00:00 Speaker A
BFA data showing Gen Z and millennials are increasingly prioritizing their health, leading to some bullish commentary from Bank of America. Let’s welcome in now Alex Perry, BFA Securities leisure analyst for more. Alex, we to see you on set.
00:16 Alex Perry
So, uh, what we’re seeing is we’re seeing a generational shift towards healthier habits, particularly from millennials and Gen Z, which we think, you know, should drive some, uh, some trends with some long-term staying power. So particularly in the data, a couple of things that we’ve seen are, we see that Gen Z is spending 2.8 times more than older generations, particularly baby boomers, on fitness. So we’re
00:46 Speaker A
How much more, Alex?
00:48 Alex Perry
2.8 times more than baby boomers on fitness. And even more interestingly, uh, Millennials, which represent the largest spending cohort, uh, for fitness, are spending three times more than baby boomers on, on fitness. So we think that you know
01:10 Speaker A
When you say fitness, we mean going to the gym, like how we, what we define fitness.
01:16 Alex Perry
Yes, yes. So we define that as as fitness clubs. Um, so think of lifetime planet fitness, uh, traditional sort of brick and mortar fitness is how we would define that. So we’re we’re increasingly seeing these younger demographics, not only prioritizing fitness, but prioritizing other healthy ways of living as well. So
01:41 Speaker A
So is that like eating, drinking?
01:44 Alex Perry
That’s exactly right. So, uh, really focus on healthy eating, drinking, aging, recovery. So what we’re seeing is millennials and Gen Z’s are, are drinking, they’re drinking less and exercising more. So one of the ways we looked at the data, um, is that we see that spending on non-alcoholic beer and seltzer equivalent is averaging 28 points higher than the alcohol equivalent since 2021. So it’s really interesting sort of how they’re behaving. They’re also doing other things, you know, focused on other wellness modalities. They’re focused on healthy aging, healthy recovery. If you look at Google search trends for red light therapy, anti-aging masks, for example, they’re up significantly.
02:37 Speaker A
So red light, more red light therapy, less bars. Is that right?
02:44 Alex Perry
More, more red light therapy, less drinking, less bars, more fitness. Um, and we think this has some real staying power for, for our stock coverage as well.
03:02 Speaker A
What about Alex, if, if the economy just stumble into a recession, you know, a lot of economists come on the show and tell me the odds of that are going up. That would mean what for some of these trends in terms of gym memberships and organic food and cold plunges.
03:23 Alex Perry
Yeah. No, that’s a great question, Josh. So I think that what that implies, if we look at the historical data, we would see that fitness actually is, is relatively recession resilient. So we go back through 2008, 2009, lifetime was actually publicly traded at this time. Uh, a brick and mortar fitness player and same store sales were relatively flattish during this time period, and margins actually expanded. And I think what that tells us is that fitness is a very ingrained consumer behavior. And consumers are less willing to drop fitness versus other pockets of discretionary spend. So we actually think that, you know, the, the fitness players are are recession resilient and maybe you’re going to ask about tariffs, which we think that they’re, they’re a great place for investors to, to avoid tariff related uncertainty. Um, you know, they’re
04:24 Speaker A
A place of tariff relative resilience.
04:28 Alex Perry
Relative resilience. That’s right. So, um, there’s probably some small fitness equipment sourcing exposure, but no direct tariff exposure for the fitness players. And we think that, you know, it’s a very interesting investment characteristic here.
04:48 Speaker A
Let’s, let’s give viewers a way to play this. You’re talking off camera, top wellness pick lifetime group.
04:59 Alex Perry
Yeah, lifetime. We, we think they fit squarely in the middle of what we view as these, um, younger generations prioritizing healthy ways of living. So they were really quick to identify some of the fastest growing leisure and wellness trends. Um, a great example of this is pickleball. We’ve seen an absolute surge in the popularity of pickleball. And I think it, lifetime quickly identified this trend and they started rolling out pickleball to majority of their clubs. So over 80% of their clubs now have pickleball, and they’re now the largest provider of pickleball in the US. Cold exposure therapy, which we talked a little bit about earlier, they were, they’ve been quick to sort of be on this trend and they’re rolling out cold plunge tubs to a lot of their, their clubs. So we think that, you know, they’ve identified these trends, they’re rolling them out to the clubs, and then you know, that’s warranted a, a really premium member, member experience.
06:00 Speaker A
Have you guys ever thought about the data, how the role of sort of influencers on these trends? Some of the trends you’re talking about, I think of like the Andrew Huberman’s out there. They talk a lot about these trends. I just wonder what kind of, what kind of role could that be playing here?
06:19 Alex Perry
Yeah, no, it’s a great question. I think it absolutely plays a huge role. Um, we’ve seen increased social media influence on, on our stock coverage. Uh, Tik Tok for instance, one of the, you know, one of the data feeds that we really look at is Tik Tok social media engagement. I think one of the things we find is that increased social media engagement leads to more buzz around different concepts. A great example of this and another wellness pick that we called out is Shark Ninja. They’re very good about.
06:57 Speaker A
Why Shark Ninja?
06:59 Alex Perry
So Shark Ninja has been, if, if we were to think about fitness from a, you know, experience and then from a consumer product standpoint, Shark Ninja really offers, um, an expanding wellness portfolio of, of, of product. The most recent example is the Shark Kyro Glow mask, which is a red light therapy, anti-aging mask. Um, and they are incredibly good about debuting and building buzz around their product on, on social media, particularly on Tik Tok.
07:38 Speaker A
Alex, thank you so much for your time today. Super interesting trend. Appreciate your time and those picks. That was great. Thanks.
07:45 Alex Perry
Thanks a lot, Josh. Thanks for having me on.
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