Virgin Active is already one of the world’s largest fitness businesses — it’s the biggest gym chain in South Africa, with an estimated 60%-70% of the market — but group CEO Dean Kowarski is on a mission to dramatically expand its scope with a major strategy shift.
Kowarski, originally from South Africa, believes the traditional gym is a single-purpose space that addresses just a portion of what people need to live well. What he’s building instead is something more ambitious: a global network of social wellness clubs that he hopes will fundamentally change how people approach health.
Globally, the gym chain has more than 1-million members. In South Africa there are 631,000. Kowarski runs the global chain, having been appointed CEO in March 2022 when the company refinanced and effectively took over the hospitality business he had founded, Real Foods Group.
Virgin Active was founded in 1999 by Sir Richard Branson, with only three gyms. The following year Nelson Mandela called the British billionaire and asked him to save the thousands of jobs at risk due to the liquidation of LeisureNet, owner of the Health & Racquet Club. Virgin Active bought the business for R319m.
Apart from the UK and South Africa, Virgin Active now also operates in Italy, Australia, Singapore, Thailand, Namibia, Botswana and Qatar. In most markets, it holds the top spot in the premium fitness segment.
Wellness had been part of Kowarski’s journey. While working in investment banking in New York, he ate a lot of quick and easy fast food, and his health began to decline. He cut out processed foods and switched to fresh meals. When he returned to South Africa, he noticed a lack of convenient, healthy eating options and founded Real Foods Group.
He is clear that the competitive landscape he cares about is the broader wellness economy, including nutrition, recovery, sleep, mental health and social connection. “If I only eat well but don’t exercise, or if I exercise but don’t sleep well, or if I’m stressed — when you put all of those things together, you achieve the best results,” he says. “That’s the role Virgin Active wants to play.”
Health, in his framing, is an “outcome” — a cholesterol reading, a doctor’s diagnosis, a state of being at a point in time. Wellness, by contrast, is an “action”: a conscious, ongoing decision to pursue a better version of yourself. It’s preventative, not reactive. “Wellness is the journey you go on before the health outcome.”
The clearest expression of this strategy is what’s happened to Virgin Active’s positioning. Before and during Covid, the business had been trying to be all things to all people.
“The worst place you can be is in the middle,” Kowarski says. “Post-Covid, people were either trading down — going budget — or trading up. They were prepared to pay for more value and more services.”
The 25kg weight in my club is the same weight as the 25kg weight in a budget gym
— Dean Kowarski
The industry took a big hit from the pandemic. Gyms had to close, and they had no revenue lifeline equivalent to the takeouts or delivery options that restaurants could offer. Gym membership plummeted around the world.
According to the Health & Fitness Association, between March 2020 and June 2021 the global gym and fitness club industry lost $29.2bn in revenue. By January 2022, 30% of fitness studios had permanently closed.
Kowarski says the market is now fully recovered. Paradoxically, Covid reinforced the importance of healthy lifestyles and consumers are prioritising spending on health and fitness.
In South Africa alone, the group has spent R950m over the past two years upgrading clubs. It introduced a tiered structure that runs from entry-level “live fitness” clubs through “flagship” and “collection” clubs up to “limited edition”, the most exclusive tier.
The leading South African example is The Point in Green Point, Cape Town, which has been relaunched as a collection country club with more than R100m invested in refurbishment.
The upgrade includes “reformer Pilates” (sliding carriage machines with springs and pulleys that create resistance), boxing, cycling and yoga studios, Hyrox training (which combines running with workout zones), recovery suites with infrared saunas and cold plunge pools, co-working spaces, boardrooms, outdoor training facilities, padel and pickleball courts, and a longevity clinic in partnership with a specialist cardiologist.
All of it is included in the new membership price, which has moved from R1,600 a month to R2,250. Discovery Vitality members pay half that. The 25m pool is also home to the Chad Le Clos Swim Academy. The Point reopened with 94% of the members it had before renovations, and membership has grown since then.
“People sometimes forget when they do the calculation how much they’re spending on their wellness across different places,” Kowarski says. “If you add it all up and then compare it to what we’re offering, there’s real value there.” Members who simply want to lift weights in a no-frills environment have alternatives — and Kowarski is comfortable saying so. “The 25kg weight in my club is the same weight as the 25kg weight in a budget gym.”
Is South Africa approaching membership saturation? “We expect demand to grow in line with economic growth and urbanisation, which will support moderate growth in supply over time. Within this, there is a combination of urban decay, urban regeneration and semigration that requires the repositioning of supply in the market.”
One new gym is Riverlands in Cape Town, an ambitious mixed-use development. Opening early next year, it will be a limited edition club. It will be the only top-tier gym of this standard in the country, slotting in above Virgin Active’s sites at Melrose Arch in Joburg and the Silo district at the V&A Waterfront.
The Silo gym was built about 15 years ago and is at capacity at 4,000 members. Its clientele come from as far as Somerset West and Stellenbosch, so there is demand for an upmarket gym that is more accessible.
Other clubs are also being primed for revamps. “I want more people to use my clubs more frequently, and I want them to stay longer,” says Kowarski.
The cost of attracting new members is a lot higher than retaining existing members, and it’s an industry with a high degree of churn. The lapse rate for the gym chain is 45% (the gym industry average is typically 40% for larger and more upmarket gyms, 60% for smaller value clubs and 90% for budget clubs). Kowarski is banking on gaining members from other chains.
A key challenge, whether for a basic gym or a sophisticated wellness offering, is to strike a balance between boosting revenue by luring as many members as possible and avoiding the overcrowding that can make peak-hour visits so frustrating. The upmarket strategy will not necessarily solve this conundrum on its own. Overcrowding, says Kowarski, is not sustainable “and not a strategy that we pursue”.
Additional new gyms are sometimes built nearby , though takes time to come into effect.
Underpinning it all is a data strategy that Kowarski believes represents the next frontier in the premium wellness business.
The group has appointed a global chief AI officer and is building what it calls a Virgin Active longevity score. This will combine such metrics as efficiency in using oxygen during exercise and muscle-to-fat ratio with a member’s workout history and other data.
It reflects a broader shift Kowarski sees in consumer attitudes, away from lifespan (how long you live) towards health span (how well you live).
What comes next for the business? Virgin Active is majority-owned by Brait, the listed investment company backed by the Wiese family and Titan (Christo Wiese’s private investment company), with stakes from the group’s management team. The gym group carries significant debt, and it’s one of the key reasons Brait is considering a listing by December 2027.
Meanwhile, Virgin Active The Point is pumping mid-morning. Members push through their workouts, while the co-working desks are fully occupied. Boardrooms are filled. Outside the Recovery Room — a compact wellness suite kitted out with equipment for post-workout muscle repair and inflammation relief — a queue has formed
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