LIFTS Episode 133 – Latin America's $7.5 Billion Opportunity | The Fitness Market Everyone Is Missing

0:00So it's funny when you talk about Beto and Zumba. I mean, gosh, like if you think about Zumba and stay in and continue to be relevant, you know, in so many countries, it's incredible the work that Zumba and Beto, or all the three Betos, because there were like three of them, did. And one thing that I have to say, I became a Zumba instructor because I said I want to go to one of their events and see where is the magic. Why are people so like me? Like I grew up, you know, like going to the gym. I was a high performance athlete and, you know, the gym has been part of my life. So we did something that we call a Roomba, which it was aerobics with Latin music.

0:44So everything that we did was with Latin music. everything was a party so we did step aerobics and we were shaking our shoulders we were like bumping and well we're live welcome to this week's episode of lifts i'm matthew januzek

1:03Matthew Januszek:uh it's three weeks since i've been sat here in the office three weeks on the road covered a lot of ground i was in athlotech where i saw both of you a few weeks ago met with many operators across the country. I went back to New York the following week and we met with Advantage that's one of our larger distributors on the east coast and they had a huge event over 100 people. They focus on the vertical markets and for those of you that are not familiar those are markets education, multi-family, corporate wellness, hospitality so had a had a chance to catch up with people to see what's happening in that space.

1:42Matthew Januszek:And then this past week, I was in Wisconsin. So we went over to our new head office and we've moved our warehouse. We've moved all of the manufacturing to the US. And we met with one of our biggest partners in the Midwest, understanding about where their business was. So it's quite interesting. My big takeaway is the market is thriving, that's for sure. It looks like also the sophistication of a lot of the fitness facilities is rising, whereas before I think it was a little bit of a race to the bottom. There's definitely an emergence of people just searching out higher quality vendors, higher quality products, and looking to differentiate themselves through a much better experience.

2:26Matthew Januszek:And although I read, and we were going to talk about this at some point, Mo, But although I read in the news that there's a slowdown in new memberships in the U.S. for, I guess, the first half of the year, probably. I'll get you to correct me on that one if I'm wrong, Mo. But what I do see is that there's, I guess, rather than the competition being other gym brands, there seems to be a lot of competition from outside of the industry. And when I look at some of these developers that are putting fitness facilities in apartments, the facilities are getting bigger. So they're allocating more and more space to fitness.

3:00Matthew Januszek:The quality of some of these fitness experiences is phenomenal. They would definitely challenge any gym that I've ever seen in terms of the equipment, the experience. They're including things like recovery and massage. And so I'd be interested to see how this is tracked. But certainly I see the market growing, but it's growing outside of what I would see as traditional fitness clubs. So that's my overview. Mo, good to see you. What have you been seeing over the last few weeks? I was in Madrid last week at Beyond Active, and it was my first time in Madrid. And I have to tell you, it's an incredible city.

3:36The food, the culture, the people, I mean, the event was fantastic. The event was in central Madrid, so I ran around a park called El Retiro, I believe. I'm probably not saying the name correctly, but it was an incredible park, a really nice, just under four miles. I love you, you would have enjoyed it because I know that's kind of about what you'd like to run. There were some hills in that though. So we had a lot of fun doing that. Then I came back to DC and now we are out East in Long Island where it just feels something about being out here on the Eastern end of Long Island in New York in the summertime.

4:14The air feels different. It definitely feels a lot more relaxed but I fully recognize the people out here live in a bubble for sure, but we're gonna enjoy it. So the family's having fun. I'm out here recording an exciting podcast today with our guests. So I want to get right to it. First, we constantly, just being at so many events and traveling and meeting people, the question that we get asked a lot about is where does growth from this industry come from? And of course, we're talking about things like GLP-1. We're talking about AI. But something that we don't really talk about is new regions.

4:52I'm really excited to talk about the South American region today. A few talking points to help frame the conversation. In the U.S., we just hit a record of 81 million gym members. And Matthew, you talked about a slowdown at the start of the year, and I think there was some truth to that, especially in the first six weeks, but a lot of the major brands recovered shortly after that. But we have about 26 % of our population that are participating in the health and wellness sector, which is an all-time high. That equates to about$60 billion of projected spend this year. So our market is maturing well.

5:30And back to equipment, I think consumers are driving the quality issue. So they want to join clubs. They want to enjoy experiences that truly feel experiential. I think that's why you're seeing a bit more of an upmarket request with some of the hardware. But where is the white space? We talk about Europe a lot. We do an event at FIBO and HFF every year, so we understand that. But I don't really think that the answer is sitting in our own hemisphere. And a lot of the industry is just not paying enough attention to it. Here's the number that is going to frame our episode today. And that number is 2.15%.

