The Fitness Industry in Vietnam had tremendous expansion in the years leading up to 2019 as more gyms and fitness facilities were opened around the nation. This trend has been driven by factors such as increased awareness of the benefits of exercise, the influence of Western cultures, and the rapid growth of social media. According to Statistics, Vietnam's fitness industry is expected to grow at an average rate of 20% per year by 2020, with a market size of around US$113 million.
In the high-end customer segment, California Fitness & Yoga is the leading brand, with a market share of over 70%. Other major brands in this segment include CityGym and Elite Fitness, which are operated by Lifestyle Vietnam. The mid-range fitness market is more competitive, with brands such as 25 Fit, Fit24, and Getfit Gym & Yoga vying for market share. These brands face the challenge of investing in infrastructure, service quality, and customer attraction to succeed in the high-end segment.
However, the sudden emergence of the Covid-19 pandemic in 2019 had a severe impact on the fitness industry in Vietnam, resulting in a complete shutdown of the industry for two years. This can be seen clearly in the revenue reports for businesses from 2019 to 2021. In the high-end customer segment, California Fitness & Yoga saw a drop in net revenue from VND 1.012 billion in 2019 to more than VND 900 billion in 2021. Elite Fitness, the second-largest brand in the industry, saw a decline in revenue of 58% compared to 2019, amounting to more than VND 250 billion. Brands in the mid-range and low-end segments were also heavily affected, with some major players seeing a decline in revenue of over 60% compared to 2019, such as Getfit Gym & Yoga (61,79%), FIT 24 - Fitness And Yoga Center (65,11%), and G-Boss Center (78,8%). However, the fitness industry in Vietnam also had a bright spot during the pandemic. In July 2019, 25 FIT quickly emerged as a leader in the industry by establishing the first studio and applying a lean training model through franchises. As a result, 25 FIT saw net revenue of around VND 50 billion in 2021, an increase of over 80% compared to 2020.
As the Covid-19 pandemic subsides, fitness brands are beginning to return to their normal operations. It is undeniable that the pandemic has caused damage, but it has also served as a wake-up call for people to become more aware of the importance of exercise and health. Research and surveys have also revealed the alarming state of Vietnamese people's lifestyles and health. According to Ken Research, the obesity rate in Vietnam increased at a compound annual growth rate (CARG) of 8,4% between 2013 and 2018 and is expected to reach 3,6% in 2023.
As the fitness market recovers, new brands are emerging and implementing various strategies to compete for market share with established players in the industry. However, this will be a challenge, as the majority of the "million-dollar pie" is currently in the hands of high-end brands, leaving little room for mid-range and affordable gyms.
California Fitness & Yoga
California Fitness & Yoga is the leading brand in the industry, having established itself in Vietnam's fitness market since 2007. While fitness is just one branch of the ecosystem for brands such as Elite Fitness, Nova Group, and CityGym, California is completely focused on fitness and has a market share of more than 70% as of October 2022. To date, California has over 250.000 members and more than 35 branches throughout the country, and it is estimated that this brand receives around 11 million visitors per year.
However, due to its rapid growth, California has also faced criticism from customers regarding its operations and sales style. As a result, the company announced that it would slow down and stop opening new branches at the end of 2022, instead focusing on improving the quality of its existing customer base. This is a necessary adjustment after a period of rapid membership growth and uncertainty in pricing.
California's revenue has also been impacted by the Covid-19 pandemic. According to reports, from 2018 to 2019, the brand saw a rapid increase in revenue, from more than VND 300 billion to VND 1.012 billion, a threefold increase from the previous year. This was due to California Fitness merging with Fitness and Lifestyle Group, the third-largest fitness group in the world, and launching promotional and community-oriented campaigns such as "We are California" and "CaliDream - Bringing you to your dream." However, from 2019 onwards, the brand's business was significantly affected by the social isolation measures implemented during the pandemic, and its revenue as of 2021 decreased to more than VND 900 billion. Despite this, California's level of impact compared to other competitors is still relatively low.
