As Jeff Compton, chief operating officer and president of Europa Sports Products, told Nutrition Business Journal recently, when he and Eric Hillman started their supplement distribution company in 1985, health clubs and gyms were the main retail source for sports nutrition and bodybuilding supplements. That changed in 1999, however, when the death of a New York woman potentially linked to an ephedra-based supplement spawned lawsuits against the personal trainer who recommended the supplement, the Crunch Fitness club that employed him, and Vitamin Shoppe, the maker of the supplement. “For many years, some clubs backed off of [supplement sales],” said Michele Bell, sales and holistic services specialist for Club and Spa Synergy Group Consultants, a management consulting firm in New Jersey.
But, as nutrition has become a greater focus for the fitness industry, health clubs and gyms throughout the United States are once again pumping up their sales of energy bars, ready-to-drink (RTD) mixes and even bulk sports nutrition products. In fact, between January and June of this year, Europa's health club sales were 20% higher than during the same period last year, Compton said.
Sports nutrition manufacturers are feeling the change as well. “We have seen health clubs becoming more aware of the popularity of nutritional supplements in the last eight to ten months,” said Eric Tomko, director of sales at BSN, maker of numerous popular sports supplements, such as N.O.-XPLODE.
Channel Set to Grow
Today, health clubs generate only about 2%-3% of overall sports supplement sales, according to NBJ's 2007 Global Supplements Report on Health Club Sales of Sports Supplements. In 2005, America's 26,000 gyms and fitness centers accounted for only $400 million of the $16 billion rung up in retail supplement sales, NBJ estimates show.
But an International Health, Racket and Sportsclub Association (IHRSA) 2007 membership survey found that there is potential for health club supplement sales to grow. According to the survey of 129 members representing 883 facilities, non-dues revenue (which includes supplements and other products, as well as a range of services) reached an all-time high in terms of percentage of overall revenue in 2006, with the average club generating almost 35% of its revenue from supplements and other non-dues-related products and services. This was up from 29.7% in 2005.
As IHRSA learned from its survey, more and more health clubs are seeking to diversify their revenue sources — but only a minority percentage are currently using sports supplements to bring in new streams of money. IHRSA's reports that nearly 70% of its survey respondents do not sell sports supplements, even though 53% do include nutritional counseling and classes in their member offerings.
The good news is that, as doctors and other healthcare experts increasingly stress the importance of integrating nutrition and exercise for optimal health and weight management, more health clubs and gyms are likely to add nutrition components — including sports supplements — to their member offerings. After interviewing more than 500 fitness professionals, the American College of Sports Medicine concluded in 2007 that the blending of diet and exercise would be a significant trend for 2008. Clearly, health clubs and gyms are a natural location for this blending to occur.
BSN is one sports nutrition company that is using the growing connection between fitness and nutrition in its pitch to health clubs — and the message seems to be having an impact. According to Tomko, both Bally's and 24 Hour Fitness have upped the amount of product they are purchasing from BSN. In fact, one of the chains has increased its purchases and sales of BSN products by more than 100% year to date, Tomko said.
Capturing Health Club Sales
Tomko said he is pleased with this trend because, despite health clubs sales representing only about 10% of BSN's business, he knows how important it is to connect with consumers in the health club setting. “BSN's goal is to capture the rapidly growing health club customer base at the start of the individual's new goals for a healthier lifestyle,” Tomko said. “We hope to gain a customer for life if we can be their first experience with nutritional supplements.”
Europa's Compton, who distributes to more than 7,000 clubs nationwide, reported that for years the top-selling products in the health club channel have been nutrition bars, drinks and RTD mixes. Compton said RTD mixes and drinks from BSN, American Bodybuilding, EAS, CytoSport and Labrada are particularly hot sellers in the health club channel, while meal-replacement bars from Chef Jay, Apex, ISS and Supreme do well on the bar side.
As Club and Spa Synergy Group's Bell notes, bars, drinks and RTD mixes fit well in the health club environment because they work for the club member who wants a quick and healthy pre- or post-workout snack. In addition, these products are safe for and typically known by the general population — unlike some more sophisticated sports nutrition offerings — making them an easier sell to club members, who may not have extensive nutrition knowledge, and less of a liability issue for club operators, Bell added.
But, along with convenience items, more health clubs are beginning to sell popular bulk sports nutrition products, such as BSN's N.O.-XPLODE. Said Bell, “Higher-end clubs are now starting to do more research on high-quality supplements to recommend to their members for an increase in profit and to offer a more well-rounded approach to total wellness.”