6:07That is the average gym member penetration across Latin America as a region. So just let that sink in for a minute. In North America, we are north of 20%. Latin America as a region is at 2%. That's a major, major gap. And I would love our guests here to validate these numbers to read, but from looking at the research that we did prior to this episode, Argentina leads the region at about 6 % or maybe close to 7%. After that, you have Brazil, then you have, and Brazil is around, I think, just under 5%. Mexico is around 3%. Colombia is around 2%. Now, some people look at those numbers and think that the market is weak.

6:52I look at those numbers and see the biggest growth opportunity in fitness. And that gap is not weakness. That gap, too, needs the opportunity. And the market is proving it. The South American fitness market hit roughly$4.6 billion in 2024 and is projected to reach $7.5 billion by 2029. That is double-digit growth. And chains are growing at nearly 12 % a year and personal training is growing really quickly as well. There are a couple of companies that we hear a lot about, which we'll talk about in this episode. Smart Fit being one of them, founded in Sao Paulo in 2009. Today they have over 2 ,000 gyms across 16 countries, 5.3 million members.

7:35Last year alone they opened over 300 clubs. I mean, this chain is just completely exploding. And I've had a chance to speak with their CEO. The part that gets me most excited about this region is that the consumer is ready. A lot of times for those of us who travel to South America, you know that the consumer is really starving for health and fitness. is 78 % of urban Latin Americans exercise at least several times per month. And when you ask them why, the top answer is health. Right behind it is mental and emotional well-being, which is at 42%. That's the exact same competition that we're having in the US right now.

8:12So Latin America isn't really a different market. It's the same market just a little bit earlier than where we are today. today. So a few questions which I'm going to ask our guest about today is around the low cost model and how would it increase penetration. But before that, I'm really excited to have our special guest on the list today, Maria Gonzales. And Maria, I learned some really interesting things about you and I've known you for some time but I didn't know about these things about you. So I want to share this with the audience. First, you are from Colombia and you grew up in Colombia.

8:47You have been a lifelong competitive athlete participating in swimming and water polo at the national team level. In 1998, you moved to the U.S. and you didn't speak English. I don't know if you knew about this or not. But three years after moving here in 2001, she took a job at a health club in Greensboro, North Carolina as a lifeguard and swim instructor. Then she became an aquatics director, bank club manager, then executive director, and in 2019 became the CEO. That is incredible. I'm an immigrant as well, but that is an incredible success for you, Maria. I just want to congratulate you on that.

9:33And today you run Club Fitness in Greensboro, North Carolina, which is two full-service clubs. I want to get into that and have you speak to your clubs. You also sit on HFA's board of directors. And you just always seem really involved in not only addressing the needs of fitness here in the U.S., but also in Latin America as well. So we are incredibly excited to have you on. And I want to say, you know, back to the immigrant story, I'm an immigrant to this country as well. But I came here speaking English. I came here with understanding kind of Western culture a little bit. I just want to give you some incredible kudos for all that you've achieved.

10:16I did not know all that about you, and I feel like I have even more respect for you. So welcome to LIFTS. Thank you. Thanks for the invite.

10:25Matthew Januszek:So, Maria, I thought a good place to start was maybe giving us an understanding of the, I would say, the health, wellness, and lifestyle space within South America. because similar to my, it sounds like royal immigrants here, I've come from Europe like seven or eight years ago. And definitely when you look at the European market compared to the US, and not to be sort of negative, but within Europe, I guess, there's a lot more history, whether that's in music, in fashion, in design. And when you go into gyms and look at whether it's programs or concepts over there, I would say the best way to describe it is there's more flavor, there's more color, there's a little bit more energy.

11:12Matthew Januszek:And when I look at many of the U.S. brands, they're extremely functional, operationally excellent. But in some cases, they're a little bit vanilla. And so I've been out to – I went to Ursa in Brazil in the past. I've been to Mexico. Those are probably the only two South American places that I've been. But when I go out there, I definitely see there's a lot of music and movement. If you look at brands like Zumba, I've spent quite a bit of time involved with their organization years ago, and we developed some product together. So there's just this energy that you see from Latin America that you probably don't see within the U.S.

11:55Matthew Januszek:fitness market. So maybe give us a bit of an overview in relation to what do you think the South American market can teach or bring or help club owners and brands in America that we're probably not seeing here? And, you know, be free to be very open in how you describe that. Sure. I love the vanilla coloring. So, you know, it's interesting, Matthew, as you mentioned that I do think that there is something to learn about every industry around the world. And there are things that will make us extremely unique. I would say as a person who grew up in Latin America, as a Latina who has been in the States for the last 28 years, one thing that I would say like, you know, like the special sauce that we bring is community.