California's profit after tax for the period from 2019 to 2021 has also been somewhat disappointing, showing negative growth. Specifically, California's profit in 2021 was negative VND 360 billion.
Elite Fitness is a sports club system founded in 2010 and owned by BIM Vietnam Group, with over 15 facilities located throughout the country. Elite focuses on investing in gym infrastructure, machines, and interior design, and offers a diverse range of exercises such as gym, yoga, and dance.
Previously the second most profitable brand after California, Elite has experienced a significant drop in revenue over the past three years, specifically, revenue decreased from over VND 450 billion in 2019 to nearly VND 200 billion in 2021, a decline of more than 58%. This is not only due to the impact of the pandemic but also to the fact that Elite was accused of disclosing the information of over 500.000 customers in 2020, which seriously damaged the brand's reputation.
However, compared to other brands, Elite still posted a net profit of VND 2,3 billion in 2019, while competitors incurred losses of tens of billions of dong on average. From 2020 onwards, Elite's net profit has been negative. In 2020 and 2021, Elite's profit reported a negative loss of nearly VND 30 billion and negative more than VND 80 billion, respectively.
City Gym is a relatively new brand, having been founded in June 2018. Despite its youth compared to brands such as California and Elite, City Gym has established itself by offering convenient locations for commuters, such as on the ground floor of a building or near main roads. To overcome the weaknesses of its competitors, City Gym focuses on location, price, and media presence.
In 2020, City Gym's net revenue reached over VND 16 billion, an increase of 64,8% compared to 2019. This period from 2018 to 2020 was also the period of fastest growth for this business, but by 2021 it began to decline. In the industry as a whole, City Gym's revenue also decreased by 26% compared to 2020.
The negative growth trend has also amplified City Gym's after-tax profit, specifically, by 2021, the brand's after-tax profit was negative more than VND 85 billion.
FIT 25 entered the fitness market at the end of 2019 but quickly made a name for itself with a new training trend that combines traditional practice with technology, using EMS machines as the main tool. This technology allows for more effective and efficient training for customers. By the end of 2022, FIT 25 had expanded to 41 branches, surpassing even California in terms of size. However, FIT 25's facilities are primarily designed for private workouts, so the number of customers it can serve is still limited.
Thanks to its use of technology and its ability to meet people's needs during the pandemic, FIT 25 has seen extremely impressive revenue growth compared to the industry as a whole. In 2020, the brand's revenue was recorded at nearly VND 30 billion, before increasing by 81% to reach over VND 50 billion in 2021. However, due to its relatively young business model and high investment in machinery and equipment, FIT 25's net profit is not positive. The brand recorded a profit of only nearly VND 0,5 billion in 2020, which decreased at a faster rate than other brands to a negative level of over VND 25 billion in 2021.
FIT 24 - Fitness and Yoga Center
FIT 24 - Fitness and Yoga Center is the first German fitness and yoga center in Ho Chi Minh City, established in May 2012. After 10 years of operation, the brand has expanded to a total of six branches.
With a modest market share, the brand's revenue in 2018 was VND 24,7 billion, which rapidly increased in 2019 to over VND 40 billion, an increase of nearly 64,4%. However, from 2020 to 2021, partly due to compliance with social distancing regulations by temporarily closing and limiting the number of customers, the brand also saw a significant drop in net revenue, specifically a decrease of nearly VND 21 billion. Fit 24's net profit also plummeted during this difficult period in the industry, with a loss of nearly VND 8 billion in 2021, four times higher than the previous year.
Getfit Gym & Yoga
Getfit Gym & Yoga was established in Vietnam in 2010, and after more than 12 years, it has attracted over 18.000 members. The gym system aims to provide customers with a comfortable, spacious, and convenient exercise environment, with an area of 2.500 square meters.
According to reports, Getfit's net revenue in 2021 reached nearly VND 5 billion, a decrease of nearly double the previous year. However, according to the end-of-year report, Getfit is the only brand to reverse this trend, with a positive net profit among the remaining gym chains. Specifically, its net profit in 2020 was negative by over VND 3 billion, but this number increased to nearly VND 9 billion in 2021. This sudden growth can be explained by Getfit's IPO project in the second half of 2021.
