This came in the wake of new cross-border e-commerce (CBEC) rules, which again highlights how sales performance in Australia in particular are at the mercy of daigou trends.
According to H&H, China's new e-commerce regulations — which were implemented at the start of the year — resulted in many daigou sellers de-stocking their inventory and reducing trading activity.
China's State Administration for Market Regulation's (SAMR) continual crackdown on the country's health food and supplement sector has hit daigou sellers and direct-selling firms the hardest.
The company said in a media release: "To cope with these new channel dynamics, the group has been partnering with customers to deplete surplus inventory and continue brand building initiatives across both ANZ and China markets to continue to drive demand."
H&H's Q1 2019 adult nutrition sales figures are a stark contrast to those reported in its 2018 annual results, where the segment had seen sales growth of 13.7%.
Australian vitamin giant Blackmores has also been affected changes in the daigou channel, with boss Marcus Blackmore saying the firm had "lost a lot of the daigou sales" it used to enjoy. The firm is trying to engage more actively with sellers on the platform now so it can maximise its potential in this aspect.
Ups and downs
Overall, H&H's revenue saw year-on-year growth of 2.4% to US$322.7m (RMB2.2bn), and its adult nutrition business is doing markedly better in China than in Australia and New Zealand.
The company recorded a 32.2% increase in adult nutrition active sales in China, which accounted for 41.6% of its total adult nutrition revenue for the quarter. However, this also represented a 30% drop from the previous year's 63.2% increase.
Furthermore, it has expanded to new CBEC platforms and social e-commerce channels in China in a bid to reach more consumers.
According to the company, it is still seeing "overall demand growth for Swisse products from Chinese consumers remaining healthy", though its de-stocking and channel shift will take some time to complete.
When it came to H&H's infant nutrition business, revenues increased by 4.1% year-on-year, with infant milk formula revenue experiencing a slight decrease of 0.3% due to a high base: revenue in the segment had risen by 41.6% year-on-year in Q1 2018.
This came after a one-off price increase, as well as distributors restocking during the company's launch of new registered infant formula products.
The rest of its infant nutrition product segment experienced significant growth of 98.2%, due mainly to H&H's Dodie brand doing well in both China and France, and the consolidation of sales from its organic baby food brand, Good Goût.
According to Nielsen research, the company's share of China's overall infant milk formula market had increased to 5.9% in the year ended March 31, 2019, a slight rise from 5.8% the previous year.
H&H chairman Luo Fei said, "We remain confident about the outlook for our baby nutrition and care business, and particularly for our adult nutrition and care business, especially in China.
"We will continue to implement our brand-building initiatives and other ongoing strategies to safeguard our ongoing growth, and to continue growing our global leadership in premium wellness."