Profiting from vanity in tough times

Nutrition Warehouse’s Grant Mayo says that when money is tight, investing a little in health and well-being can help people feel better about their situation. Photo: Glenn Hunt

As a former Mr World body builder, Grant Mayo knows a thing or two about the time and money it takes to look good. Mayo, who now runs his own supplements and vitamins business, Nutrition Warehouse, says entrepreneurs are beginning to realise that health and beauty equate to big business.

People spent almost $7 billion in 2011-12 on plucking, injecting, tanning and exercising their way to an improved appearance, according to research company IBISWorld.

The figure, up about 19 per cent on the previous year, equates to an average spend of $313 per person per year.

The boom in the beauty and fitness industry is evident on the BRW Fast 100 list. Nutrition Warehouse is one of three health and beauty businesses in the top 10 and one of five companies on the overall list.

“When money is tight, you don’t feel great,” Mayo says. “Going down to the gym and spending money on supplements is a small thing you can do, without a huge cost. It makes you look and feel better.”

Much like the “lipstick index” – a phenomenon in which people spend money on cosmetics and other small luxuries to lift their spirits during tough economic times – the popularity of non-invasive cosmetic procedures, such as chemical peels and Botox injections seems to have intensified during the global financial crisis.

IBISWorld general manager Karen Dobie says a growing number of people – particularly older females – are indulging in weekly beauty rituals such as facials, hair removal and personal training as well as regular cosmetic procedures to preserve their looks. Non-invasive cosmetic procedures such as Botox injections are the fastest-growing market for beauty spending, increasing some 25 per cent in the past year.

In 2011, the Australasian College of Cosmetic Surgeons reported Australians spent more than $225 million on Botox and Dysport (another injectable wrinkle remover) – equating to a greater per capita spend than any other country.

Women account for about 80 per cent of the cosmetic procedures, according to the college, however it reports men are steadily increasing their appetite for nip and tuck procedures. In 2011, 62,000 people underwent surgical cosmetic procedures, while another 68,000 had non-surgical procedures.

“The popularity of cosmetic procedures is being driven by the convenience of ‘lunch hour’ treatments, which require little or no downtime,” Dobie says. “As many such treatments are not permanent, such as Botox and fillers, more women are willing to give them a go. There are also fewer stigmas associated with this type of treatment than with full-blown plastic surgery.”

Like Mayo, Alaistair Champion, co-founder of hair removal and cosmetics procedures company Laser Clinics Australia, says the economic downturn benefited his business. “Consumers are exercising constraint on large-ticket items but are more than happy to spend on smaller cosmetic products [and] procedures,” he says. As well, the business was able to snap up retail rental locations at favourable prices and terms. Laser Clinics Australia co-founder Babak Moiniis also co-founder of another “vanity” business on the list, cosmetics business Skinstitut.

The founding president of the Australasian Society of Cosmetic Medicine and founder of The Elizabeth Laser and Cosmetic Medicine Centre, Sharron Phillipson, says the rise in non-invasive cosmetics procedures (Botox and other filler injections) has more to do with availability than vanity.

“People have always wanted to look better and younger. Now it’s just that these things are available. People would have used them if they were available,” she says.

Phillipson, who comes from a general practice medical background, first entered the cosmetic medicine industry in 1997 – a time when it was still looked at suspiciously by some members of the medical fraternity. The response from her doctor peers was mixed.

“A friend I studied with who was an anaesthetist initially berated me for getting into it,” she says. “She is now a patient, which we both find quite funny.”

Phillipson reckons one factor contributing to the industry’s boom during the global financial crisis was its detrimental effect on people’s superannuation pots.

“People who were planning on retiring lost their superannuation,” she says. “They found themselves needing to go back to work and they were looking older. They wanted to have non-invasive procedures to look younger.

“It wasn’t about vanity so much as keeping up appearances and performing at their best at an older age. With people’s life expectancy increasing, it is more important to look the part.”

Phillipson expects demand for laser therapies, such as tattoo removal, also to rise.

There are very few barriers to entry in cosmetic medicine, especially in the non-invasive space but regulations are beginning to change. Customers, Phillipson says, are becoming increasingly aware of the risks of dealing with operators that do not have adequate training or medical backgrounds.

“Regulation is very ad hoc throughout Australia,” she says. “There was the case of a nurse giving Botox injections from her lounge room. Those cases don’t reflect well.”

But the desire to look good expands beyond beauty and cosmetic medicine. On this year’s list, there are two gymnasium chains: Jetts Fitness and Plus Fitness .

According to IBISWorld, people spent $1.67 billion in 2011-12 on gyms and fitness training.

The founder of the 24-hour franchise Jetts Fitness, Brendon Levenson, says he developed his business model around the fact that people are increasingly time poor, yet image conscious. Rising levels of obesity and type-two diabetes are also contributing to an increase in the number of gym members, leading to a greater need for flexible gym models, he says.

“Society paints a picture for what we should look like and how we should feel – and it is typically fit and healthy,” he says. “The lifestyle imbalances of the last 20 years have seen the average Australian drift from the norm and I think people are recognising this and choosing to make better lifestyle decisions. Hopefully we will see a reverse in the trend over the next 20 years.”

MORE BRW FAST 100:

• What Australia’s fastest growing companies have in common
• Why it pays to start a business with a partner
• The highs and lows of a strong dollar
• BRW Fast 100: the top 10
• BRW Fast 100: the list
• How to make your company go faster
• How to leave your business
• The trick to changing names

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