‘China-centric approach’: Melrose CEO outlines new distribution and product strategies for key market
The firm already has sales in China with its Melrose Health brand as well as Nu-Lax – one of the bestselling gut and fibre products in the country.
But speaking to NutraIngredients-Asia, CEO Nathan Cheong, who took the helm last September, outlined his plans to grow the firm’s presence in China market.
For one, the company would be revamping the way it distributes its products.
“The reason why we are re-setting our distribution strategy in China is that we feel that the market is incredibly dynamic, and what has worked in the past isn't going to necessarily work now and into the future, because things change a lot.
“The model that we had in the past, from Melrose at least, was a very close ecosystem, so we were working with a distributor who had almost like a multi-level-marketing style approach to the market.
“And that was quite limiting to us in a number of ways,” Cheong explained.
The new model would see the firm work with distributors to promote the Melrose brand on a wider scale.
For example, the company will be launching its Melrose flagship store on Tmall in December, on top of operating via Taobao, other key cross-border e-commerce (CBEC) platforms such as Kaola, VIP, and the bricks-and-mortar channels.
“Supermarkets will probably be our primary initial offering, and then we will also move to pharmacy as a secondary route to market, and there'll be some specialty stores as well that we will be going after,” he said, when asked about the plans for the brick-and-mortar channel.
How have things changed?
The past few years have seen the evolution of Australian brands accessing the China market via the daigou trade, to CBEC, and now, Cheong believes that it is all the more important for brands to have their operations on the ground in China to work closely with the CBEC partners.
The firm has established a local presence in China, where its head of China is based in Hangzhou.
The office is also going to develop a team to support local CBEC channels, as well as business development and marketing presence.
“Ideally, you need to have people on the ground in China that can go and partner with the platforms in person and to drive traffic to your site and page.
“You are also getting your potential new product ideas from that CBEC partner, because they think what products are trending so they may give you insights and you take those insights and develop them into products that you can then sell on those platforms.”
He added that pushing out an Australian brand alone would not be sufficient to win in the China market.
“You got to have a China-centric approach to selling products, rather than a domestic-centric approach, thinking that just because it’s an Australian product, it will get traction and you will be able to sell it in China.
“That is over, and no brand can truly be successful in China if that's going to be their approach.”
New product launches
The company will therefore be launching a series of products designed for the China market.
For instance, the firm will be launching a beauty sleep product containing hyaluronic acid, melatonin, and astaxanthin.
“This is a sleep product that has a beauty focus to it. This is a brand-new product launched for China, it wouldn’t be sold in Australia, it will be a China-only SKU,” Cheong said.
This new product will be a single-dose liquid stick format.
Others would be upgrades made to existing bestsellers in China.
For example, the firm will be upgrading the Melrose Essential Greens – its flagship product by expanding the number of ingredients used from four to 80.
Known as The Ultimate, ingredients used in the upgraded version would include collagen, prebiotic fibre, probiotics, as well as postbiotics, green banana flower, chlorella, spirulina, barley grass, and berries.
“The Essential Greens is going from a four-ingredient product to an 80-ingredient product. It is looking at a holistic approach to gut health, energy, immunity, improving your antioxidant status, and will have an adaptogenic activity as well, helping people work through stress.
“It will be your ultimate greens product,” said the qualified naturopath and medical herbalist who has over 20 years of industry experience.
To be launched in the form of green apple flavoured powder, the product will be launched in Australia and into China via cross-border e-commerce, and then via the general trade.
Secondly, the firm will be launching the 2.0 version of its weight loss product known as Balance and Lean.
The product contains patented orange peel extract that has been shown to switch off fat cells or lead to the death of the adipose tissues.
Upgrades to the product would include increasing the strength of the product, such as increasing the amount per dose.
The firm will also add a couple of ingredients meant to increase the rate of metabolism in users.