Issue No. 202: Everything is Wellness

Wellness has become a catch-all, and consumers can’t get enough.

Exponential Growth

The active pursuit of holistic health. That’s how the Global Wellness Institute (GWI) sums up its namesake state of being.

And, according to a McKinsey survey, consumers view wellness through a broad lens, where health, fitness, nutrition, appearance, sleep, and mindfulness are the focus.

While definitions vary, as the meaning of wellness expands, so does the market.

GWI: The global wellness market is expected to reach $7T by 2025.
McKinsey: Americans spend more than $450B annually on wellness products and services.

Live Well

Reeling from the pandemic, consumers want holistic wellness.

And its importance is only growing. A recent McKinsey report found that 50% of US consumers now say wellness is a top priority in their day-to-day lives, up from 42% in 2020.

The report also states that the lines between wellness dimensions are blurring further, with consumers indicating existing offerings don’t meet their needs.

Consumers value brands that span several wellness dimensions.
37% of consumers desire additional products/services in both the sleep and mindfulness categories.
One-third of consumers want more options across health, nutrition, fitness, and appearance, respectively.

Driving demand, younger generations are seeking out wellness at rates up to 7% higher than the average consumer.

What’s Trending

For companies in the space, the report goes on to identify key growth drivers that can’t be ignored.

It’s personal. Consumers now expect data-driven personalization. Following the lead of Netflix and Spotify, wellness brands are dialing in.

In particular, companies like Strava, WHOOP, and Oura are tapping integrations and interoperability to improve the customer experience. Meanwhile, the rise of wearables, home diagnostics, and computer vision enable real-time personalization.

Service-based. While products account for 70% of consumer wellness spending, services are gaining ground. Over the next year, 45% of people intend to spend more on services vs. 25% buying more products.

Lending further support to this trend, Mindbody recently noted that 87% of consumers plan to maintain or increase spending on wellness services. Leading the way, bookings for nutrition counseling and massage were up 15% and 11%, respectively, through this year vs. the same period in 2019.

Shut-eye. Apparently, the $500B sleep economy isn’t big enough.

After health, sleep is the highest priority for consumers. At the same time, it’s the area with the highest unmet need — one in three Americans are sleep-deprived, with the national average slipping to 6.8 hours of shut-eye per night.

As smart mattresses and bedtime elixirs try to change that, more startups are working to diagnose and treat sleep disorders.

Pay-to-play. Even amid economic uncertainty, consumers say they won’t curb wellness spending.

80% of consumers plan to maintain or increase their health and fitness spend in the next year, per Accenture.
62% of people say health and wellness activities are the last thing they’d cut back on, according to a survey from Restore Hyper Wellness.

Unwell. Still, as we’ve pointed out, more spending doesn’t equate to better health outcomes. So, whether it’s increasing access to healthcare, leveraging tech to spur innovation, or simply making our cities more walkable, we have a lot of work ahead of us.

🚨 Inside the Red Room

Boutique fitness is still booming.

On the Fitt Insider Podcast: Barry’s CEO Joey Gonzalez discusses how the international HIIT studio accelerated out of the pandemic.

We also cover: the launch of its cycling concept RIDE and the foundational strength behind group fitness.

Listen to today’s episode here

📈 Pumped Up

Gym visits are trending up, but it’s not business as usual.

Back on track. After a false start last year, 2022 marked a clear turning point for in-person fitness.

As peak COVID restrictions lifted and connected equipment sales stalled, brick-and-mortar operators welcomed the gym faithful back.

Since February, monthly gym visits have been ~13% higher than over the same period 2019.
According to Mindbody, for those that have returned, per-user class booking is 10% higher than pre-pandemic.
Exercisers taking the same Les Mills class in-studio and at-home found the in-person version 14% more effective and 13% more enjoyable.

Riding the wave, big-box gyms and boutique studios alike are touting gains.

But… Increased traffic doesn’t tell the full story — IRL participation and frequency are headed in opposite directions as at-home exercise remains popular.

