Past Issues

The business of fitness and wellness.

“Costco meets Whole Foods”


If Amazon’s the everything store, Thrive Market wants to be the “everything healthy store.” 

Founded in 2014, the company describes itself as “Costco meets Whole Foods.” By charging an annual membership ($5/month or $60/year), the online marketplace is able to offer natural and organic food and products at a 25–50% discount per item. 

“If we can drive a quality experience to our members, while at the same time selling organic groceries at the same price as conventional equivalents, we’ve got a winning proposition that will allow us to compete at scale with institutional players.” 
– Gunnar Lovelace, Thrive Market co-CEO

Although the concept of a health-focused online grocer seems obvious in 2019, the founders were met with skepticism at the company’s inception. Because investors thought that Whole Foods already dominated the natural food space, Thrive Market initially struggled to secure funding. In the years since, they’ve managed to raise more than $160M by succeeding, in part, where Whole Foods falls short. While Whole Foods has struggled to shake its “Whole Paycheck” perception, Thrive Market has managed to build a brand and member base by making a healthy lifestyle more affordable and accessible. 

As Thrive Market’s co-CEO Gunnar Lovelace explained, “More than 85% of American families want to buy organic but they can’t do it because they can’t afford it. We feel like we’re bringing the mainstream in.” While a sizable percentage of Whole Foods customers live in California and earn more than $200,000, Thrive Market is winning over middle class moms in middle America. More than half of Thrive Market’s customers live in the Southeast and Midwest, have an average household income of $75,000, and 85% are women. 

Amazon buying Whole Foods has created a big opportunity for us. Whole Foods has been the standard bearer for natural foods and organic products, but the challenge it has had is that many people don’t live near one, and many people can’t afford it." 
– Nick Green, Thrive Market co-CEO

While Thrive Market doesn’t release revenue numbers, a New York Times report from 2016 claimed the company had 5M registered users and 300,000 paid members. Additionally, at the time, the company was said to be shipping more than $200,000 worth of goods per day. As of 2018, Thrive’s membership was estimated to be around 500,000. 

Besides growing its member base, the company has also been focused on expanding its product assortment. Initially, the plan was to provide food and supplements, but over time—and in response to member feedback—Thrive now offers personal care and beauty items, non-toxic cleaning products, fresh meat and seafood, wine, and more. At the same time, the company has also been growing its private label Thrive Market brand that, according to Lovelace, is expected to account for 50% of sales by 2020.

Despite their success, Thrive Market knows they still have their work cut out for them. First up, the company will need to crack the code on fresh produce and other perishable foods. Next, they’ll have to stave off upstarts like Brandless and Public Goods, both of whom appear to be pivoting to wellness. While Brandless has struggled to acquire and retain customers, they’re hoping that a new line of supplements, skincare items, and superfood powders can help. Meanwhile, Public Goods is using a membership program like Thrive Market’s to sell personal care products, ethically-sourced household goods, and organic food items. 

All that said, Thrive Market will still have to compete with Amazon, Whole Foods, and the growing number of grocery delivery services. But, as Thrive co-CEO Nick Green sees it, while others focus on value and convenience alone, Thrive Market can succeed by focusing on conscious consumption. As Green told Digiday, “We want to be the platform that people trust for innovative, all-natural brands and that’s where we’re planting our flag.”

Headlines & Happenings

💊 Dealing Drugs  

File this one under “saw that coming.” Direct-to-consumer healthcare companies like Hims and Roman have experienced tremendous growth by making hair loss treatments, ED pills, and beta blockers cool and accessible. But they may have made getting a prescription a little too cool — and possibly too easy. Recently, DTC healthcare companies have been the subject of reports from Bloomberg, The New York Times, and other outlets questioning the ethics and legal implications of pushing prescription medication with very little (or no) oversight.

Some of these companies operate in a regulatory vacuum that could increase public health risks, according to interviews with physicians, former federal health regulators and legal experts. And federal and state health laws, written to ensure competent medical care and drug safety, have not kept pace with online services…” — New York Times 

While the pros (convenience) and cons (health risks) are fairly evident, and with telemedicine the inevitable future, the elephant in the room remains: will Hims have to fight an Uber- or Airbnb-like regulatory battle or will they be able to skirt the rules?

⚖️ Naming Rights

Whether it’s meatless meat, plant-based milk, or grain-free rice, farmers and food producers are suing over naming rights.

On the range, Montana, Mississippi, Missouri, and South Dakota have passed laws that prohibit labeling products that are not from a slaughtered animal as meat. And back in the stable, claiming that plant-based beverages that use the word milk are doing so deceptively, dairy milk producers have petitioned the FDA to stop soy, almond, and oat beverages from using the term altogether. And most recently, lawmakers in Arkansas passed a measure banning food companies from marketing “cauliflower rice” as “rice.” They claimed using such terms could confuse people.

Ultimately, these lawsuits may prove to be futile. Regardless of the name, consumers will buy and eat what they want, forcing food producers and marketers to respond accordingly.

🚀 Up, Up, and Away

As we initially predicted in the 2019 Fitt Insider Outlook, wellness continues to be the ambition of brands everywhere. Now, it’s time to add Away luggage to that list. 

As 2PM pointed out, the DTC luggage company has a job opening on their website for a Head of CPG/Wellness. Per the posting, the company is looking for someone to lead the development of “skincare, supplements, and personal care products that will help make travel better for our customers.” Given the rise of wellness tourism, the overlapping self-care and beauty segments, and the premium being placed on sleep, Away is well-positioned to tap into well-being as it evolves into an “all-things-travel” brand.

From Issue No. 20: As the retail landscape shifts, consumers will entrust more decisions to fewer brands.Read more.

💰 Money Moves


Tonal, the “Peloton of strength training”, raised $45M in Series C funding led by L Catterton's Growth Fund.

From Issue No. 18: “For the foreseeable future, the Peloton of “X” will continue to define the fitness industry.” Read More.

Post Holdings has filed a confidential IPO registration for its active nutrition business, the division of the CPG company that sells PowerBar and other high-protein brands.

Kayla Itsines and her fiancé Tobi Pearce have built a fitness empire worth an estimated $487M on top of Itsines’ 11M Instagram followers, the Bikini Body Guide eBook, and Sweat, Apple’s largest-grossing health app that generates more than $100M in annual revenue.

Berkshire Partners is interested in acquiring Fitness & Lifestyle Group, an Australia-based group operating nine gym concepts in the Asia-Pacific , from Quadrant Private Equity in a deal that would be worth more than $1B.

Israeli tech accelerator Hype Sports Innovation has launched Hype Capital, a $75M sports tech fund.

Nutrafol, a non-prescription hair health brand, secured $35M in series B funding led by L Catterton, with participation from existing investor Unilever Ventures.

GrubMarket, a farm-to-table food delivery service, raised $25M in an oversubscribed C1 round of funding.

Nykaa, a Mumbai-based beauty and wellness retailer, has raised $14M from private equity investment firm TPG Growth.

Cora, makers of natural and organic feminine hygiene products, raised $7.5M in Series A funding led by Harbinger Ventures.

Tofurky accepted $7M in private funding — the first debt investment the private, family-owned business has received. 

4505 Meats, makers of paleo- and keto-certified pork rinds, landed $8.45M from Encore Consumer Partners and CircleUp Growth Partners.

Functional beverage brand LIFEAID closed a $7.7M investment to support nationwide distribution into grocery and convenience stores across the US.

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