While Blackmores and Swisse owner H&H have recently reported lacklustre financial results in Australia and New Zealand – with fewer products being bought by daigou shoppers to sell to consumers in China - Nature’s Care has seen “solid growth” both at home and in China, according to chief marketing officer Todd Atkinson.
This was despite some of its supply having been disrupted earlier this year after the implementation of China’s new CBEC laws on January 1.
The firm’s last filing was in mid-2018 and showed that its health foods, vitamins and supplements business brought in a revenue of US$123m (A$174.6m), up 8.2% from US$113m (A$160.3m) the previous year.
It says since then it has taken a multi-pronged approach to ensure that regulatory restrictions on one sales channel do not cause overall sales to suffer. Though it remains in third place in terms of domestic market share at 7% — with Blackmores and Swisse each holding around 20% — its steady performance is spurring internal confidence.
Atkinson told NutraIngredients-Asia that the company was being “very consumer-centric” in its China strategy, and has diversified its sales channels away from the daigou platform.
"The companies that have been heavily dependent on C2C channels are probably feeling a lot of pain right now. In contrast, while we still think C2C channels are very important and will continue to focus a lot of our efforts there, we've also shifted a lot of our focus to B2C channels, where, in our experience, growth happens very quickly.”
Presently, Nature’s Care’s products are available on major Chinese e-commerce platforms such as JD.com, Kaola, Tmall and VIP, as well as Little Red Book and Yunji, where social media influencers promote and sell the products.
Atkinson added that the firm’s channel strategy was in line with consumer preferences and its marketing plans were focusing on building awareness, and integrating these well with major B2C platforms to increase buying convenience was key to retaining consumer interest.
"If you have a strong brand that is available across channels, you can deal with regulatory changes more easily.
“At the end of the day, the consumer will look for the brands he likes, even if it means buying them through a different channel. Being available across channels places your brand in a stronger position."
Strategy after sale
In April last year, NutraIngredients-Asia reported on the sale of Nature’s Care from the Wu family to two Chinese private equity firms, JIC Investments and Tamar Alliance Fund, in a US$563.5m (A$800m) deal.
While the Wu family still own a substantial stake in the company, the sale has brought about investments in manufacturing, R&D and infrastructure as part of a shift towards a more corporate structure.
Atkinson said: "What has remained consistent (after the sale) is our investment in people and brands. We now have a new management team and experience across markets, and are investing a lot more in building our brand, as well as in consumer research, to fill our innovation pipeline."
At the same time, the firm’s Healthy Care brand, which is sold at Chemist Warehouse outlets and responsible for approximately 90% of its vitamin sales in Australia, has been growing rapidly in China.
Atkinson said the brand has been seeing at least “60% comparable year-on-year growth” across Nature’s Care’s major B2C platforms, such as Tmall and VIP.
"A lot of Chinese students and tourists are spending time in Australia, so we make sure they have a positive brand experience here that reinforces their purchasing decisions when they go home, such as by making our products available in gift stores."
He added: "We’ve just renewed our contract with our main Healthy Care brand ambassador (TV star) Sun Li, and we're working with key opinion leaders to broaden our reach across a lot of different social media channels.
“We have heavyweight media in traditional channels, as well as investment in emerging media and social channels, which drives appeal to the younger market."
The interest in younger consumers stems from their overall expenditure, which tops that of other demographics. The younger set are particularly keen on Nature’s Care’s beauty-from-within products, such as grapeseed and propolis.
Beyond that, however, the firm has also invested heavily in face-to-face consumer research.
Atkinson said, "We've just completed 125 hours of face-to-face research with consumers across Australia and China, in addition to 45 focus groups, to further understand their needs across categories.
“We've also spoken to suppliers and experts, so we've taken a 360-degree approach to gathering insight for product development."
Coleman recently told Australian media that in this regard, Nature’s Care would concentrate on several key product lines instead of being “everything to everyone”.
Choosing a ‘fewer, bigger, better’ approach, the company will focus on key trademarks and important sub-categories.
Coleman also revealed that this year, he was planning to increase the firm’s 2018 promotion and advertising expenditure of US$15.8m (A$22.4m) by over 100%.
Atkinson said that there was new product development planned for the second half of this year, but decline to disclose further details as Nature’s Care wanted to maintain confidentiality for the time being.
"We are focusing on current trends as well as emerging consumer needs as a way to prepare for the future.
“We also want to expand outside of Australia and China — we've already commenced our market entry to Hong Kong, and Singapore will follow in the second half of this year," he said.