There exists a wellness company, nestled away in Cesena, Italy that is plotting to take over a part of Americans' daily activities. To be clear, it is a wellness company, not a fitness company, which is an important distinction for Technogym founder Nerio Alessandri who founded the company in 1983 at twenty-two years old and has built it to the point of bringing in $581.2 million in revenue in 2015.
What Is Wellness And How Is It Differentiated From Fitness?
Technogym considers itself "The Wellness Company." There are reminders of the company's commitment to wellness spread throughout its expansive Technogym Village, which serves as Technogym's international headquarters and features a Wellness Center, Wellness Garden and T-Wellness Restaurant with myriad healthy options for its workforce to enjoy lunch.
But why does Alessandri care so much to craft a message that his company is dedicated to wellness as opposed to fitness, a term that is more familiar to consumers committed to healthy lifestyles?
"The concept about fitness and wellness is that fitness is looking good. Wellness is feeling good," explained Alessandri in an interview conducted at the Technogym Villaga in Cesena. "Looking good is based upon training. It is a rational approach, a hedonistic approach. Wellness is lifestyle. It is the emotional approach. The inspirational and aspirational approach. Fitness is good, but it is only one part of wellness."
Passion is pumped through Alessandri's veins as he provides the distinction between wellness and fitness, with the former described as including design, arts, culture, awareness, education and environment. Alessandri finds fitness to be a three-times per week activity of going to a gym. In his mind, wellness is a twenty-four hours a day, seven days a week commitment.
The concept of wellness could be classified as its creation in Satire X of the Roman poet Juvenal with his use of the Latin phrase, "mens sana in corpore sano," which is translated to mean "a sound mind in a sound body." It is everything to Alessandri, whom believes that the Key Performance Indicator (KPI) of wellness is happiness.
Why Wellness Matters So Much To Technogym.
Alessandri's bravado for the European way of life and European products is impossible to ignore. He carries a sense of zeal and jingoism for his home of Italy and surrounding countries. It is a part of why he is so passionate about shaping Technogym around a concept of wellness.
First, Alessandri compared Technogym's revolutionary products to the automotive industry.
"Thirty to forty years ago, when I went to U.S. for the first time, I saw a lot of cars. All of them were similar. Same shape and color. GM, Chrysler, Ford," said Alessandri. "After 10 years, BMW,
Alessandri sees fitness as functional, but wellness as something more . . . something that adds an important layer on top of fitness, similar to the layer of added value provided by European automobile manufacturers to American consumers many years ago. He next highlighted a shift in the clothing culture within the U.S.
"Thirty to forty years ago in in the U.S., it was about functional clothes. Then Armani,
Alessandri prognosticates the same progression for gyms in the U.S.
"Now in the U.S., if you go to the gym, you have the fruit salad of the gym floor. If you go to a high end or low end club, it looks the same. It is like the automotive industry forty years ago," explained Alessandri. "TechnoGym provides a solution that is different and better. Like Armani and BMW. Seamless design, seamless interface, connectivity, branding, emotional and educational."
He is convinced that he can accomplish his goal of replicating the success of European brands in the U.S. by not only focusing on the function of Technogym products, but also the emotional connection to consumers -- the wellness elements that he holds so dear.
"Now the U.S. market is flat. It’s boring. It’s standard," said Alessandri. "If you enter into a club, it looks like a mechanical workshop. Operators didn’t need to differentiate in the past thirty years. In many different industries, it was the same."
Alessandri is also able to place emphasis in an area that predecessors could not fully enjoy -- digital. Since 1996, Technogym sought to develop an ecosystem in that digital ecosystem, not a machine.
Technogym has launched its first storefront in SoHo in New York City. It has products spread throughout fitness facilities (i.e. Equinox), is focused on rehabilitation centers and is now shifting to concentrate on consumer-driven products. It is launching a new consumer product in September with a price point that is much more affordable than most of its cardio-related machinery.
What Does The Wellness Market Look Like?
Alessandri firmly believes that Technogym has no competitors. It goes along with his conviction that he has a wellness, not a fitness company, and that U.S. companies are not providing similar products or services.
That said, Washington-based Precor is likely chief among Technogym's competition. Technogym seeks to cater to the consumer by allowing individuals to create their profiles and use technology to analyze their performance while permitting them to carry that data from machine-to-machine. Similarly, Precor has developed a line of products that tap into the cloud with algorithm-based calorie cutting platforms.
Both Technogym and Precor offer expensive equipment and thus position themselves in the premium market in the U.S. Technogym is fine with being marketed as a high-end option that is not available for all to enjoy.
"We don’t want to sell to everybody," said Alessandri. "Plenty of companies want to sell to everyone. Chinese, Taiwanese and American companies. They sell machines, not design. They sell iron, but not ecosystem with software."
"We believe in the relation between quality and price," continued Alessandri. "We want to be accessible. We don’t want to be inaccessible luxury. We want to be quality – product, service, relationship."
How Has Technogym's Wellness-based Ecosystem Fared Financially?
In an interview with Alessandri, the Technogym founder said that the company has experienced annual average organic growth of 30% per year over the past thirty years and double digit growth for the past five years. Technogym went public on May 3 and is now listed on the Milan Stock Exchange. Thus, revenues and earnings before interest, taxes, depreciation and amortization (EBITDA) are now public.
In 2013, Technogym reported $467.7 million in revenue and $41.6 million in EBITDA. It followed with $527.9 million in revenue and $72.7 million in EBITDA in 2014.
In 2015, Technogym grew its reported revenue to $581.2 million and EBITDA to $98.8 million.
The IPO offering was set at 3,25 € per share, which converts to $3.69. Company equity value of Technogym was $738.9 million. The offering was four times oversubscribed. Today, Technogym is traded at above 4 € per share and company equity value is $954.9 million.
Technogym has roughly 2,000 employees worldwide and 1,000 employees based in Cesena. It is sending fifty trainers and 1,200 pieces of equipment to the Rio Olympics. This is part of its involvement in the Olympic Games, which spans across the past six competitions.
A devotion to wellness has worked out well for Alessandri.
Darren Heitner is a lawyer and the Founder of South Florida-based HEITNER LEGAL, P.L.L.C., which has a focus on Sports Law and Entertainment Law.Follow @DarrenHeitner
