New Year, new resolutions, new you… well, maybe… for the first few weeks anyway… until you are back spending the evening on the sofa gorging on Haagen-Dazs by the start of February. Gyms see a rush of interest around this time of year and it’s often hard to find a free treadmill or get a place at your favourite Pilates class. The seasonal hype inevitably fades, but we are firm believers in the fitness megatrend, which has seen gym membership and exercise participation rates increase meaningfully across the globe in recent years.

Looking at the figures, it is estimated that between 2008 and 2018 gym memberships grew by 37.1% in the US alone*. In the UK, memberships finally broke the 10 million mark last year, meaning one in seven people are currently members of a gym.** This has proved a structural tailwind for many gym operators and sporting goods companies and has provided a number of sustainable investment opportunities.

Growth of gym membership in the US (left) and 2019 statistics on UK gym membership (right)

In particular we favour low cost gyms, like Planet Fitness and Basic Fit, which make exercise accessible to those who can’t afford to pay the hefty monthly fees charged by premium health clubs.

US gym group, Planet Fitness, is a disruptive low-price gym, offering prices starting at around $10 – much lower than its competitors. Even its premium ‘Black Card’ membership comes in at a very reasonable $23 per month. The group is targeting the 80% of Americans that don’t go to the gym, particularly focussing on increasing the number of female members and attracting those low in confidence. The gyms offer “No Judgement Zones” and “No Gymtimidation” – a marketing message that has been highly effective in overcoming the old image of meatheads throwing dumbbells around!

Basic Fit offers a low-priced gym format across the Netherlands, Belgium, France and Spain, with market share just below 10%. The company is run by founder and former tennis player Rene Moos and expects to grow strongly in France and Spain in particular, where gym penetration rates are much lower than the UK. Both Basic Fit and Planet Fitness are also benefitting from lower rents by opportunistically taking space made vacant by the perennial struggles of traditional bricks and mortar retail.

All these new gyms need equipment, which has helped Technogym’s business expand as well. Like seemingly all successful businesses these days (think Amazon, for example), Technogym started life in someone’s garage and grew under the passion and drive of a visionary leader. Today the company, which manufactures a full range of fitness equipment, has an enduring global brand and attractive opportunities to continue to grow in markets including the US and China. The company has also recently launched its own direct-to-consumer offerings with live streaming of fitness classes from their studios in London and Milan – much like Peloton, but without the spectacular pre-Christmas advertising own goal. We see a big opportunity for them to grow their business and generate a more highly-valued subscription-based revenue stream.

These examples demonstrate the power of tapping into the fitness trend and the companies involved not only have the potential to be excellent investments but also provide clear benefits to society by helping keep people healthy and reduce the costs and burdens on healthcare systems further down the road.

Have a great weekend (at the gym).

Some of the companies listed above are held in the Kames Global Sustainable Equity Fund as well as other Kames Fund portfolios.

* Source: IHRSA:
** Source: Leisure DB:


About the author

Iain Snedden is an investment specialist in the equities team. He has responsibility for representing the firm’s equity capabilities both within and out with the firm, with a particular focus on our suite of global equity products. This involves ensuring colleagues and clients are kept up to date on developments within the funds and the wider market. Iain joined us in 2015 to work in the Client Management team with responsibility for a portfolio of UK-based institutional clients. Prior to that, he worked at Baillie Gifford and held roles within the client accounting and business risk functions. Iain graduated from University of Edinburgh with a first class honours degree in Accounting and Business Studies. He has 9 years’ industry experience*. *As at 30 November 2019.

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