12:50I think you brought up the brand of Zumba. And I think Zumba has been so successful because they have built community. And I think when you think about resilience, maybe at times, you know, a larger group of people that cannot afford to belong to gyms, but they're active in the parks or they're active in the schools. They belong to sports, you know, in a very, I don't know, like local way, not as structured, you know, as it is here in the U.S. that has become like this business side of things. you have a culture of activity movement, but also like the sense of community around anything and everything that we do.

13:40You know, I think one of the things that I've heard when, when I was going to move to the States, it was like, people work all the time. Like you're gonna, you're gonna be missing, like getting together with your friends, right? Like, you know, and, and, and there is the sense for us that that is like meeting with your friends, you know, on the weekends or getting together with your family, like those are things that we always do. It's not because it's a holiday. It's not because it's Thanksgiving. It's not because it's Easter, you know, like you just do it. Or at least that's what I remember doing when I was growing up.

14:17Like that's what we did all the time. When I go to Fitness Brazil, for example, I see that sense of happiness, music, Like, I don't know, dancing. People want to hug each other. You're more comfortable. Like, you know, like there is not this sense of like, oh, hi, or, you know, and I'm not saying that it's right or wrong. I think it's cultural, right? Like, you know, and I have learned to embrace people where they are and who they are, and then just meet them where they are. But as a Latina, I have to say that that is one of the things that I see the culture that brings from Latin America is they warm the community.

14:59People wanted it to be together with others. And I think that's why we're looking here. Right. Like, how do we build community? We have everything. We have the infrastructure. We have people can pay. You know, then how do you build community where people love each other, that they need each other, that they're just going to be meeting with each other when they come to the gym or when they come to our spaces. Well, I think community is one of the biggest retention tools that we're all, to your point, we're all trying to build. And I have to put a note, too. I mean, a good friend, Paolo with ABC Evo, I've heard, does the absolute best parties and best event in Fitness Brazil.

15:35So I've got to find a way to make it that. I was going to make it this year. I don't think my schedule is going to work with that. But I agree. I think it's just always a good time to Matthew's sentiment is always positive. So I'm curious, you run a very large two-club operation in Greensboro. But at the same time, the gym penetration rate, as I mentioned at the top of the show, is relatively low in Latin America as a whole. How would you describe the current state of the Latin or South American market today? So I will describe it as emerging. I will describe it as, and I think you said it earlier, is like the moment where the opportunities arise in, you know, like my conversations with the people in Latin America, they said the bigger cities are having challenges to find real estate space, just because it is very limited.

16:33And when things are coming available, there's pretty much a line of people waiting for those spaces. So there is some growth almost like going outside of the cities, finding the education of the staff. It's, you know, like another thing that we're that we're finding that it is an opportunity and it is a challenge. But on the other hand, I also find that there is this thirst of learning and then there is this thirst of seeing what the mature markets are doing. So you see people from Latin America coming to the HFA show. You're seeing people going to FIBO. You're seeing people going to other events.

17:15So they're not only like feeding themselves from what they're seeing. They're also going, they're traveling, they're educating themselves. So I do find that now we're more connected than ever. And it is very cool to see that innovation will not only come from the mature markets. I think we can learn what are the things that have been done. But I find that each region, it's finding their own identity to create or recreate themselves.

17:45Matthew Januszek:I want to come on to, you mentioned innovation there. And again, it's been some time since I went to Brazil. But one of the things that I was very impressed by, well, there's a couple of things that I remember. One is that the price to get into a gym in Brazil was extremely high. Like it was unbelievably expensive. But everybody seemed to, it was almost like the investment they were prepared to make to go into the gym was, you know, they were sacrificing other things to do that. People of all ages. The innovation in some of the gyms, even the more basic gyms, was extremely impressive. The group exercise, as you say, I think the way that that seems to be part of the culture where they have the music, the energy, the instructors, was definitely infectious and very impressive in what they did in those areas.

18:38Matthew Januszek:I think we can certainly attribute a lot of the trends that we see in North America in terms of the glute training. Like I went out there and there was women in the free weights areas doing heavy free weight training and training the glutes a long time before it really hit in North America. The fashion that is spawned as a result of that. So the gym athletic wear market, a lot of things in the early days, you know, what we're seeing here in terms of some of the women's fitness outfits are still relatively new here. I noticed that stuff happening out there a very, very long time ago. So I think we're really influenced by some of the things that are happening.

19:21And to be honest, if I was opening a gym chain in America, I would definitely go out there and you'd come up with a huge amount of ideas.

19:30Matthew Januszek:So as it's been a while since I've been out there, I'd just be curious in terms of your perspective when you compare what you're doing and seeing in some of the gyms from a design and a programming perspective or even a complete offering. What are some of the things that you see out there that are probably worth mentioning that would give value to anyone that's listening today? This episode of the Lyfts podcast is sponsored by eGym, the company behind some of the smartest strength equipment on the market. eGym is more than just machines. They've built a full ecosystem that gives gyms and health clubs the tools to deliver personalized data-driven workouts to every member automatically.

