A weighty segment

Losing weight has turned into a significant industry recently, and our expanding waistlines assure a continuing trend. By JASON BAKER of IBISWorld.

By Jason Baker

The $790 million weight reduction services segment of the personal services industry has been performing solidly over the past five years, and growth looks set to continue into the next five.

Firms in this segment provide personalised weight management services, dietary advice and assistance over varying program durations, usually depending on the extent of desired weight loss.

Some services also provide proprietary food products, which provides extra income for the company. IBISWorld estimates that revenue in the weight reduction services segment will account for about $790 million in 2006-07. The industry is highly dependent on advertising using high-profile people or weight loss success stories.

It has expanded over the past decade as the number of overweight and obese people in Australia has increased and the health implications for overweight people have gained increased publicity. Over the forecast period, this product segment will continue to grow in importance.

IBISWorld anticipates moderate growth in the weight reduction services industry. This is mainly due to the availability of obesity treatment drugs and supplements and a rise in the popularity of self-managed weight loss, where exercise is used in conjunction with a good diet.

Roche sells “Xenical”, a prescription drug for the treatment of obesity. It is estimated that more than 200,000 Australians have used Xenical since its release in 2000-01. Roche has made a submission to the Federal Government to have Xenical categorised as a Schedule X pharmacy-only drug, which would allow Xenical to be advertised directly to consumers.

There has been some publicity relating to the dangers of frequent fast dieting, and this may adversely affect demand for weight reduction services. This publicity appears to have contributed to a move by some weight reduction service providers towards describing their services as weight management (rather than weight reduction) services.

The industry is now prohibited from advertising specified potential levels of weight loss during a certain period, and this may reduce demand from people who seek rapid weight loss.

The expected change in emphasis from weight loss regimes towards self-management may cause specialised weight reduction services to lose market share to other products and service providers, such as suppliers of drugs, dietary foods, self-help web-sites, health farms, sport participation, gymnasiums and personal trainers.

Competition from alternative products will pressure firms in this industry segment to expand their range of services.

The weight reduction services segment has an opportunity to expand the market for services provided to males. Two-thirds of men are overweight or obese compared to only one-half of men 20 years ago.

It would appear that Australian men are becoming more conscious of the health implications of being overweight, such as increased risk of heart disease and diabetes. However, most men are reluctant to attend weight management groups.

As long as health and image trends continue the way they have been, growth can be expected to continue. In fact, IBISWorld expects the greater industry to grow at about 2.4% a year, which means the weight reduction segment will be fighting fit for a few years to come.