NutraIngredients-USA Global Round-up: Blackmores, e-Commerce in China, Carbiotix, and more

04-Sep-2018 - Last updated on 04-Sep-2018 at 15:19 GMT

It’s a global industry, but it’s not always easy keeping up with everything that’s happening around the world that could impact the US dietary supplements industry. The answer? Our new weekly round-up of key news from across the globe.

This week we look at Blackmores annual financials, the looming changes to e-Commerce in China, the UK’s banning of energy drinks to minors, and Carbiotix’s recent funding boost.

First up, we head Down Under to learn that Australia’s leading supplement firm Blackmores reported 9% year-on-year revenue growth, with China and Asia playing a massive role in this success.

Much of the company’s business in China is based on cross-border e-commerce sales, which is currently growing at an impressive 20% yearly. US companies may also be interested to find out more about how it strengthened its digital platform and retail partnerships in China by opening a WeChat store and signed an exclusive NPD partnership with Kaola.com.

Further afield, but still in Asia, the company also reported significant sales growth in Singapore (22% sales increase) and South Korea (91% increase).

“We see plenty of growth opportunity in Asia beyond the China phenomenon. Our joint venture in Indonesia, Kalbe Blackmores Nutrition, is almost two years old and is already building a winning position in a market that is expected to be the fourth largest economy globally by 2050,” said CEO Richard Henfrey.

However, it wasn’t all sunshine and roses for the company, with flat sales in Australia and New Zealand and supply chain issues.

“We've always had a strong reliance on our suppliers to assist us in minimizing this lead time,” Henfrey wrote in the Blackmores’ official financial report. “However, this continued to challenge us throughout the year. The number of lines out of stock was minimal at the close of the financial year, and Blackmores has implemented several strategies and interventions to mitigate this challenge in the future.

“These changes include introducing new technology and processes to assist with global sales forecasting and demand planning. The announcement in April of Blackmores' plans to acquire the Catalent Australia manufacturing facility in Victoria will also give us greater control over production volumes.”

e-Commerce in China

eCommerce © Getty Images Askold Romanov — © Getty Images / Askold Romanov

Sticking with the e-commerce theme, another significant development is China’s potential new cross border e-commerce (CBEC) that could be introduced on January 1, 2019.

And this may lead to additional regulation and taxes for supplement and functional food firms, and CBEC sales of vitamins, supplements, and infant formula could be among the first product categories affected, according to New Zealand Trade and Enterprise (NZTE).

While Chinese authorities have not yet made any official announcements, multiple sources indicate that the changes are coming.

KJ Bas, an Auckland based consultancy firm which focuses on the China market, noted that the two most popular CBEC models – bonded zone and direct shipping with website connected with customs, would be affected by the regulatory change.

Banning energy drink sales to children

Concerns over the consumption of energy drinks by children have been swirling for many years, and proposal to ban their sale to minors are also not new. Indeed, Chicago toyed with idea back in 2013, while New York State has tried to impose warnings on energy drinks in 2009-10 (A09754).

Now the UK is planning to ban the sale of energy drinks to children, following on from moves made by major supermarkets – including Waitrose, Sainsbury’s, Morrisons, Tesco, Asda and Aldi – to ban sales to under 16s in their stores. However, retailers are not legally required to ban sales, and children can still easily buy energy drinks from convenience stores, other retailers and vending machines.

With over 65% of British 10-17 year olds consuming energy drinks, the UK government is now exploring legislating to end the sale of high-caffeine energy drinks to children to “create a level playing field for businesses”.

“We want to use this consultation to gather further views and evidence on the advantages and disadvantages of ending the sale of energy drinks to children, and on alternative options, before making a decision. We are also seeking views on how a restriction on sales of energy drinks to children would be enforced in a way that is fair and proportionate, and on the appropriate implementation period, in the event that Government does decide to take such an approach.”

Personalized prebiotics

Last up for this week, we look at Swedish personalized prebiotic start-up Carbiotix, which recently successfully closed a second pre-seed financing round of €450,000, bringing the total capital raised by the company to €700,000.

The current pre-seed financing – made up mostly of local investors and angels – will help the company to continue growth in its consumer-facing microbiome test and personalized prebiotic businesses, said CEO Kristofer Cook .

“The next natural step is to continue investing in marketing and sales to allow us to expand sales, but also further invest in pushing down the costs of the tests even further - because that is out key competitive advantage going forward.”

“We see that there are opportunities to reduce costs even further by having a physical presence initially in the North American market and then eventually in the Asian market as well,” he said.