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  • The Zumba economy

    The Zumba economy
    Published February 19, 2013
    The Zumba economy
    How three men named Alberto created a fitness phenomenon

    Is it a workout? Is it fitness? Or is it just a crazy Latin dance party? It’s Zumba and holy kettlebells, it’s everywhere. At your gym, in your living room, in your mother’s living room. Zumba fitness studios are popping up in every neighbourhood in North America. “Ditch the workout and join the party,” says Zumba.

    Given all the women who are addicted to Zumba, you’d think it must have sprung from the mind of a sister, right? A 21st century Jane Fonda. Some kind of cross between Shakira and Tracy Anderson. But, no. Zumba was the brainchild of a man named Alberto… who met another man named Alberto, who had a friend named… you guessed it, Alberto.

    From Colombia to Miami 
    It all began in Santiago de Cali, the third largest city in Colombia. One day in the mid 1990s, a young fitness instructor named Alberto “Beto” Perez forgot to bring his music to his aerobics class (C+C Music Factory perhaps?). All he had with him was a cassette (remember those…nah, neither do we!) of Latin rhythms. Think rumba and salsa beats. He used it for his aerobics class and the women loved it – who wouldn’t love all that hip swinging and shaking? The idea for Zumba was born.

    Beto had a feeling that his Latin dance-cardio classes would be a hit in the US. He flew to Miami four times to market his moves at fitness clubs. He finally landed a gig and quickly became one of the most popular instructors at the gym. Upon hearing of his dream to bring Zumba to more people, one of his students suggested he meet her son, a 24-year old aspiring entrepreneur named Alberto Perlman.

    And then there were three 
    This new Alberto immediately saw the business potential of the charismatic Beto (actually his mom saw it first!). According to Alberto, he had an “aha moment” and thought “this needs to be scaled.” He volunteered to be the CEO of a new venture to unleash Beto’s cardio-dance moves upon the world. They invited Alberto’s friend and colleague, Alberto Aghion, to be the fledgling company’s COO and president.

    The three Albertos began filming Beto’s classes and showing them to investors. Eventually they found a partner with Fitness Quest. They made an infomercial and sold a million DVDs in only six months.

    Once the Zumba videos started spreading across the nation, the Albertos began to receive calls from fitness instructors who wanted to learn to teach Zumba. They needed Zumba teacher training! In 2005, they launched the Zumba Academy and came up with a formula: $300 for Zumba Instructor licensing, then $30 a month for access to the music and the choreography.

    Today, there are eight different levels of Zumba classes, including Aqua Zumba and Zumba Gold (for the grannies). There is a clothing line called Zumba Wear and even a Zumba fitness video game (don’t laugh – more than 6 million copies have been sold!). And quite naturally, there is a music album, the Zumba Fitness Dance Party.

    Exercise in equity 
    Zumba now employs over 200 people. It is a privately-held company and does not disclose its annual financials. However, Alberto Perlman was quoted in a 2012 story in the UK newspaperThe Independent as saying the company earns $10 million a year on clothing sales alone. Add to that the DVDs, the video games, the high profile Zumba concerts, the instructor licensing and training fees - and of course, the participant fees generated for fitness clubs and instructors thanks to the estimated 14 million people a week who pay for Zumba classes in more than 125 countries – pretty soon you’re talking about real money.

    The business world has taken notice and investors have started to ask when they can get a piece of the Zumba action. According to an interview with Alberto Perlman Reuters in June 2012, an IPO is “not on our radar at this time.” Private equity investment is on the radar, however, and Zumba recently got an undisclosed amount of cash from a private equity and venture capital firm that also invested in Twitter and Tumblr. A second investment was made a media and entertainment firm – reportedly the company has plans to launch a music platform, similar to iTunes and Spotify.

    A little celebrity goes a long way 
    Among Zumba’s 14 million fans are plenty of bold-faced names, which is what really made Zumba go viral. Jenny from the Block (aka La Lopez, aka Jennifer Lopez) is a fan. Victoria Beckham (aka Posh Spice) and Black Swan ballerina Natalie Portman are fans. Clearly, it’s a party.

    But the secret to Zumba is that it is fun. Although you can burn up to 400-500 calories per 45-minute session, it rarely feels like exercise. According to Beto, 90% of people who do Zumba hate to exercise. Since that describes about 90% of the general population, Zumba is a pretty good match.

    About the Author/Partner: GoldenGirlFinance.com is a free personal finance and education site for women.

    Nothing contained herein is intended to provide personalized financial, legal or tax advice. Nothing should be construed as an offer to sell, or a solicitation of an offer to buy a security, a recommendation for any product or service by Golden Girl Finance or any associated third party, or a suggestion regarding the purchase, holding or sale of securities. Before implementing any financial strategy, you should obtain information and advice from your financial, legal and/or tax advisers who are fully aware of your individual circumstances.
     

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