Peloton is one of an elite group of companies that has profited from the pandemic. Fuelled by demand from exercise buffs looking for safer alternatives to the gym, the US-based maker of spin bikes (the New York Times reports even Joe Biden has one) found itself in profit last year for the first time since it was launched in 2012. The turnaround came courtesy of sales of its workout equipment, plus a membership scheme that streams fitness sessions to Peloton’s networked workout tools.
John Foley, its CEO, thinks the home workout trend will survive the end of the pandemic and he’s predicting that Peloton can grow its paying subscriber base to 100 million from three million currently. That heady forecast has helped the Nasdaq-listed firm quintuple its market value to $46 billion over the past 12 months.
Beijing Calories Technology is sometimes touted as Peloton’s Chinese twin, although its business model isn’t identical. Starting out in 2014 as a fitness-focused social media platform called Keep, it has morphed into the largest provider of on-demand workout classes in China. Like Peloton, its valuation has been on steroids since the onset of the coronavirus.
In its latest financing round – which closed in early January – Beijing Calories raised another $360 million on a valuation of $2 billion from a consortium led by the Softbank Vision Fund. Longer term financial backers participated too, including Bertelsmann Asia Investments, GGV Capital, Hillhouse Capital and Tencent, with the company said to be weighing up an initial public offering later this year, reports Bloomberg.
The prospects of a wider fitness boom has excited investors. Across 18 of China’s main metropolitan areas, where residents enjoy relatively higher incomes and are more likely to be health-conscious, only four out of 100 people are gym members, versus 10 in South Korea and Japan, and up to 20 in Europe and the US, according to a survey from Deloitte last year.
Beijing Calories boasts a loyal following that is leaps and bounds larger than its peers. By the end of last year its registered user base had reached 300 million, although just 10 million were paying customers. Increasing the proportion of paying members is one of the company’s main priorities. But expanding its ecosystem is another key to monetising its membership: apart from selling proprietary workout classes and personalised fitness plans, its flagship platform Keep is experimenting in online sales of ‘athleisure’ apparel items and healthy snacks. It has also rolled out its own range of ‘connected’ fitness equipment.
Liu Dong, the company’s vice-president, says that Beijing Calorie made it into profit nine months ago on an annualised income of Rmb1 billion. Membership fees and pay-as-you-go classes in physical venues under sub-brand Keepland were important contributors. But more than half of its revenues came from the sales of fitness-related merchandise: training accessories made up 40% of the pie, smart devices 35% and meal replacement 25% (for more on this fast-growing category see page 13).
With its business model intersecting the worlds of KOL livestreaming (see WiC448), online education (see WiC517), e-commerce and ‘smart’ consumer electronics – each a potentially profitable sector in its own right – Beijing Calories has plenty of flexibility in how it presents itself to investors. But its diverse appeal also means more rivals and imitators.
Another local player that is rising fast is Chengdu-based Fiture, best known for its ‘magic mirrors’ or sleek-looking screens that double as interactive displays for streaming fitness lessons. The Rmb9,000-mirrors are said to be able to detect whether a person is keeping up with the workout, with its AI software then recommending follow-up training based on performance.
Sometimes compared to Lululemon’s Mirror, the device was launched last October. In the last quarter investors including GSR Ventures, Sequoia China, Tencent, Nio Capital and C Ventures (owned by Hong Kong billionaire Adrian Cheng) ploughed $850 million into the start-up, which was only founded in March 2019.
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