Getfit's leaders are aiming to move forward with the IPO (initial public offering) journey, to develop the chain's premises over the next five years. On June 29, 2021, Getfit Holding held an online Leader Talk to seek cooperation from angel investors for the Getfit IPO Project, becoming the first pioneering IPO project in the fitness industry.
SEVEN GYM is a newer entrant to the Vietnamese fitness market, so its market share is still quite small compared to other chains. Seven Gym's focus is on customer-oriented services, providing facilities imported from abroad and benefits for members.
During the period of social distancing when gyms were closed or had to suspend operations, Seven Gym's net revenue in 2021 decreased by half compared to the previous year, specifically, revenue in 2020 was over VND 6 billion, dropping to just over VND 3 billion in 2021.
Seven Gym's after-tax profit has consistently reported losses in all three years from 2019 to 2021, but the amount has improved year by year. Seven Gym's profit in 2020 and 2021 was negative over VND 3 billion and negative over VND 2 billion, respectively.
Fitness industry trend in the future – gym technology is on the throne
According to a statistic, the Fitness market penetration rate into the middle class in Hong Kong is 14%, in Australia is 23% and in the US is 17%. In Vietnam, this figure is still less than 1% and growing. Mr. Dane Fort, General Director of FLG Vietnam - the owner of California said: "Before the pandemic, Vietnam only existed specialized gyms such as yoga studios, boxing gyms... After the pandemic, the old trend returned. become a new trend when people want to practice in a place with all kinds of training, freely choose a variety of different subjects with just one membership card."
According to the General Statistics Office of Vietnam, the GDP value of the arts, entertainment, and entertainment industry in 2020 is VND 35.57 trillion, contributing 0.57% to the country's GDP. The fitness industry in Vietnam has faced many difficulties in recent times due to the Covid-19 pandemic. Many facilities and gyms have been forced to close or limit the number of customers to comply with health and safety regulations. Now that this restriction is gradually eased, the gym industry in Vietnam is expected to recover and continue to thrive. However, this development will follow a new trend, more suitable to the social situation and people's needs.
One of the new trends in the Fitness industry in Vietnam after the Covid-19 pandemic is the growth of online workout services. With the development of technology, users can join online workout classes remotely and follow a more personalized workout plan. Many facilities are aiming to offer virtual classes and online training programs, allowing people to exercise in the comfort and safety of their own homes. This trend is likely to continue as people become more and more accustomed to using technology to stay in shape and as fitness facilities find ways to adapt to the new normal.
In addition, the Fitness industry is also expected to continue to grow in terms of the quality and variety of services provided. Many brands such as California, City Gym … are now also offering a variety of services in addition to traditional exercise options, such as yoga, Pilates, and other specialized classes.
It can be seen that gym brands are also trying to get back on track and find ways to retain their customers. For example, big brother California, right during the epidemic season, has launched a new program Cali x Home for customers, including online exercises to guide exercise at home. 25 FIT also quickly launched the 25 FIT AT HOME service. With this service, customers only need to make an appointment through the technology system, the coach will bring the EMS machine to their home. UFC Gym, a new brand in Vietnam a few years ago, has also provided members with home workouts through Instagram Live Feed…
Another trend that can be seen in the Vietnamese Fitness industry is the focus on outdoor activities and social distancing. Given the risk of transmission in an indoor environment, many people may be more inclined to pursue outdoor fitness activities such as jogging, hiking, and cycling. This can lead to an increase in the popularity of these activities and the demand for related products and services.
In the future, it is expected that group fitness classes and other activities that allow people to exercise with friends and family will also become mainstream. This trend can be fueled by the ubiquity of social media and the desire for a more enjoyable and interactive exercise experience.
Overall, the fitness industry is expected to continue to grow after the Covid-19 pandemic, with a focus on online and outdoor options, prioritizing safety and social distancing. Vietnam Fitness market will also be a "delicious piece of cake" for brands to quickly grasp market trends and promptly respond to customer needs.
Source: Vietdata's 2022 Fitness Industry Report