Nestle Sheds Some Weight With Jenny Craig Transaction

By Sam Lewis

World’s fifth most loved company moves forward, shedding underperforming brands

The world’s largest food group has sold most of its weight-loss brand, Jenny Craig, to a private U.S. equity firm, North Castle Partners. The move by Nestle follows the trend in consumer products of companies selling underperforming business in a slow worldwide economy. Earlier this year, Unilever sold its Wish-Bone salad dressing and Skippy peanut butter in an effort to focus the company on its successful brands.

The Switzerland-based food company announced the transaction on Thursday, Nov 7. The value of the transaction remains undisclosed, but analysts believe the sale was under $600 million, which Nestle paid for the brand in 2006. “It is a sign the company is carrying through with its commitment to weed out duds if they can't be turned around,” says Jon Cox, an analyst at Kepler Cheuvreux, a Swiss brokerage firm.

The move comes as little surprise, as many forecasted the sale of Jenny Craig in October. Weight-loss food programs like Jenny Craig have been victims of lowered sales due to weakened economies and free calorie counting apps, despite a growing obesity epidemic in the U.S. When Nestle acquired Jenny Craig, it was reporting $400 million in annual sales accompanied by greater than 10 percent annual growth. Now, sales are down and the brand has been losing value for years. “We want to be in business, not in agony,” says Nestle CEO Paul Bulcke.

The new owner of Jenny Craig has a history of revitalizing doomed health and wellness brands. Back in 2007, North Castle Partners bought bankrupt Atkins Nutritionals and brought it back into the mainstream. Monty Sharma, the CEO of Atkins, will be in charge of Jenny Craig. Partnered with another of his health and wellness endeavors, Curves — a fitness gym and program designed for women — Sharma has a nice plan set up to bring Jenny Craig back into the black. In addition, North Castle’s managing director, Jon Canarick, wants to build the Jenny Craig brand in Australia. “We believe we can tailor the marketing more specifically toward what Jenny Craig is great at, which is one-on-one consultation and food,” he says. The deal is expected to close later this month, giving North Castle all parts of Nestle’s Jenny Craig, except its small, but presumably profitable, operations in France.