From Bloomberg:
Weight Watchers International Inc., the world’s largest chain of diet centers, said it is adapting its point-counting system to fit China and take advantage of a growing middle-class population.
Increasing affluence and a lack of nutritional education make the country ripe for expansion of the New York-based company’s weight-loss programs, according to Chief Executive Officer David Kirchhoff, 43. The company opened its first Chinese outlet in Shanghai in 2008 and now has five centers there.
“The speed of how quickly the middle class is emerging lends itself to our program,” Kirchhoff said yesterday in a telephone interview. China’s middle class may grow to 46.2 percent of households by 2020, from 31.7 percent this year, London-based research firm Euromonitor International said.
China will be “a brand new business,” Kirchhoff said. Weight Watchers needs the boost after first-quarter profit fell to its lowest level since 2004.
The company has had to negotiate cultural differences in its effort to gain brand recognition and respect among Chinese consumers, Kirchhoff said. Weight Watchers assigns points to foods based on calories, fat and fiber, and a client gets a certain amount of points per day.
Trays of Food
“A typical experience for people when they eat out in China is the big spinning tray with all the different dishes around it,” he said. “You might have two spoonfuls of this, three spoonfuls of that. It’s a different process to keep track of how much you’re eating. We had to reinvent the program to fit their lives.”
The Chinese version of the program incorporates images to show how big servings should be, Kirchhoff said. Researchers spent time in restaurant kitchens throughout China to compile a list of standard ingredients in many traditional dishes to give approximate point values, he said.
“Nutritional information has not been available for Chinese consumers, so awareness about what’s in certain foods is quite a bit lower,” said Kirchhoff. The company spent more than a year developing a Chinese-food database.
The China business is a joint venture with Paris-based Groupe Danone SA, 51 percent-owned by the weight-loss company.
Weight Watchers rose 13 cents to $27.13 at 1:54 p.m. in New York Stock Exchange composite trading. The shares had fallen 7.4 percent this year through yesterday. The company is scheduled to report second-quarter earnings Aug. 5.
Weight Watchers hasn’t released revenue or profit from its China operations. North America accounted for about 65 percent of the company’s sales of $1.4 billion in 2009. The U.K. and Europe made up about 31 percent.
“We’re in the process of identifying the right business model that will allow us to profit in China,” said Kirchhoff. “Without knowing exactly what that is, it would be an arbitrary exercise to forecast profit at this time.”
To contact the reporter on this story: Alex Sherman in New York
asherman6@bloomberg.net.
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