Brace yourself for lasting disruption in the health & wellness sector.
This space has experienced considerable change in the last several years, and is poised for even-greater transformation. Several new companies are addressing the gaping holes in the sector, while large industry incumbents remain flat-footed. These legacy players are scrambling to catch up via new product offerings, or by investing in—or even outright acquiring—newer companies.
Here are some themes to consider.
1. Consumers Are Ready to Act
When it comes to health & wellness, consumers are reaching their tipping point. Approximately 70% of Americans over the age of 20 are overweight. To combat this, there has been an influx of education on the importance of a healthy lifestyle.
Now 20% of Americans are ready to take action and head to a gym, or at least pay for a fitness membership. Over 60 million Americans are paying gym membership fees, with annual visits exceeding 5 billion. As memberships grow at a 20% CAGR, this translates to a $30 billion domestic opportunity and a global TAM of $88 billion, with 162 million members and a 72.4% average member retention rate.
Now let me get to the abovementioned tipping point. Customers who have shied away from traditional gyms are pursuing a healthy lifestyle via boutique studios, outdoor boot camps, and even online/streaming DIY programs like Aaptiv, Les Mills, and Peloton.
Awareness and consumer intent put the fitness industry in a pretty sweet spot: A largely out-of-shape population is looking for new and exciting ways to keep active.
2. Cookie-Cutter Approaches Are No Longer Working
No two people are the same, so why prescribe them the same exercise and nutrition programs?
Gone are the days of cookie-cutter approaches where intense cardio and blanket overdosing on kale ensure a healthy lifestyle. Today consumers are gravitating toward more bespoke approaches.
Following in the footsteps of startups like 23andMe, an increasing number of health & wellness companies are using DNA testing to deliver the most impactful customized activity and nutrition plans.
Companies such as Habit and DNAFit are leveraging DNA tests to gain insights into their users. DNAFit’s tests are gaining traction among athletes, for instance, as the tests reveal a wealth of information about the player. On the fitness side, they can show the athlete’s V02 max potential, injury risk, and recovery speed. On the nutrition side, they can catch sensitivities to carbohydrates and saturated fat, or even lactose intolerance.
3. Industry Experts Are Looking to Scale
Just like DNA testing, personal training continues to take hold as the health & wellness industry grows. Personal training represents a gateway for consumers to get off the couch and into the gym with a built-in support system.
The problem is that many gyms take a quantity vs. quality approach to personal training. Trainers are often overworked and pressured to deliver the highest quotas. This is the basis for their compensation, and not necessarily the quality of the training they deliver. Hence, burnout and turnover are quite high, as is the risk of injury.
And yet, trainers know they have a limited shelf life.
They are looking for ways to become differentiated and more scalable.
As a first resort, many trainers are joining boutique studios—but this is only an incremental change from the Equinoxes and Crunch Fitnesses of the world. Second, some have built their own brands, resulting in a flood of online fitness personalities. In addition, many trainers have turned to platforms like Aaptiv, MoveWith, Peloton, and others to reach consumers at scale.
4. The Plant-Based Sector Is Getting Crowded
Have you noticed a spike in plant-based protein and services that combine convenience and health? This—along with record levels of funding from strategic and financial investors—is a major disruptive trend reshaping the plant-based sector.
Hormel’s 2014 acquisition of CytoSport helped kick off a major trend. Today some of the nation’s largest food manufacturers are investing in newer brands—brands built on the premise that plants are a great source of protein. In addition to Hormel, legacy companies like General Mills, Kellogg, and Tyson Foods are investing in the trend through investments made in their venture capital arms. Brands like Beyond Meat, Kite Hill, and Kuli Kuli hold substantial appeal.
With modern consumers putting everything they eat under a microscope, there is significant demand for clean products. Once an overlooked category, plant-based foods are now a preferred option for those seeking to add a healthy source of protein to their diet.
5. Wellness & Technology Will Make a Formidable Partnership
In the wellness space, consumers are willing to spend money on compelling brands. A growing intent to become healthy has caught the attention of wellness technology companies, wearable developers, and equipment manufacturers.
Millennials in particular have taken to this trend. Over 81% of millennials exercise or would like to, versus only 61% of baby boomers. Millennials also use fitness apps more than any other age group. In turn, over 46% of Millennials want as much data on their health as possible, and more than 54% are likely to purchase a body-analyzing device.
Consumers in the health & wellness industry are increasingly seeking out technologies that make being healthy 1) more convenient and 2) more transparent. Ultimately, companies that foster greater convenience and understanding are on the right side of growth in this rapidly-evolving sector.