Wellness isn’t going anywhere — it’s still a top priority for consumers.
On Thursday, McKinsey released its annual Future of Wellness report, citing ongoing prioritization of the wellness category, diverse interests among demographics and clear areas of opportunity. In the face of economic downturn, tariffs and new products launching every day promising better health, consumers are still eager about the category. The firm estimates the market to account for more than $500 billion of annual spend in the United States, growing 4 to 5 percent each year.
“Eighty-four percent say it’s important or a top priority, and then only 13 percent say that they’re definitely achieving their wellness goals,” said Anna Pione, a partner at McKinsey and coauthor of the report. “As we think about what the opportunity is, it just continues to remain really robust.”
While Pione said the wellness category won’t be entirely immune to economic pressures, McKinsey still predicts the market will be relatively resilient and continue to grow.
“What gave us more confidence there is we asked consumers if you were to have pressure on your personal economic situation, what are the categories where you would consider cutting your spend,” she said. “When we ranked a lot of the wellness-related categories to broader consumer goods or services, we saw that a lot of those wellness products and services were at the top, meaning consumers were more likely to consider those as part of their essential routines and less likely to consider those as discretionary.”
However, with ongoing pressures, McKinsey said consumers will become even more savvy when it comes to the brands and products they are purchasing.
“Consumers [are] being really thoughtful about where they allocate their dollars,” said Pione, adding that consumers will seek out clinical studies and scientific evidence. “They’re conscious of what products are going to move the needle.”
With this, McKinsey predicted there are key areas of opportunity for companies to meet some of the unmet needs of the consumer. The most significant areas of opportunity, per investor interest, M&A activity and category innovation, include the below:
- Functional nutrition: With the success of the functional beverage category with brands like Poppi and Olipop, other food and beverage categories are getting a refresh — think Khloé Kardashian’s new protein-infused popcorn Khloud. McKinsey reports key need states that could be addressed via nutrition include energy, gut health, immunity and muscle, bone and joint support.
- Beauty: Per the report, Gen Zers are saying that “better appearance” is a greater priority to them than other age demographics. Therefore, McKinsey cites areas of opportunity to be beauty products infused with ingredients that provide health benefits, supplements and medical aesthetics. The firm also says that cobranding and partnerships will become crucial as consumers look to layer products, devices and procedures.
- Longevity: Per McKinsey’s findings, 60 percent of consumers report that healthy aging is a top or very important priority. Solutions that address better aging could be skin care products, biological age testing, cell-boosting supplements and more.
- In-person experiences and wellness travel: As consumers are looking to unplug, wellness travel has become increasingly popular. Perhaps surprisingly, the report states that younger demographics, including Gen Zers and Millennials, are more likely to invest in this type of travel. That being said, companies playing in the space are now marketing more to older consumers in an effort to reach them.
- Weight management: With the mass use of GLP-1s, weight loss continues to be one of the largest conversations in the wellness category and is still considered an unmet need by many. With many survey respondents finding it difficult to manage weight, areas of opportunity include the growing GLP-1 market, supplements, nutrition-led programs and more.
- Mental health: The survey states that 42 percent of Gen Zers and Millennials find mindfulness to be a “very high priority,” likely thanks to social media, stress and economic pressures. However, with a proliferation of apps in this area, McKinsey suggests players will need to offer differentiated value.
In addition to these, the firm also said that there is a growing divide among consumers of different ages and how they are shopping the category. Specifically, “younger generations are spending disproportionately,” per the firm, likely due to burnout, stress, exposure to health content on social media and other pressures. Gen Zers and Millennials account for 41 percent of spend in the category.
“You have an element of the younger consumers in general are more excited to experiment and engage in new products and services across the different wellness categories that we test. At the same time, the older consumers often have a more advantaged personal economic situation and able to engage there,” said Pione. “You have seen historically that older consumer is the one who has an ability to spend. You will start to see the companies offering these [wellness] services starting to think about what the needs of the younger consumer is.”
Although consumers across the board are becoming more interested in the category, McKinsey has identified five personalities that make up the bulk of the market, including maximalist optimizers, those looking to experiment and invest in newness across the category; confident enthusiasts, those who prioritize the category but are more likely to stick with specific products; health traditionalists, those who have a minimalist approach to the category; health strugglers, those who are stressed by the wellness category and find it difficult to feel motivated, and wellness shirkers, those who don’t focus on their health and are unlikely to spend a lot within the category.
According to the report, there are specific ways to target each type of wellness consumer. For example, for maximalist optimizers and confident enthusiasts, understandable education around science and research is crucial. On the other hand, to win the health struggler, McKinsey suggests making the approach less intimidating and using incentives to drive compliance.
With brands and products launching every day, the market could feel saturated, but Pione argued otherwise.
“There’s a ton of room across wellness. This is one of those broader categories where consumers are going to continually be looking to optimize. If you think about the degree to which consumers have been prioritizing it over the years, and the degree to which they’re still answering their goals are not being met, [that] would suggest that… as you achieve more, you set new goals for yourself,” Pione said. “The more consumers feel like they’re actually meeting their goals or making progress, that can even engender more engagement of the category because it drives enthusiasm and excitement.”
