Blackmores’ CFO exclusive: ‘Pharmacy sales, probiotics and beauty-from-within key to boost China fortunes’

By Tingmin Koe contact

- Last updated on GMT

Blackmores highlighted probiotics and kids' supplements as some of the focus for the Chinese market. ©Getty Images
Blackmores highlighted probiotics and kids' supplements as some of the focus for the Chinese market. ©Getty Images

Related tags: Blackmores, Australia, Probiotics, kids, Beauty from within

Blackmores has reiterated its commitment to China in the wake of weak full year results in the country, with its CFO telling us in an exclusive interview that it is determined to strengthen its presence in in-country retail, such as pharmacies, alongside e-commerce platforms.

In its FY2019 financial report​ released last Thursday (Aug 15), the firm report fast growth in the South East Asian markets, but this was offset, by a lacklustre performance in China.

The overall key export accounts and in-country sales in China went down by 15% yoy to $122m and stricter Chinese e-commerce law was cited as a key factor. 

Despite a tough market environment, Blackmores’ CFO Aaron Canning told NutraIngredients-Asia ​that China remained an important market.

 “China remains the single largest offshore market for Blackmores, so it is important to us. However, China is not without risks, and the journey will not be without some bumps in the road as we go forward.”

He said the Australian firm would build its presence by offering more products in pharmacies, mother-and-baby stores, and fostering in-country relationships with the e-commerce platforms as well.

“Our in-country China business grew at 22% last year, it is growing strongly and we will like to see that continue. In fact, we will like to see that strengthened as we go into this year.

“E-commerce is a path where we will continue to build on the strong relationships that we already have in China, but we also like the retail market opportunities, in particular, the pharmacy channel, and the mum-and-baby stores.

We were actually in the pharmacies before we were in the e-commerce. So we know the channel well, we already have products that we sell in that channel.”

Its key products in China include fish Oil, pregnancy and breastfeeding supplements, and glucosomine. 

The firm has been operating in the pharmacy sphere for about six years and is in the process of obtaining the orange-cap certification for its products. 

Unlike the 'blue hat' certification, orange-cap certified products only need to go through the filing, instead of the more vigorous registration process in China.  

While several firms are now nurturing the markets in China’s lower-tiered cities, Canning said that the firm would still focus on the higher-tiered cities.

“We still think that there are opportunities in the tier one and tier two cities, so we want to make sure that we get that right first. But in time to come, we will look to expand into tier three and four cities.”  

R&D priorities

Canning highlighted probiotics, kids’ supplements, and the beauty-from-within categories as the firm’s focus for the Chinese market.

This will include the probiotics range that the firm launched in Australia, including 99% sugar-free gummies and chewables for kids, and skin protection products.

Work to be done includes beefing up product supply and product ranges.

“We have already launched the probiotics and kids range, but we have limited supply, and so we are working on improve that..

“We have already launched the skincare products, and we look to expand that range this year…As we gain more supply, we will launch more fully into China.”

Supply and demand

Canning revealed that the problem of limited product supply was not unique to China, as the firm also faced the same issue in its domestic market.

“We don’t even have supply to meet the demand in the Australian market, we have limited supply for China.

Our suppliers and manufacturers cannot keep up with demand, so we are working with them on increasing that.”

According to its financial report, the firm enjoyed a market share of 15.9% at home, with a “strong gap over the nearest domestic competitor.”

For FY2019, its sales in the ANZ markets saw a modest growth, with sales increasing by $1m to $267m.

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