Industry insights: wellness, brought to you by Natwest

Thursday, 02 January 2020

The wellness sector is now worth $4.2trn globally and hosts a myriad of opportunities for UK start-ups and SMEs. We look at how the industry is growing and developing.

The global economy is facing many challenges, but one area that remains fighting fit is wellness.

According to the Global Wellness Institute (GWI), the sector was worth $4.2trn (£3.3trn) in 2017, up 12.8% over the previous two years, with the UK market expected to reach £12.4bn by 2020.

The increase has been driven by demand for personal care, beauty and anti-ageing products, healthy eating and nutrition, wellness tourism and fitness. Workplace wellness and wellness real estate, where healthy living is incorporated into building design, are also increasingly sought after.

GWI also predicts that the biggest growth in the next four years will be seen in real estate and workplace wellness, as well as tourism.

“Once upon a time, our contact with wellness was occasional: we went to the gym or got a massage,” says Katherine Johnston, senior research fellow at GWI. “But a wellness mindset is starting to permeate the global consumer consciousness.”

Consumers have become much better informed and proactive, agrees Laura Hill, senior editor at wellness consultancy Welltodo. “A decade ago people were reactive when it came to health and fitness, only engaging when a doctor told them to do something,” she says. “Now people want to take control with a preventative approach.”

She says it has primarily been disruptive start-up firms led by “passionate” entrepreneurs that have raced to meet this demand.

Despite large corporates such as Walgreen Boots Alliance developing their own wellness arms and McDonald’s launching healthy wraps, Hill says start-ups continue to play a crucial role in this sector. “There’s still room for the disruptor entrepreneurs. They’re more agile, innovative and authentic,” she says.

Business opportunities

Paul Joseph set up worldwide wellness holiday provider Health & Fitness Travel in 2010. It offers trips from detox and yoga retreats to ‘Mindful Triathlon Holidays’. “There were a lot of pampering-type spa breaks, but people really wanted more active trips,” Joseph says. “We were a niche travel product but now wellness has become the norm. Bigger travel companies are embracing health and fitness travel and most hotels have a wellness programme.”

In response to this, Joseph has developed more personalised, unique and exclusive trips. “We also have a wellness consultant who speaks to our clients when they return from holiday for a follow up,” he says.

Joseph also keeps a track of changing demographics. The business has mainly attracted people in their 30s to 60s, but is now experiencing a rush in demand from millennials. “They’re much more into their health than previous generations,” he says.

He advises other wellness entrepreneurs to find a niche product and to have passion for the sector. “You’ll be at a disadvantage if you don’t – you need to live the brand,” Joseph says.

A niche offering

Daniel Herman agrees that passion is paramount. He spotted his gap in the market in 1997, when he launched supplement brand Bio-Synergy.

“There were very few sports nutrition products at the time apart from those for bodybuilders,” he says. “I wanted to create a better product for me, my friends and other non-athletes increasingly working out at gyms to improve their fitness and health.” Soon, Herman was able to count sports clubs including Arsenal FC among his clients and retailers such as Tesco among his stockists.

“The category has grown exponentially but I feel it’s the same fitness-focused consumers just buying more stuff,” he says. “Over three quarters of the UK population still exercise less than once a week.”

Herman wants to tap into those couch potatoes with the launch of L1VE, an interactive workout device preloaded with fitness programmes, recipes and supplements delivered to customers in a box. “We want to be the Netflix of fitness,” Herman says. “There are so any fitness apps out there, but they’re focused on people who are already fit. We want to help those exercising for the first time.”

Also finding opportunity in the fitness sector is Juliet Murrell, founder of House of Voga, which combines yoga and vogue-style dancing. It’s taught at retreats, hen parties and festivals. “I combined my love of yoga and dancing,” says Murrell. “It’s taking off mainly with females, the LGBT community and dance enthusiasts.”

She also believes a unique product and innovation is crucial to stay ahead of the ever-rising competition. It intends to bring out a fashion line later this year so you can “go to a class and the bar afterwards” and is making inroads into workplace wellness schemes.

Digital wellness

Also helping workers is Kaido Wellbeing, a wellness/digital change platform licensed to employers. Devised by former sport scientist Rich Westman, it uses data analytics and wearables to monitor an employee’s physical, mental and social well-being over a 60-day challenge programme. Of its current users, 76.5% increased their physical activity and 36.8% reported feeling less stressed at work.

“In the last 12 months there’s been a huge shift in the number of employers realising that workplace well-being needs to be an integral part of their culture,” says Westman. “We felt that the existing technology platforms were not as personalised as they should be. Our system is more targeted to an individual’s health status.”

Another start-up looking at health is Thriva, which sends out home testing kits for measurements such as cholesterol via a subscription model. “People want to take their health and well-being into their own hands,” says co-founder Hamish Grierson. “Through healthtech we can build a more proactive health service. The digital health market in the UK is estimated to be worth £2.9bn and there’s still plenty more opportunities.”

Looking at the bigger picture

SMEs should pay close attention to business fundamentals, says Laura Hill. “Competition has increased in the wellness sector with new launches every day, so it’s harder to stand out. You can’t just rely on passion, you need to have a strong and sustainable financial and strategic proposition,” she says. “Build personal communications with customers via social media and look at digital innovation, including, in the longer term, AI [artificial intelligence] and virtual reality products.”

Hill says wellness start-ups are also focusing on building strong teams, often looking outside the sector to find talent. “They want experts to bolster growth in areas such as customer services, finance and data,” she says. If a business gets these ingredients right, then investors are increasingly attracted to the sector.

Investments and growth opportunities

Recent big investments include £1.5m for food-tech business Feedr – an online platform for workers to order nutritious food – from venture capital firm Episode 1.

“Every year there are huge injections of cash from private equity, angel investors and crowdfunding,” Hill says. “The hottest investment areas we’ve seen recently have been in ‘femtech’, so apps tracking things like hormones and periods.”

João Félix, managing director of Wellty, which invests in and advises wellness firms, sees growth opportunities in genomics and consumer health, as people seek a “better, faster and stronger me”. “We assess the size of the opportunity, the total addressable market, the competitive landscape, whether the solution is viable and team strength,” he says. “Wellness is not a fad. It’s a generational opportunity.”