reputation for effectiveness, not to mention the ongoing obesity epidemic. But more Americans were eschewing subscriptions to services that assigned points to different foods in a bid for them to gauge overall leanness and healthfulness.

Instead, consumers were opting to download any of a multitude of free fitness apps, many of which linked their diet to their exercise regimen. Suddenly, WW found itself competing with not only the likes of Jenny Craig and Nutrisystem but Fitbit, Apple, Nike, and Strava, among many others.

Enter Winfrey and her megawatt stardom. Not only did she help WW focus its digital strategy but she gave it a boost in the analog role of pitchwoman, revealing, for example, that she had lost 26 lbs. using WW’s program even though “I love bread,” as she declared in one ad. (The stock went up 20% the day she tweeted the news.)

Winfrey has been handsomely rewarded for her efforts. Though she recently pared some of her initial 10% investment in the company (for which she paid $43.5 million), she still holds 8% in a stake worth $378 million as of Friday, according to Bloomberg data.

Since Grossman became CEO in July 2017, she has sought to “codify” the new direction that WW had already embraced. In her first months, she led an effort to come up with its “Impact Manifesto,” a blueprint to modernize the company on the way to its $2 billion goal and more than doubling of its overall customer base to 10 million people.

Grossman made some key hires, too. She notably poached chief brand officer Gail Tifford from Unilever and hired Michael Korcuska as chief product officer in San Francisco, to work more closely with WW’s tech team.

Weight Watchers stock down 40% this year
Weight Watchers ice cream in a supermarket freezer in New York on Thursday, March 17, 2016 with a logo that is being eliminated to reflect the new WW company and brand name. (Photo by Richard Levine/Corbis via Getty Images)Richard Levine Corbis via Getty Images
Richard Levine—Corbis via Getty Images

WW’s leadership now gets to execute the tricky task of changing its longstanding name and logo without confusing or alienating any of its customers.

The company must also find its place amid a zeitgeist that is seeing more people simply embrace their weight. Many retailers, from Target (TGT) to J.C. Penney (JCP) to Nordstrom (JWN), have ramped up their plus-size clothing assortment amid a backlash to “fat-shaming.”

Grossman calls WW “the biggest proponent of body positivity in the world” and notes that it won’t tell people what they should weigh. But the company was criticized by eating disorder groups earlier this year when her company said it would offer teenagers a free six-week membership. (A spokeswoman says WW is still working out how such a program would work.)

If there’s one thing that’s clear, it’s that a focus on dieting seems increasingly out of step with society. “If you look at how we’ve moved from this age of dieting to this age of wellness, the ‘weight’ in the name is holding us back,” says Tifford. Or, as Grossman likes to put it: “Healthy is the new skinny.”

Financo CEO Forum
Mindy Grossman, President and CEO of Weight Watchers (now WW) onstage at the Financo CEO Forum on January 15, 2018 in New York City. (Photo by Cindy Ord/Getty Images for Financo CEO Forum)
Cindy Ord—Getty Images for Financo CEO Forum

If WW succeeds in its new positioning, the upside could be huge. For example, the company thinks its new WellnessWins rewards program, fueled by its app, could be a way to attract more male customers. The program has a game-like system offering goodies for tracking meals and hitting activity and weight goals. Men are still just 10% of WW’s membership, despite efforts over the years to increase that figure. What’s more, WW hopes that it can improve its customer retention rate of nine months—an all-time high for the company—as its rewards program makes its app, and therefore WW programs, stickier.

But there are hurdles. A Morgan Stanley analyst recently published a note warning that investors were overestimating how much market share WW could grab given its stiff competition. WW shares trade at about $70 now, well above the roughly $6 that Winfrey bought in for but well below the $105.73 price reached not long ago.

Others believe WW is making all the right moves. A J.P. Morgan analyst wrote last month that there is “a clear pathway” for WW to hit its $2 billion sales target and lifted the target price on the stock to $120. The analyst also wrote that WW’s digital push would boost profitability, noting that online membership profit margins are 40% higher than those from members who go to any of the approximately 31,000 meetings that WW holds each week.

The more digital users WW has, the more attractive it will be to potential partners, which could include businesses like fitness centers. (WW on Monday also announced a partnership with Headspace to have the meditation company’s services embedded in the WW app.)

Sixteen months into her tenure, it’s clear Grossman aims to reinvent WW with the same sense of urgency with which she modernized HSN, where she was CEO for nine years and turned the television shopping network into an e-commerce powerhouse that generates half its sales online.

“Weight Watchers is an incredible legacy brand, and we want to recognize that,” she says. “But we have to move forward and we have to recognize what the world is today.”

Subscribe to Well Adjusted, our newsletter full of simple strategies to work smarter and live better, from the Fortune Well team. Sign up today.

Read More

Great ResignationInflationSupply ChainsLeadership