Nutrisystem gains customers via Walmart

The mail-order meal-replacement program Nutrisystem has been making headway into the retail market through its expanding distribution agreement with Walmart. Nutrisystem last month announced that because of growing consumer demand for its Nutrisystem D 5-Day Jumpstart Weight Loss Kit, the company will expand distribution into 3,700 Walmart stores from 2,000 by the end of June.

Meal-replacement solutions have been trending well in the past quarter, according to IRI figures. For the 12 weeks ended May 19 across total U.S. multi-outlets, sales of meal-replacement bars were up 10.7% to $470 million.

The kit includes five breakfasts, lunches, snacks and dinners. Nutrisystem foods are intended to be combined with such fresh grocery additions as low-fat yogurt, salad, fruit and vegetables, and could represent a repeat trip with a built-in market basket opportunity for those consumers looking for a short-term meal replacement solution versus Nutrisystem's subscription meal program.

This isn't the first time Nutrisystem has tried to crack the retail code with its meal-replacement offering. The company launched a retail product across more than 2,000 Kroger shelves last year that generated somewhat less fanfare — but the company may have found a niche with weight management. "Kroger itself was not a bad channel for us to be in," Zier said. "The issue is that we won some market in Kroger with the wrong product, [a weight-maintenance solution], whereas we're obviously finding our strength in the weight-loss kit [at Walmart]."

Nutrisystem launched its 5-Day Jumpstart Weight Loss Kit exclusively at Walmart April 22. "[This] represents a significant departure from our traditional 28-day program," said Nutrisystem CEO Dawn Zier. "We are experiencing very positive results from our Walmart retail lines that expanded our footprint in their stores. We're seeing repeat business at Walmart, as well as multiple kit purchases, indicating that customers are seeing good results. ... We expect to have additional product and kit to launch in retail for the 2014 diet season."

The article above is part of the DSN Category Review Series. For the complete Diet Buy-In Report, including extensive charts, data and more analysis, click here.