Medifast looks to college sports leagues to popularize new line of sports nutrition products
Medifast is a company based in Owings Mills, MD that markets weight loss products and programs online and through a series of its own weight loss centers located in nine states. Even though the number of overweight consumers seems to grow daily, the sector is highly competitive with some major players such as Nutrisystem and Weight Watchers, companies which spend a lot more on marketing than does Medifast. Medifast’s core product line is an expensive proposition—$544 full retail price for a 30-day supply of the complete meal program—which perhaps limits its growth potential. Even so, the company has seen steady results over the years, with annual revenue closing in on the $300 million range, though the most recent earnings results came in below analysts’ estimates.
Play for hot market
In effort to enter markets with more immediate upside potential, in January the company announced a new sports nutrition line called Dual Fuel. The line was developed in cooperation with Rutgers University and was designed to be fully compliant with NCAA rules on banned substances. The line consists of two liquid supplements in the form of Dual Fuel Ready-to-Drink Shakes that feature milk protein and electrolytes to help rehydrate and fuel the body after exercise. These shakes contain 18 grams of protein and are made with real cocoa or vanilla extract, sweetened with monk fruit and stevia extract, and contain vitamins A, C, & E. The line also includes Dual Fuel nutrition bars, which take a different tack on mouthfeel, with a chewy layer married to a crunchy layer and are made with whole grains, peanuts or cocoa and milk proteins.
To spur initial market uptake, Medifast has has signed sponsorship agreements with both the Colonial Athletic Association and the Atlantic Hockey Conference, which will distribute the Dual Fuel products to student-athletes and fans onsite at conference tournaments. The Colonial Athletic Association includes smaller schools in the East such as William and Mary, Drexel and Towson and covers the gamut of typical college sports. Many fewer schools feature hockey programs, so that sport has its own associations; the Atlantic Hockey Conference includes such schools as Robert Morris and Holy Cross and also counts two service academies as members: Air Force and Army. In addition to the sports association sponsorships, the company has hired sports marketing agency Play By Play Sports to expand distribution among college and university programs.
"These new partnerships serve as a strong platform for the expansion of Dual Fuel," said Michael MacDonald, Medifast chairman and CEO. "We will increase our distribution and have developed a robust calendar of opportunities during which we can engage student-athletes and active lifestyle consumers around our products.”
The new product line is part of Medifast’s effort to regain momentum. The company’s revenue has stalled in recent years; it reported $285 million in revenue in 2014 and projects 2016 revenue to come in at $273 million to $280 million. In its most recent earnings report the company reported $0.33 earnings per share, slightly below analysts’ estimates.