A Missed Revenue Opportunity
Still, despite increased interest on the part of health clubs to develop sports supplement sales, Bonnie Patrick Mattalian, president of Club and Spa Synergy Group Consultants, estimates that only 20% of health clubs actually do supplement sales successfully — bringing both a profit to the club and meaningful health benefits to its membership.
“Most clubs are terrible at retail — this is especially bad when you consider that you have all these people there, like personal trainers, who really believe in the value of supplementation,” agreed Brad Stevens, founding partner of Elementals Health & Wellness, a supplement and nutritional guidance company that specializes in the health club channel. But rather than driving sales of the sports nutrition products their own clubs could carry, health club trainers too often “just send people down the street to GNC,” said Stevens, adding that health clubs tend to be too “membership-oriented” and focused solely on the “monthly draft.” As a result, “a huge amount of [their members'] wallet space is left untouched,” Stevens said.
To increase their share of their members' money, Stevens advises clubs to diversify their marketing beyond membership drives and integrate supplement marketing into their overall marketing programs. For example, clubs could integrate supplement sales into new member orientations or train their personal trainers on how to integrate nutritional advice into their coaching.
Increasing staff and member education is also essential to building up club sports supplement sales, said Bell and Patrick Mattalian, who both note that incorporating a serious education component into staff and member training can increase product and club credibility and help ensure that members use a club's sports nutrition offerings safely.
Mike Valentino, owner of 13 Gold's Gyms in North and South Carolina, said that, with a well-educated staff, sports supplements can drive 6%-8% of a gym's total revenue, compared to 2% with a staff that really doesn't know or care much about sports nutrition products. While Valentino attributes some of his products' success to good national marketing campaigns, “sales really depend on the person we have overseeing the selling of the products,” he said. “In gyms where we have someone who is in charge of our pro shops who has used supplements over the years, is interested in them, believes in them and sees their value to being aids to enhance someone's fitness program and lifestyle, we do well.”
To help his trainers do a better job of selling the value of sports supplements to his gym members, Valentino said he would like to see more support from manufacturers in the form of literature and training for his staff. He reported that when manufacturers have visited his gyms with samples and product literature, the products have been very well received. Valentino sells mostly sports nutrition products, such as protein and whey mixes, nitric-oxide products and drinks at a 60% markup over wholesale, although some of his higher priced items get marked up only 25%. (Bell noted that the typical health club markup averages between 25%-50%.)
Valentino also pointed out that, although his supplement sales dipped four years ago when more people began turning to the Internet for their sports nutrition purchases, he's managed to revive his sales through better pricing, package deals and volume sales. “Members clearly like the convenience,” added Valentino. “They already come to the gym multiple times a week, and having access to products right there saves a trip elsewhere.”
While a knowledgeable staff can help supplement sales, Valentino was a bit cautious on this front due to liability concerns. Even with signed waivers or disclaimers that specifically address supplement products, health club owners are not completely protected from being held liable should someone suffer an adverse reaction to a supplement sold or simply recommended at their facilities, said Brandi Boutwell of Sports and Fitness Insurance Corp. In addition, few insurance policies will cover a gym for supplementation or nutritional advice unless the facility has a board-certified nutritionist on staff — and even then, the professional liability coverage usually only applies to the nutritionist, Boutwell added.
To limit his clubs' liability, Valentino instructs his staff to direct people to a product's labels and literature and to stick with the “facts” when talking with members about a specific sports supplement product. But, he admitted, it's difficult — if not impossible — to eliminate all opinions and personal experiences from seeping into the supplement conversations his trainers have with members.
For this reason, Bell recommends health clubs make the investment in hiring a nutritionist to oversee their supplement sales. “Supplementation is serious business,” Bell said. “When there is a nutritionist on staff, supplements can be extremely profitable.”
Health Clubs Juice the Smoothie Bar for Sales
Along with energy bars, the other immensely popular “bar” at health clubs and gyms is the juice or smoothie bar. In fact, a 2007 International Health, Racket and Sportsclub Association membership survey found that 43% of its members had a snack/juice bar, and 14% were planning to expand their food and beverage offerings for 2007-2008.
Increasingly, health clubs are turning to businesses such as Dr. Smoothie to provide their snack and juice bar offerings. Fullerton, California-based Dr. Smoothie provides several thousand clubs across the United States and Canada with a comprehensive smoothie bar service that includes 100% crushed fruit smoothie ingredients, supplemental add-ins, coffee and vanilla beverage ingredients, smoothie and juicing equipment, and sales literature. The company also sells a line of packaged products, such as nutrition bars, botanical blends and sports drink mixes.