20:10Matthew Januszek:Their WorldCast platform is also helping companies worldwide improve employee health by providing access to top fitness and wellness providers via a single subscription. It's all part of eGym's mission to transform healthcare through exercise by making fitness smarter, more connected, and more impactful. Check them out at eGym.com. I think, Matthew, you mentioned it earlier. I think, you know, like a lot of times we find that, you know, like maybe just looking in the States and what are the big brands doing. But I think the innovation and the not being afraid to bring colors and lighting and playing with new things, it's something that we see in Latin America.

20:53I think, you know, I see people pushing the boundaries and almost like finding what are those spaces creating, making it dark, making it bright, making it clear. So almost like creating different environments depends on the brand. And a lot of times I do find that when people are very resilient and then they work with limited resources or with abundant resources, sometimes you do things maybe more restricted. I think when you have to be more creative because maybe the resources are not there, it just pushes people to be more innovative. And I do find in Latin America, you see a lot of that. There is a lot of talent.

21:39There is a lot of like, you know, engineering, not only with lighting, with with sound. But, you know, you were talking about clothing. It is fashion, you know, like in Colombia, in Brazil, like, you know, like we do not only like many of the clothes that we were here in the United States, you know, are made in Latin America, Central America, South America. Great quality and great fashion that is also coming from there. So I do think that the uniqueness on the things that they are creating, I feel that we're going to be seeing that influence that is going to be just spreading out across.

22:23Matthew Januszek:Just one other quick follow up on that. I was reading that a big percentage of the market is independents. One of the reports I was reading is about 68 % of independents hold the share of the South American market. So what are you, I'm just wondering, do you think because of that, rather than it being controlled predominantly by big brands over here, where you almost get this, once they've got a model, it's rinse and repeat and everything is the same. What are your thoughts on how that independence shapes the market? Because I think it's similar, again, in other markets like Italy as well, where you have a lot of these sort of smaller individual gyms that have their own spin on things.

23:04I think it has been like the natural evolution of this industry. I would say like that's kind of like how we started it here. You had people that they were very passionate about exercise. They started a small studio. They started their gyms. That's how some of the brands have grown. And, you know, like they become more established. And now you see even here in the United States, big brands buying the little brands because, you know, like there is this big influence. I think in Latin America, you still see, you see some brands, you see, actually, what I'm hearing is that there is local chains that they are kind of like growing people acquiring some other gyms, some brands growing, but you still have a lot of independent small gyms or small studios being led by people that just love the industry, which I think at times, you know, we've seen it all across, that there are people who love the industry, but maybe there are people who love the industry.

24:00not really good business people. And I'm not saying that is all, but I think just because you have a passion for something not necessarily means and is going to translate into the business side. Yeah, we see that here as well. One with South America on the Swartwick side, I think we opened up our first technology office in Buenos Aires in 2014, then moved to Montevideo. And now where we have an office in Monteguado, Argentina, and Colombia. So I've had an opportunity to visit some of these incredible countries. And Maria, in Colombia, I was in Medellin a year and a half ago, and I was really surprised to see that it's become this wellness hub for longevity.

24:45So Matthew, we think about Miami or New York and LA or Newark, Newport beaches being these meccas for longevity. but I'm telling you Medellin in Colombia is there's some incredible things for that. Just speak about what's going on in Medellin specifically, because I certainly wasn't aware about how this has really become this wellness hub. So I really don't know what happened and what is sparked, you know, like Medellin to become like this hub. I know we have been, you know, from technology side, there has been a lot of talent that has been developed throughout the time. you know, a very resilient city.

25:25I, you know, very proud to say that I am from that beautiful town. But on the other hand, you know, like we come with, you know, like tough, tough history. You know, like it was a city that at one point in our lives, when I was there, it was considered the most dangerous city in the world. And to see what it has become now, it's incredible. So one thing that I have to say, Mo, is big influence of beauty, big influence of maybe affordability in comparison to the cost of wellness and longevity elsewhere. So I think when you see people traveling to places outside of United States to have these treatments is because you can afford to travel to the place and afford to be seen by very high qualified doctors, nurses.

26:20and you are getting, I mean, of course, there's clinics that probably, you know, like are doing things that they should not be doing. But I think, you know, in general, you're going to see just, you know, like high end, top notch, lots of investment. There is lots of brands coming in. I mean, I'm getting calls, you know, like for club fitness, just people offering services. And the funniest time is when I receive calls and they're like, oh, yes, our headquarters is based in medellin and i'm like you are calling me in greensboro but then you're based in my hometown that's funny and i think as a follow-up question so samantha talked about the premium side of his time in brazil and how much people are spending in clubs at the same time hdlp really led by smart fit has just completely exploded um two questions for you number one do you see the hdlp market growing, continuing to grow in Latin America?