Revenue in Indonesia was up 110 per cent as compared to the same period last year, mostly driven by strong sales of its immune and eye health supplements in pharmacies, CEO Alastair Symington told NutraIngredients-Asia on the day (Feb 24) the company announced its H1 FY22 results.
Group revenue was up 14.3 per cent as compared to the prior comparative period to AUD$346m (US$248m).
Gross profit climbed 19.4 per cent pcp to AUD$187.6m (US$134.9m).
The company reported strongest growth from its international markets – especially in Indonesia and Thailand.
These markets drove a 49.8 per cent increase in revenue to AUD$116.3m (US$83.6m), which was equivalent to a growth of 53.8 per cent based on constant currency exchange rate.
Symington said he had made the decision mid last year to prioritise growth in Indonesia, which he said was a crucial market, alongside India, in helping the company reach its goal of connecting to one billion consumers in three years’ time.
“Across the region, we're still wrestling with what is a very challenging circumstance related to the pandemic.
“What we were fortunate to do and I'm glad we did, is that we have prioritised the production of our vitamin products.
“Because we manufacture the products here in Australia, I made the call that we would manufacture exclusively for Indonesia and get as much product as we could to Indonesia back in July.
“Fortunately, we're able to get those much-needed products in the hands of Indonesian consumers. We saw a lot of sales coming through, so vitamin D3 has been a big success for us. The other one is zinc…[Sales of] immunity products are growing,” he said.
In Indonesia, the company is selling the product Blackmores Vitamin D3 1000 IU capsule in pharmacy chains, independent pharmacies through its local partner Kalbe Farma. In H1 FY22, its products have been introduced to 6,000 new independent pharmacies throughout Indonesia.
It is also present online in e-commerce sites such as Tokopedia.
Over 60 per cent of its portfolio in Indonesia is halal-certified by MUI.
Purchases of vitamins A and D may become significant in Indonesia, said a report by Euromonitor in October last year.
“Vitamin D has seen some interest during the pandemic as consumers have been concerned about lacking vitamin D after a prolonged period of lockdown and fewer outdoor activities,” said the report.
According to the report, the category leader is Bayer Indonesia, which is leading with its Redoxon Double Action effervescent. Other leading brands in the e-commerce channels are Hemaviton, Blackmores, and Natur-E.
Elsewhere in Thailand, the company managed to snap up market share by keeping its inventory stable.
“In Thailand, we have been prioritising inventory on the ground in Thailand to make sure that we could meet consumer, customer demands.
“As such, our products didn’t go out of stock at a time when there were challenges in the Thai market. As a consequence, we're actually able to grow share in Thailand. Our market share is now around 24 per cent,” Symington said.
In Thailand, the company launched Sunny D3 Daily Drops. The required dosage is one drop per day, which is equivalent to 133.33 IU of vitamin D3. It also launched Bio C Acerola Plus during H1 FY22.
Vision care products are also on the rise in Indonesia and Thailand.
“The other trend that we're seeing is [the rise in] vision care. For some of our products like Lutein Defence, they're doing really well. MacuVision is a big one for us as well…Eyestrain is an important issue that we're trying to help resolve,” Symington said.
New product development
In the current financial year, the company will be launching more than 100 new products, Symington said.
“We've really stepped up our innovation pipeline…whether it's halal products, whether its products for vision care, whether it's getting new products to market that we haven't had in market before. There's a lot of new innovations coming down the pipeline,” he said.
Some new products launched in Australia include its Stress and Sleep Day and Night Formula consisting of B vitamins for the day tablet and valerian extract for the night tablet.
It also launched Women’s Energy Effervescent containing vitamin B6, C, magnesium for supporting maternal health, energy production, and healthy immune system function.
Elsewhere in China, it launched Collagen Joint Renew.
Changes in shopping behaviour
In Australia, the company has been seeing an uptake in sales from e-commerce and pharmacies in suburbs, due to less foot traffic in the city areas, Symington said.
In H1 FY22, revenue in Australia was down 1.2 per cent to AUD$145.9m (US$104.9m).
“People are staying closer to home for their retail options…I think for a big brand like Blackmores in this situation is that we can't just rely on big retail chains, we have to make sure that we have more of an omni channel experience, so we need be present online and offline.”
The company also said that it would optimise price and pack combinations to drive a stronger consumer purchase intent, as well as maintaining “a disciplined pricing strategy to protect and grow profitability, despite increased levels of industry-wide discounting.”
CBEC focus in China
In China, the focus will be on the cross-border e-commerce sales growth, Symington said.
China’s revenue was up 8.5 percent to AUD$83.9m (US$60.3m) in H1 FY22, driven by 18 per cent pcp growth from its direct CBEC channel.
The CBEC channel is also accounting for more than 70 per cent of the company’s sales from China.
In contrast, the corporate daigou channel reported a seven per cent decline, due to COVID-19 related border closures.
“The daigou channel is also going to serve a purpose, it is a different route to market.
“Our focus [now] is actually really single minded around investing in CBEC both in terms of advertising and promotional investments as well as building capabilities and investing in talent.
“We feel that this area is much more lucrative for us in the longer term.
“But that's not to say we don't see it [daigou] as really important. It's just that we see e-commerce and social network channels as more important than these other channels,” Symington said.