Blackmores' supply challenges under control as business plans move ahead, says CEO Henfrey

By Cheryl Tay contact

- Last updated on GMT

Blackmores had previously reported facing supply chain issues, which led to flat sales in Australia and New Zealand.
Blackmores had previously reported facing supply chain issues, which led to flat sales in Australia and New Zealand.
Blackmores insists its recent supply chain challenges — documented in its half-yearly results six months ago — have now eased, with CEO Richard Henfrey adding that new measures would hopefully help to avoid future shortages.

While the report mentioned that the "the most serious constraints"​ concerned its supply of whey protein and fish oil, Henfrey said this was no longer the case.

"These two products received a fair bit of attention because they were two examples of supply challenges at the time of our half-yearly results announcement.

"There aren't any ongoing issues with the supply of either ingredient, pleasingly. In fact, there was no single product that was out of stock long-term.

"However, there were a higher number of constrained lines than we were happy with; our smaller lines were more exposed, and we have prioritised them as we transition more products to the Catalent facility."

The firm's annual financial report – released last month​ – showed it recorded 9% year-on-year revenue growth to A$601.1m for the financial year ending in June, with China and overall Asia sales contributing significantly to this increase.

The firm made A$69.2m in profits after taxes, up from last year's A$58m. Sales to China — which consisted of key exports and in-country sales — stood at A$143m, representing a 22% year-on-year increase.

Henfrey said this constant growth meant it was vital to continue to invest in new business systems.

He told NutraIngredients-Asia​: "When you consider that our business has almost tripled in profit and more than doubled in revenue over the last five years, there are definitely some opportunities to invest in the business systems we will need to support our growth ambitions.

"This will include investment in technology and infrastructure over the next two years.  The other factor that will support the continued supply of our products is our upcoming acquisition of the Catalent Australian manufacturing facility​ in October 2019. 

"We are actively transitioning to own the manufacturing plant, which will give us even greater control over our production."

Blackmores announced its acquisition of long-time business partner Catalent Australia's tablet and soft-gel manufacturing facility earlier this year​, and Henfrey said that as part of the lead-up to the firm’s ownership of the site in 2019, more of its production will be moved into the facility.

He is certain Blackmores' long professional relationship with Catalent Australia would help to "make the integration period more seamless"​.

Stocks and sales

More recently, Blackmores announced its acquisition of weight management programme Impromy, which was developed in conjunction with the CSIRO (Commonwealth Scientific and Industrial Research Organisation).

Henfrey is fairly confident that the acquisition will fulfil its purpose of helping to drive sales in Australia.

"We have followed the success of Impromy since they launched in recent years because they have a great product offering, the research and support of the CSIRO, and they utilise their expertise within community pharmacies."

He further said that ethical weight management was a great opportunity for the prevention of chronic disease in Australia, adding that Blackmores plans to work with the CSIRO on more research projects on lifestyle diseases affecting Australians.

These actions are also expected to help Blackmores grow its core businesses in Australia over the next three years.

A matter of times

Another major supply chain-related problem highlighted in the company's latest financial report was the longer lead times needed to develop its natural health products, and shortening these lead times would be vital to improving sales.

However, Henfrey was keen to emphasise that though shortening lead times was undoubtedly a key focus for Blackmores (especially as the firm was shoring up its supply) quality control was equally — if not more — important.

"We won't ever compromise on our quality programme, our sourcing programme, or our preference for Australian and New Zealand manufacturers. 

"As an example, our team in May were overseeing the anchovy harvest and working with our suppliers to assure the quality and potency of our marine oils, as well as working together on furthering our sustainability programme.

"This depth of control over our supply chain is an important competitive advantage for Blackmores, and one we have no plans to change."

Related topics: East Asia, Oceania, Manufacturers

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