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Cablegate: Feel the Burn: Fitness Clubs in Russia

VZCZCXRO3297
RR RUEHHM RUEHLN RUEHMA RUEHPB RUEHPOD
DE RUEHMO #5831/01 3510942
ZNR UUUUU ZZH
R 170942Z DEC 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC 5877
INFO RUEAUSA/DEPT OF HHS WASHINGTON DC
RUEHYG/AMCONSUL YEKATERINBURG 2907
RUEHVK/AMCONSUL VLADIVOSTOK 2570
RUEHZN/EST COLLECTIVE
RUEHPH/CDC ATLANTA GA

UNCLAS SECTION 01 OF 02 MOSCOW 005831

SIPDIS

SENSITIVE
SIPDIS

DEPARTMENT FOR OES/IHA AND EUR/RUS
USAID FOR GH, E&E
HHS FOR OGHA

E.O. 12958: N/A
TAGS: TBIO SOCI SCUL RS
SUBJECT: FEEL THE BURN: FITNESS CLUBS IN RUSSIA

REF: MOSCOW 1834

MOSCOW 00005831 001.2 OF 002


THIS CABLE IS SENSITIVE BUT UNCLASSIFIED. PLEASE PROTECT
ACCORDINGLY.

1. (SBU) SUMMARY: Russian fitness clubs are expanding and becoming
increasing popular, suggesting that the notion of a healthy
lifestyle may slowly be taking root in Russia. END SUMMARY.

------------------------
Fitness Clubs Pumping Up
------------------------

2. (U) Although there are no publicly available statistics on
fitness businesses in Russia, the Magram Market Research firm
estimates that the industry generates annual sales and membership
fees of about $500-$600 million and an annual sales growth rate of
about 40 percent. In July 2007, several large fitness club chains
merged to form the Russian Fitness Group (RFG), which now includes
the World Class, R-Fitness (formerly a gym franchise of Reebok
Shoes), and Maxi-Sport fitness clubs. RFG now boasts 45 fitness
clubs with two more in construction, making it the market leader.
Planet Fitness, another successful chain, has 37 locations, and
Stria Partners owns 25 gyms. International brands have also gained
a foothold in the Russian fitness market: Gold's Gym now has
branches in Moscow, Samara, and Abakan. Even with recent
expansions, no more than two percent of Russians are working out at
gyms, according to market analysts. Over 70 percent of clubs in
Moscow are in the premium segment of the market that caters to
customers who can afford to pay $1,500 or more for a yearly
membership.

----------------------------------
Fitness for Health, and for Profit
----------------------------------

3. (SBU) Senior managers at two central Moscow fitness clubs told us
that 70-80 percent of patrons frequent their clubs for health
reasons, though some members do come to network and socialize. Even
though basic membership fees at these full service clubs are pricey
($2,000-$3,500 per year), both chains have seen steady growth. Both
chains also have significant programs for children. One chain with
2,000 members has 120-200 children enrolled in various activities,
including tai kwon do, fencing, swimming, rollerblading, and
dancing. Families with children make up about one third of the
other club's membership. While acknowledging that basic memberships
at the central Moscow clubs are not affordable to the average
Russian, one chain's managers told us they run "more democratic"
gyms offering fewer services and located farther from the center
where memberships can be less than $70 per month. Dr. Kirill
Danishevskiy, a senior health consultant at the Open Health
Institute, told us that the big fitness chains had sometimes
expanded by buying up older "Soviet" gyms, making basic
improvements, and then raising prices. Naturally, this raised
questions about whether fitness club expansions had really increased
the average Russian's options for getting fit.

--------------------------------------
The President's Physical Fitness Plan?
--------------------------------------

4. (SBU) Some observers have wondered whether President Putin's
attempts to generate popular interest in a healthy lifestyle through
his own personal example has played a role in the sector's
development. Putin is an avid martial artist with a black belt in
judo, and the press has covered his attendance at martial arts
events with action film stars like Jean-Claude Van Damme.
Danishevskiy told us that he was skeptical that President Putin's
attempts to promote a healthy lifestyle appealed to wealthier
Russians who had then signed up for fitness club memberships, though
he acknowledged that Putin's healthy public image was probably more
appealing to the less well-heeled Russian. Managers at Planet
Fitness disagreed and thought that Putin's healthy public image had
a broad appeal and led to a bit of "fitness mania" among Russia's
professional classes. In their view, Putin's attempts to popularize
a healthy lifestyle had been one factor in the chain's growth.

5. (SBU) COMMENT: It is not yet clear how much of a trickle-down
effect that Putin's image of a healthy lifestyle has generated among
the masses, but there is certainly some evidence that the fitness
bug is catching on among well-off Russians who can afford the
membership fees at a posh club. With only two percent of Russians
working out at gyms, there is still plenty of room for growth in the
sector. In addition to private sector growth, some regional

MOSCOW 00005831 002.2 OF 002


governments with budget surpluses have unveiled health and fitness
plans. Orenburg Oblast will open four new sports facilities next
year and requires government employees to take part in fitness
programs. Interest in physical fitness could eventually become one
factor helping to reverse the demographics crisis and improve
Russia's high mortality figures and low life expectancy, much of
which is driven by poor lifestyle choices like smoking and heavy
drinking of hard alcohol (Reftel). However, there is a danger that
if growth is concentrated in the premium segment of the market,
expensive clubs could crowd out affordable gyms and leave fewer
outlets for Russians of modest means.

BURNS

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