Only 26% of US adults go to a gym weekly, compared to 57% who work out at home, according to Momentive.
The proportion of fitness consumers with hybrid routines has grown from 46% in 2020 to 65% in 2022, per McKinsey.
Hybrid exercisers were more likely to report positive health outcomes, with 55% saying their overall wellness has improved vs. 41% for all respondents.

Looking ahead: Adjusting to shifting demand, brands are adopting new business models. While Peloton doubles down on subscriptions, Life Time is raising prices, with CEO Bahram Akradi telling Axios the health club wants fewer members paying higher dues.

Still, putting the “here or there” argument aside, getting more people moving more often remains the largest and most important challenge.

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💸 Exit Strategy

Fitness equipment maker Nautilus is mulling a sale.

For context: Owner of brands like Bowflex and Schwinn, the company has been in business for more than 30 years.

More recently, with the rise of connected fitness, Nautilus set its sights on a tech-enabled makeover. Boosted by COVID restrictions, it posted record growth during the pandemic — but the lift didn’t last.

Reorienting. Underway for years, Nautilus made its transition from product-led hardware company to consumer-led digital company official in 2021, announcing its North Star strategy.

2019: Debuted JRNY, a digital platform creating personalized workouts.
2020: Sold its commercial brand Octane Fitness to focus on the at-home market.
2021: Acquired VAY, a computer vision and motion technology company.

Despite its efforts, Nautilus saw sales decline 70% YoY in Q1’23 as losses mounted.

At the time, CEO Jim Barr remained bullish on home fitness, reaffirming plans to double direct-to-consumer sales by 2026.

Unwilling to wait, the Nautilus board elected to pursue strategic options, including a sale.

Takeaway: Hardly alone, Nautilus joins a growing list of equipment makers who bet that pandemic-era demand would last forever. As the pendulum swings, downsizing, consolidation, or worse remain likely possibilities.

📰 News & Notes

Lyra Health expands mental health coverage to kids.
WHOOP targets interoperability with new developer kit.
Upstart running brand Tracksmith opens storefront in the UK.
WV Tourism partners with AllTrails for free Pro memberships.
Startup Q&A: Katalyst CEO Bjoern Woltermann on EMS fitness.
Fitt Jobs: Curated dream careers in the health & fitness industry.
UnitedHealthcare extends Peloton subscription to 10M members.

💰 Money Moves

Limbo, a weight loss platform using CGMs and wearable technology, raised $6M in a funding round.
More from Fitt Insider: Weight of the World
Beauty and wellness studio booking platform GlossGenius secured $25M in a funding round co-led by Imaginary Ventures and Bessemer Venture Partners.
OYE, a mental health app co-founded by recording artist J Balvin, raised $4.1M in a pre-seed round.
Employee wellness platform Wellable acquired digital fitness platform Sweat Factor.
Spa service marketplace Spa Space received $10.2M from CI Capital Partners.
Dame, a sexual wellness company, secured $7M in a Series A round led by Amboy Street Ventures.
Sexual health and wellness brand Cake landed $8M in a Series A round led by Silas Capital.
Chubby Snacks, maker of better-for-you pre-made PB&Js, raised $3.25M.
Pediatric mental health platform Cartwheel Care secured $3.9M in a seed round led by General Catalyst.
Metre, a metabolic health platform using breath acetone measurement, secured $1M in pre-seed funding.
UK-based music-as-medicine startup MediMusic added £1.2M ($1.33M) in new funding.
More from Fitt Insider: Sound On
Private equity firm Digsbury Ventures launched an outdoor industry-focused fund, with its first investment into Bridge Bike Works.
Innomy, a Spanish foodtech firm using mycelium to create alt meat products, raised €1.3M ($1.27M) in a pre-Series A round.
UK-based Gymfinity Kids, a chain of youth-focused multi-sport facilities, added £5M ($5.4M) and will expand internationally.

Today’s newsletter was brought to you by Anthony Vennare, Joe Vennare, and Ryan Deer.