As we enter the second quarter of 2019, the post-Christmas enthusiasm many of us felt towards swapping the wine and chocolate for the treadmill is likely beginning to fade.

However, the fact remains that the UK’s overall focus on personal improvement and exercise is continuing to grow at an unprecedented rate.

Last year saw the number of fitness facilities across Britain increase from 6,728 to a record 7,038, according to the 2018 State of the UK Fitness Industry report. Meanwhile, total memberships grew by 2% to 9.9 million – that’s 15% of the population.

The growing focus and appeal of wellbeing is not just reflected in gym attendance, either. The millennial-driven move away from meat consumption has led to a 350% rise in the number of Brits identifying as vegans over the last decade, according to Vegan Society figures.

While Brits are presumably benefiting from the trend towards healthy eating, the shift is also creating opportunities for small consumer-facing businesses. As their larger counterparts struggle to keep up due to their static and cumbersome business models, these highly flexible start-ups are emerging as the big winners.

Furthermore, with sentiment turning against UK equities in the Brexit run-up, we think larger UK business will be hit much harder than small entrepreneurial British firms which offer more disruptive and innovative products.

As a team of entrepreneurs ourselves, we have created a portfolio of disruptive young start-ups that we believe can capture changing consumer spending habits. Here are several ways we are making healthy returns out of the UK’s growing interest in nutrition:

Exercise

One trend we have seen emerge is a growing number of UK consumers who want to exercise at their convenience. These gym-goers wish to get fit, but do not want to run the risk of wasting money under the traditional monthly membership model.

In this environment, ‘pay-as-you-go’ fitness brands like KXU and Boom Cycle are striking a chord as they let customers pay as and when they use facilities.

Healthy eating

The UK’s £18bn snacking industry is also being shaped by the wellness trend, according to research company Nielsen. Last year, the market research provider found that 45% of shoppers now look for healthy options when snacking, while 41% want snacks with less sugar.

Our investee company Plenish is one of the leading cold-pressed juicing businesses in the UK and is benefiting from this trend. In addition, the company has launched four varieties of nut milk to gain exposure to the UK’s move away from dairy products.

This focus on healthy eating has also spread to the restaurant industry, with consumers increasingly demanding fresh and local produce.

To gain exposure to this trend, we have invested in Sourced Market, a retailer and restaurant which offers a curated selection of locally-sourced, fresh produce.

Nutrition

With increased interest in healthy eating comes a challenge to the supplements industry. Many generation X-ers may remember the vitamin C tablets they had foisted upon them as children. How effective they are is debatable. Many supplements are not even absorbed by the human body.

Although the supplements industry is set to be worth as much as £475 million by 2021, according to Mintel, it is poorly regulated. In fact, researchers from John Hopkins university suggest that most supplements are unvalidated, potentially putting consumers’ health and wellbeing at risk.

In 2018 LYMA launched the world’s most advanced nutraceutical, heralding a new era for the supplement industry. In January this year, we invested in the business to help them meet the rising demand they have experienced.

We firmly believe that these companies are set to take Britain’s health and fitness industry by storm. Early investors in these innovative firms within an already booming sector could well see healthy returns on their investment.

Andrew Wolfson is managing director of Pembroke VCT

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