Past Issues

The business of fitness and wellness.

Butter me up


With Chipotle announcing their keto-friendly menu and SlimFast hawking their take on a keto shake, there’s no denying the mainstream appeal of this fat-first diet. But taking a step back, it’s worth exploring how this diet, initially conceived as a treatment for epilepsy, overtook paleo and Whole30 as Google’s most searched diet term of 2018. 

As is often the case with diet and weight loss trends, keto appears to have been vaulted into the spotlight by star power. Starting in 2013 with a series of podcast interviews, Tim Ferriss and Joe Rogan helped introduce the world to a group of keto masterminds, including Peter Attia, Valter Longo, and Dom D’Agostino. As an article in Men’s Health explained, within a year of D’Agostino’s appearance on Rogan, a podcast that has an audience of 30M monthly listeners, “keto cookbooks flooded the market, searches for keto hit 17M per month, and Orian Research estimated keto is a $5B industry.” 

During the same period, venture capitalists began backing keto companies. To date, three keto-friendly concepts have cashed in big-time — Bulletproof, Ancient Nutrition, and Virta Health have raised a combined $250M to corner the market on ketones. When Dave Asprey, Bulletproof’s health-hacking founder and CEO spread the gospel of butter coffee, sales of its two key ingredients took off. As the super fats fueling the keto economy, the market for medium-chain triglycerides or MCTs is expected to reach $2.5B by 2025. Undergoing similar growth, sales of grass-fed butter rose 45% in 2018 as global butter sales expanded to $19.4B

When consumers started going keto, online communities like Instagram’s #ketotransformation and Reddit’s r/keto subreddit popped up and, over time, ballooned to 678,000 posts and 1.1M members, respectively. As the opportunity became more obvious, the floodgates opened, and the period between 2013 and 2017 saw a fivefold increase in the number of new “keto” food and beverage products. 

From Fat Snax to FBOMB and Know Brainer to Ample Foods, the keto craze came for everything, including cookies, nut butter, coffee creamer, and ready-to-drink meal replacements. Keto mania has even led to the creation of a “clean keto” seal of approval and National Keto Day, as brands think up new ways to ride the fat-focused wave. Looking ahead, following the keto trend seems like a smart business decision — some estimates of the ketogenic market expect an incremental growth of over $366B between 2017 and 2022. 

Food for thought: With the fat fad in full swing, founders, investors, retailers, and consumers can’t seem to get enough. But as more people cash in, it’s important to note that the keto craze isn’t free from controversy — there’s contradicting evidence of the diet’s effectiveness. Similarly, countless other diets, supplements, and entire companies (see: Goop) have been mired in skepticism. Still, despite the fact that weight loss and wellness companies struggle to back up their claims with science, many continue to find success — ultimately, they’re not accountable for actual results. It begs the question: What are the rules for creating, fueling, or capitalizing on a weight loss or wellness trend? Or is all fair in the business of wellness?

Headlines & Happenings

✈️ Well traveled 

At $639B, wellness tourism is one of the largest and fastest-growing segments of the $4.2T global wellness market. Now, new numbers from Airbnb reveal how the surge is impacting the hospitality company and the travel industry in general. 

"Bookings for wellness-related Experiences have spiked more than 500 percent from 2017 to 2018, with notably strong growth among seniors (ages 60+) and Gen Z and millennials (ages 18-24) with more than 800 percent growth in both age groups."

A number of trends appear to be converging here. Travelers want to feel more like locals than tourists. A shift from prior attitudes, today’s travel itineraries don’t include an escape from healthy habits — instead, they are an extension of a wellness-based lifestyle. The self-care and the luxury aspects of wellness are increasing bookings for experiences like “Meditate with a Shaman” and “Bali Healer and Holy Bathing”. Given this context, initiatives like Equinox's Travel Experience and the brand’s boutique hotels are well-positioned to serve growing demand. 

👟 Running in place

Starting in 2014, Equinox began offering Precision Run, a treadmill-based group fitness class. Flash forward to the present day, and all 500 Precision Run classes across 135 Equinox locations sell out each week. Tapping into this demand, Equinox is spinning Precision Run out into a standalone boutique fitness concept. Now, there’s a plan in place to open a dedicated Precision Run studio in NYC’s Flatiron District and a location in LA ahead of a nationwide rollout. 

For background, treadmill-centric workouts are very trendy right now. According to ClassPass, sign-ups for treadmill classes increased by 82% last year. And just last month, Equinox competitor and boutique fitness accelerator Xponential Fitness acquired Stride, a boutique treadmill studio, to its portfolio. With Precision Running, Equinox now counts their namesake upscale health clubs, PURE Yoga, Blink Fitness, SoulCycle, and its investment in Rumble among its collection of concepts. Meanwhile, Xponential claims Club Pilates, CycleBar, StretchLab, Row House, Pure Barre, AKT, Yoga Six, and Stride.

💰 Money Moves

Update: Hims, the DTC men’s health company, has officially entered the unicorn club, raising $100M at a $1B pre-money valuation. Issue No. 13 of Insider included initial reporting from Recode that the round was taking shape. The Series C deal was finalized last week.

Siete Family Foods, a Mexican-American food brand and makers of grain-free tortillas and chips, raised $90M in private equity funding from The Stripes Group.

Sierra Nevada Brewing Company has acquired Sufferfest Beer Company, makers of “functional beer” geared toward healthy, active consumers. The terms of the deal were not disclosed.

Ritual raised $25M in Series B for its subscription-based women's vitamin business.

Tough Mudder is in the process of raising capital to spin off and scale its Tough Mudder Bootcamp business, separating the fitness studios from the obstacle races. In 2018, Tough Mudder Bootcamp sold 60 franchises in the US, and CEO Will Dean said there’s demand for more US studios and international locations.

Billie, a women's shaving and personal care startup, landed $25M in Series A funding led by Goldman Sachs.

FabFitFun secured $80M in Series A funding for its health- and beauty-focused subscription boxes. Axios is reporting that “the valuation is north of $1B” and the company is doing “hundreds of millions in revenue.”

Men’s fertility and sperm storage startup Dadi raised $2M to “normalize the conversation around male fertility and reproductive health.”

Superfood and smoothie chain Everbowl secured $3M in private equity funding and plans to open as many as 45 locations by year’s end. 

Roark Capital acquired a majority stake in Fitness Connection from LNK Partners.

In an effort to acquire healthy snack box company Graze, Unilever is pushing for a period of exclusivity to finalize a deal. The consumer goods giant is trying to box out Kellogg’s and PepsiCo, who have also expressed interest in buying Graze. 

As we noted last week, Australia's biggest gyms business, Quadrant Private Equity's Fitness and Lifestyle Group, is preparing for a sale. Now, in an effort to bolster their value among potential suitors, the company has purchased Vietnam-based CMG Asia gym group for $200M. CMG Asia has about 100,000 members, generates about $20M in annual earnings, and owns the master franchisor rights for UFC Gyms in southeast Asia.

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