Can Supplements Help Your Club Increase Its Revenues?

Some health club companies ventured into the supplement business more than 10 years ago by branding their own lines, but has it worked?

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Dr. Kenneth Cooper knows a thing or two about branding. It’s no wonder that the man who coined the term “aerobics” also branded his own line of nutritional supplements. In 1998, the Cooper Aerobics Center, which Cooper founded in 1970, launched a line of nutritional supplements called Cooper Complete. Just a few years later, two club companies with recognizable names of their own—Life Time Fitness and Bally Total Fitness—also launched supplement lines under their club brands. Other club companies, such as Curves, soon followed.

Sales of supplements—club branded supplements or not—continue to grow. During the past 13 years, sports nutrition and weight loss (SNWL) supplements have had a compound growth rate of 10.2 percent, according to research by the Nutrition Business Journal. Sales in SNWL were $22.7 billion in 2010. With such a large market, it’s no wonder that of the 703 health clubs that responded to a survey by the International Health, Racquet and Sportsclub Association, 89 percent sell some type of dietary supplement. And it’s no wonder that some better-known club brands have taken to branding their own supplements to capture a larger piece of this pie.

“Private labels are big everywhere, from big-bucks grocery stores to mom-and-pop stores,” says Dan Fabricant, vice president of global government and scientific affairs for the Washington, DC-based Natural Products Association. “It’s a trend that’s here to stay.”

Bally and Life Time would not share specifics about their supplement revenue, but Todd Whitthorne, president and CEO of Cooper Concepts, the division of Cooper Aerobics Center, Dallas, that markets the company’s supplements, says they constitute 5 percent to 10 percent of Cooper’s business, and supplement revenue has grown each year, usually by double digits. “It’s a profitable business for us,” Whitthorne says.

“It’s a growing business. But it’s not the biggest revenue generator for our operation.”

Pete Marino, spokesman for Bally Total Fitness, Chicago, says, “Clearly, there is a relevant ROI (return on investment), otherwise we wouldn’t be selling supplements. More than that, though, we offer products more to provide a total fitness experience versus being a core part of our business plan. Our sales data indicates our members purchase Bally products at the same rate they choose other brands.”

Life Time Fitness, Chanhassen, MN, reported that in 2010, total center revenue grew $70.5 million to $894.1 million. Of that increase, 47.5 percent was from in-center revenue, which increased $33.6 million. That growth was primarily from increased sales of LifeSpa and LifeCafé products and services and personal training, according to the company. Life Time sells its nutritional products through its LifeCafés as well as through its website.

At Life Time, the ROI has everything to do with the clientele.

“Our greatest return comes from ensuring our members can achieve optimal levels of health,” says Tom Nikkola, the company’s nutrition program manager. “We believe that includes proper exercise and nutrition, along with the appropriate use of dietary supplements. The more lives we change for the better, the more significant our ROI is.”

Life Time’s line of nutritional products focuses on daily health, weight management, energy and athletic performance. Its line includes men’s and women’s multivitamins, omega-3 fish oil, joint maintenance tablets, whey protein isolate and a meal replacement product. Life Time recently released multivitamins for children and a protein powder for vegans and vegetarians.

The Cooper Complete line was created to address the weaknesses of supplements, including poor absorption rates and purity concerns, Whitthorne says. The line includes multivitamins for elite athletes, adults, teenagers and children, as well as supplements to improve brain health, skin and eye health, prostate health and joint function.

Whitthorne categorizes Cooper’s nutritional products as dietary supplements rather than SNWL.

“When you talk about trying to sell somebody on a fat burner, that’s pretty well validated that that’s not the longterm solution,” Whitthorne says. “Most everybody who loses weight is going to gain it back within a year. So losing weight is not the issue. Losing weight and keeping it off is the issue. We know what works there, and that’s lifestyle modification. That’s changing your lifestyle, not taking a pill.”

Bally moved into the supplement market with a private label meal-replacement protein drink called B-Trim Shakes after a survey of 1,200 members revealed that two-thirds of them shunned breakfast and often lunch.

“Bally believes that supplementation is an important part of any fitness regimen,” Marino says. “We have developed a comprehensive and high-quality line of Bally-branded supplements to offer our members at an affordable price.”

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