A recent McKinsey survey of the health and wellness market summed up the industry's growth this way.
First, wellness as a global industry is growing impressively. The firm estimates that wellness exceeded $1.8 trillion dollars overall and $480 billion in the US alone, growing 5 -10% annually.
More impressive still is how it's growing. 82% of US consumers see wellness as an important priority in their everyday lives, as do 73% of UK consumers and 87% of Chinese consumers. Its best customers are Gen Z and Millenials who, according to McKinsey now purchase more wellness products and services than older generations.
And it's an ecosystem of products and services: health, sleep, nutrition, fitness, appearance, and mindfulness.
As the market expands, sources of innovation in health and wellness are diversifying well beyond the usual suspects. Beyond well-established global innovators in the US and France, new products and services are being created in South Korea, Japan, Israel, Australia, Singapore and Kazakhstan.
Yes Kazakhstan, the home of fast-growing startups like the LULU Group, Hero's Journey, and Resolventa.
With thanks to the partners at Big Sky Capital, a leading Kazakhstan VC, we caught up with LULU Group founders Dana Amanbekova and Asel Mashanova. They shared their vision and progress in building a strong global brand. They also discuss their recent acquisition of PSA Skincare.
You've built an impressive health and wellness business in Kazakhstan. What's the LULU Group and the vision behind it?
Dana. We're a women-owned network of products and services helping people live healthier, more beautiful, lives. We believe in the relationship between physical, mental, and emotional health and want to offer a more holistic approach to women around the world. We began with a small beauty shop named LULU selling skincare. Six years later we've grown into the LULU Group, including three large health and wellness clinics under the Metabody brand, LULU skincare, a retailer and distributor of well-known brands in skincare, haircare and color cosmetics -including IS Clinical, RMS Beauty and Augustinus Bader - and a fast-growing online supplements business. We also recently acquired a separate line of skincare products from our partners at Allies of Skin. And, we produce and sell organic food.
Readers are always interested in the backgrounds of successful entrepreneurs. Why the focus on health and wellness?
Asel. Dana and I are close cousins, and always imagined being in business together. Dana rose up the ladder at KPMG. I had similar experiences at Coca-Cola. We were eager to start our own business and saw skincare challenges as an exciting opportunity. We learned from our own experience that it's never "just" a skincare problem: lifestyle, health, exercise, healthy eating and stress management all play a part. We've both had to deal with significant health issues ourselves. This led us to create the first functional medical clinics in Kazakhstan. We see our businesses as a wellness ecosystem for those who consciously approach their health, nutrition, beauty and mindfulness. We are pioneering the Kazakhstani movement towards a healthier nation.
And now you've acquired PSA and entering the US market? Is PSA a stand-alone or part of a larger, more ambitious, growth strategy?
Dana. We received a big endorsement from Nicolas Travis, the creator of brands Allies of Skin and PSA Skincare, when he offered us the PSA Skincare brand. It was a perfect fit for our LULU Group: cutting-edge skincare products accessible to all. We're producing PSA in the US, and we have a strong team led by Mira Belgibayeva who is excellent. We've been fans and distribution partners of PSA Skincare for years and jumped at the opportunity to acquire. PSA stands for "purposeful skincare for all" and is a disruptor in the beauty industry, challenging the high cost status quo. We see PSA as a testament to quality skincare that is affordable and joyful, and real symbols of personal hope and change. True beauty is inclusive and intrinsically linked to self-care. The brand fully aligns with our beliefs that everyone deserves to feel beautiful, confident, and empowered in their own skin.
What's the "secret sauce" that's made a success of LULU?
Asel. We believe in partnership. While very different personalities, we trust each another completely and deeply share the vision. Our finance backgrounds have served us well. We're financially prudent but fearless about growth, bootstrapping our growth using our cash-generating units to fund new product or service opportunities. We believe in offering our customers a holistic approach. For example, a new customer in our clinics have access to functional medical care, high-quality supplements, effective skincare products, and even organic pasture-raised meat and meat products. These services and products are supported by an active program of free podcasts, webinars, and educational services that share LULU services, activities, and philosophy. We think educating customers is a powerful growth tool and it shows. In fact, we're the number one distributor for many of our skincare and supplement brands. Fourth and finally, we move fast when we make a decision. The acquisition of PSA Skincare is a good example. It took us around 3 months to raise our first angel investor funds and complete the acquisition of the PSA Skincare.
The startup scene in Kazakhstan is buzzing and you are in the center of the action. Has that been a helpful context?
Dana. It's an exciting time for startups in Kazakhstan. We're a young, ambitious, country with 60% of our population 18-35 years of age. We have a strong education system in STEM and many universities across Kazakhstan offer entrepreneurship programs. The Astana Hub, an amazing government program, supports startups with tax incentives, legal support, networking opportunities, and training programs. Domestic incubators and accelerators provide mentorship, office space, and initial funding to early-stage startups. And international and domestic VCs are active, investing over $100 million in new startups last year. The rising startup scene and startup mindset definitely helps.
As LULU becomes more of a global player, growth comes with risk and change. What challenges do you see ahead?
Asel. It's a tough industry, very demanding of us as leaders. We know our markets and what customers need. We've built a great team of employees and partners, and a culture of collaboration. As we look ahead, two challenges are uppermost in our minds. First, we are hyper-focused now on building a strong PSA Skincare brand in what we all know is a highly competitive market. Second is funding. We've primarily bootstrapped to this point and raised local investor funds to fund the PSA Skincare acquisition but will eventually need to raise global debt and capital. The best investors bring more than money. We want a true partner that will boost us in scaling the business and building strong global brands in the rising wellness industry.
You have a strong view of where the health and wellness industry is headed. What trends most influence your thinking?
Dana. It exciting to see the $1.8 trillion dollar global health and wellness industry expanding from appearance and fitness into nutrition, sleep health, and mindfulness. Helping customers to age happily and healthily is a growing focus and we're ahead of this trend with our Metabody clinics. We see such opportunity to help women have a healthier life. Yes, women live longer, but 25% of their life is of poor quality. Only 0.003% out of total NIH funds are spent on premenopausal and menopausal studies whereas this health-critical period is almost half of the woman's life. I'm confident that this growing trend will further shape the future of global health and wellness and we will certainly be part of it.
Imagine the LULU Group 3-5 years from now. Can you share the kinds of products and services you'll add to the mix?
Asel. We've built a strong "business muscle" and a deep understanding of our clients. Our future will continue to create life-improving and life-changing health and wellness products ourselves and in partnership with others. PSA Skincare is our first product "baby", but we see others on the horizon. For example, Kazakhstan is rich with organic unique minerals, including zeolite. We've recently partnered with Biotech Sciences, a local producer of zeolite, a powerful mineral assisting our ability to reduce toxins and heavy metals. We also are soon releasing our first detoxification supplement. I believe these products are a great starting point for us in our aspiration to create meaningful products.