Dr. Smoothie CEO Bill Haugh told Nutrition Business Journal that the company's specialized ingredients make a difference in nutritional value and taste, which can consequentially make a difference in a club's revenues. He said clients have reported that adding the Dr. Smoothie system and products to their offerings increased their overall snack bar sales by 25% to 175%. Among Dr. Smoothie's top sellers is its amino drink mix containing collagen, which the company is planning to introduce in single-serving packets.
Customized Nutrition Services Provide Up-Selling Opportunities
Apex Fitness sells a wide range of sports nutrition products, including bars, drinks and weight-loss supplements, via health clubs and gyms. The Westlake Village, California-based company also provides online meal planning and nutritional guidance services to help drive its supplement sales and provide more value to health clubs and their members. Apex customers can calibrate their nutritional needs using the company's bodybugg armband, a high-tech device that tracks the calories a person burns throughout the day. This data is then uploaded into an online service, which combines this information with a person's medical history, age and body parameters and produces customized menu plans and supplement recommendations. Subscribers can also bypass the bodybugg armband and use an online questionnaire to develop their plans, although these recommendations are not as comprehensive or specific.
Apex complements its online nutrition programs by training health club staff and providing them with marketing and educational materials about the company's products and services. “The club channel remains the strongest segment of Apex's business, especially when program revenue is added,” said Apex's national account manager and master educator, Ed Slover. Apex distributes products to more than 400 24 Hour Fitness clubs and 770 other fitness centers, including chains such as Lifestyle Family Fitness, Gold's Gym and Pure Fitness. Although sales data from the 24 Hour Fitness clubs were unavailable, Slover reported that the remaining 770 clubs had sold about $8 million worth of Apex nutrition products in 2007.
Atlanta-based Elementals Health & Wellness also offers customized meal planning, along with a variety of sports nutrition products, via the health club channel. Elementals Founding Partner Brad Stevens reported that most subscribers to the company's menu-planning service purchase its Daily Vital-Pack, 7 Day Detox and Cleanse formula, Lean System and Joint Formula. Elementals recommends clubs keep some product inventory in their facilities, but the company also pays a 40% commission for club member orders placed online or by phone or fax, Stevens said.
Customized meal planning and nutrition services not only bring in revenue through product sales, but they also help clubs drive up membership numbers when offered as a membership benefit, said Stevens, who added that Elementals' health club clients have used the company's products and services to increase their overall sales by as much as $8,000 a month. Stevens said that 20%-25% of Elementals' sales go to fitness clubs and personal trainers, with 30%-40% of those sales coming from the company's menu-planning program. Stevens also pointed out that a significant number of Elementals' clients are personal trainers who sell the services and products independently of the clubs in which they work.
Health Clubs Evolving into Wellness Centers
Health clubs are no longer just weight-lifting gyms or corrals of treadmills. More and more, health clubs and gyms offer spa services, chiropractor services, on-staff dieticians and nutritionists. They are renaming themselves as wellness centers, expanding or introducing cafes and smoothie bars, and bringing in new crowds with “softer” offerings, such as yoga, dance and pilates. In addition, Bonnie Patrick Mattalian, president of Club and Spa Synergy Group Consultants, said she has seen a rising popularity in medically directed fitness centers that are associated with hospital systems. “Many older people — those 40 and older — who may have specific health needs feel more comfortable going to a place connected to a hospital,” said Mattalian, adding that many doctors are embracing alternative therapies and recommending spa services.
This merging of health and fitness venues means good news for supplement sales because these new venues — fitness clubs, wellness centers and studios — are now expanding beyond traditional sports nutrition offerings to include a larger selection of wellness products. For example, Triune, a chiropractic counseling and wellness center in Philadelphia, has added yoga and pilates to its extensive list of wellness services. The company's clientele is increasingly taking advantage of the studio's supplement offerings, many of them recommended specifically by Triune's professional staff. Dr. Jeffrey Sklar, DC, co-founder and director of chiropractic and rehabilitative care at Triune, reports that the company sells about $300-$500 in supplements a week. Triune's products include a mixture of multivitamins, natural anti-inflammatories and antioxidants from New Chapter, Jarrow and other high-end supplement companies.
As Rosemary Lavery, public relations manager for International Health, Racket and Sportsclub Association told Nutrition Business Journal, the bodybuilding-obsessed health clubs of the 1980s are a thing of the past. “These days, health clubs like to be recognized as wellness centers, leading the charge toward wellness,” Lavery said. “Clubs are trying hard to make the wellness concept something they are identified with.”