US$ 1.2 Billion Or US$ 12.2 Billion: What Is India’s True Fitness Industry Potential?
Ever since I got into the fitness business around 3 years ago I knew the potential of the business was huge but have not been able to peg it to an exact number. Unlike in markets like the UK and the US where verified industry numbers are easily available, this is a huge challenge in India. One of the key reasons for the same is that currently there is only approx. 28% of the total market that falls under the organized centers category with the bulk being in the unorganized segment. Also, there is no standardization on as to what all is included while calculating numbers in the fitness segment. For e.g., While Amaresh Ojha (Founder & CEO of Gympik) had estimated the Indian fitness industry to hit around US$ 1.18 billion by 2017, Ramesh Raja, (Founder Director at ACME Fitness) has estimated that it would hit a lower US$ 908 million by end 2018. Clearly, there is a distinct mismatch and in most probability, this is due to a difference in parameters/segments between the two.
The Fitness and wellness industry in India has emerged from simply being a weight losing domain to an overall grooming service. Gone are the days when people opted for gyms and fitness centers just to gain or reduce weight. There’s a shift in perspective today. People are concerned about overall health and are keen on maintaining the right attitude towards inner satisfaction and growth. Not surprising then, the fitness industry too has evolved accordingly to keep pace with the changing needs of consumers. The modern fitness industry goes beyond conventional fitness methods to accommodate everything from yoga and kickboxing to pilates and functional training on the one end and nutrition, healthy foods, wearable, and athleisure on the other. Today, you could also count fitness, sports and/or bits of health tourism also into this category. Categorizing fitness industry to be a separate sector in itself indicates the scope of business and investment of the industry. Fitness enthusiasts have gone ahead and indulged in different platforms to popularize their fitness regimes and trends. More importantly, a key indicator that validates the growing preference to the industry is the rapidly increasing venture and institutional funding interest in this segment.
There had to be a way to look at the industry differently to determine what true potential is would be?
If we look at the numbers from the standard prediction model deployed in general by statisticians and industry specialists we would look at around 16%-18% y-o-y growth bringing us to a figure of around US$1.2 billion – US$1.75 billion by 2022 depending on which set of figures we based these predictions on. So one could safely say that this would probably be the lower growth ceiling of the industry. If all went reasonably well, am sure we all would agree that it would be very difficult to go below these numbers. So what are the numbers on the other side of the spectrum? What is the upper circuit so to speak?
There has to be a standardization method that could act as a guide for players to understand what the upper and lower growth celling would be. But for that, I strongly felt that the industry should look at the business wearing consumer POV lenses as opposed to business POV lenses - a pull perspective as opposed to a push perspective.
The solution lies in considering three key elements in the basket, namely actual physical fitness business, nutrition and fitness wear (including athleisure & wearable’s), as these are the three pre-requisites today for anyone getting into or looking at fitness. Conventionally this was calculated basis revenue and equipment sales with some analyst also throwing in conservative athleisure numbers.
Here there are two sets of numbers that become really interesting, (a) the NCD driven mortality rate in India (As per WHO 61% (i.e. 5.8 million individuals) of all mortality in India in 2016, where 7.3 deaths per 1000 is recorded, were due to NCDs), and (b) the rapid urbanization linked numbers (estimated to constitute 60%-70% of entire population in next 8-10 years). Both are interlinked. The rapid rise in urbanization brings with it sedentary lifestyle driven issues that in turn has caused and will, in turn, keep causing growing NCD linked mortality which is estimated to reach as high as around 80% by 2022. Keeping the overall population as a constant and pegging the dollar at around INR 100.00 and an average spend of around INR 300 per day for 50% of NCD patients and say around 2% of the rest the number at the other end of the spectrum translates to a staggering US$17.2 billion (approx.) industry by 2022. To top it all if a serious player gets the business model of his gym right and ensures a 20%-30% operational profitability a month, which from our experience is very possible, there is no doubt that is a winning formula.
While people may argue that this is not possible and a fancy notion the fact remains that even if a mere 50% of it is achieved, it indeed is a very attractive business proposition. Add to this the current state of the real estate markets and/or the significant flux in the real estate market and the answer is straight forward and for all to see. Don’t forget organized fitness penetration in India is a mere 0.3% approximately as compared to around 14.9% in the UK and over 19.3% in the US.
