Last year, Elite Supplements opened a new store every 10 days. An offshoot of a Canberra gym, it has taken almost two decades for Elite to find its moment in the sun – courtesy of a well-documented boom in health that has powered the growth of everything from wellness apps to gyms.

Domenic Giampaolo, the former Olyroos squad member who now runs the business, has plans to open another 22 stores this year alone, taking the number of Elite Supplement outlets to more than 140.

“I think retail is going to get absolutely squeezed in the labour market in the next five to 10 years and that, coupled with so much competition around leasing, paints a tougher picture for retail,” said Giampaolo, who founded the company with his father, former Socceroos player Sebastian Giampaolo.

“But if you take my category, then I’m very optimistic. We’re very blessed to be in health and fitness, which when you look at the young generation in Western countries, they’re moving away from alcohol and into the gym.”

Elite Supplement is valued at about $150 million, an increase of 22 per cent in the past 12 months, The Australian Financial Review understands.

The health and fitness industry has boomed since the COVID-19 pandemic. Complementary Medicines Australia, which represents vitamin and fitness supplement companies, says 8.2 million people buy them every six months and estimates the market is worth around $6 billion.

Elite Supplements not only sells fitness supplements – its bestseller is a whey protein powder pack which it says promotes muscle growth and suppresses appetite – but it also provides advice from sports nutritionists.

Giampaolo said the business was making more revenue outside protein powders and has expanded into vitamins and energy drinks that promise fat burning and enhanced mental focus. Revenues, he said, had risen from $35 million to $143 million in five years.

Sam Koch, an analyst at Wilson Asset Management, said sales in the listed health retail market – largely pharmacies and cosmetics businesses – had grown almost 10 per cent over the past year as lifestyles changed.

“It’s fascinating how people are spending more on their health and less on other things like liquor, which is only up 0.2 per cent,” Koch said.

“Australians are going into more of a health conscious mindset which has meant a situation where pharmacy and cosmetics – the health segment – are taking market share off supermarkets.”

There is a dark side to supplements, however. Some dietitians warn that the long-term effects of some of the products are not well known. Others are imported without being tested by the Therapeutic Goods Administration.

“It’s important for consumers to be aware that purchasing products from overseas carries risk. They can’t always be sure they’re getting what’s promised on the label,” said Complementary Medicines Australia chief executive John O’Doherty, who added that the strict regulations imposed by the local regulator could stifle innovation and slow down approvals.

The elder Giampaolo in 2021 was sentenced to a fully suspended jail term of 11 months for importing fitness supplements without approval and 200 hours of community service. The former Socceroo, on behalf of Elite, used false documents to get fitness supplements into Australia without meeting the necessary importation requirements.

From Canberra to Singapore

Elite Supplements opened its first store in 2007 and largely operated in Canberra until recently. In the past year, however, it has opened 37 stores. Among its 22 planned stores this year is one in Singapore.

Giampaolo said the company was working on expanding its store footprint because Australian consumers, unlike those overseas, still preferred to shop in person. Only a third of Elite Supplements’ sales are from its online store.

That has meant Giampaolo has been locking in leases at the country’s biggest shopping malls, including Westfield Bondi Junction and The Galeries in the Sydney CBD, and bringing in franchisees at a time when there is expected to be retail space shortages in the next decade.

“Real estate, so high-end leases and well-located distribution centres, is really, really difficult in Australia,” he said. “The finance arm probably weren’t too fond of what we did last year, but you have to get the good leases quick while they’re out there and going as more multinationals are coming in and willing to pay silly rents at centres like Bondi Junction.”

Giampaolo said bigger retailers such as Chemist Warehouse and the supermarket giants Woolworths and Coles had begun introducing supplement products to their stores as demand grew. That has put a lid on how much Elite Supplements and other specialist stores can charge.

“For us, we’re really trying to establish a big point of difference between us and say, a pharmacy, in the sense that the profile of the product is so much superior,” Giampaolo said. “Our consumers are happy to pay $10 or $20 more because it’s something you’re going to take and put into your body so that amount of money difference is really not the driver for them.”

Licensed by Copyright Agency. You must not copy this work without permission.

Subscribe