CBD expansion: Aussie pharma firm outlines Asia nutraceutical plans after China launch
In April this year, the company signed a deal with Chinese e-commerce import platform YuShop Global to distribute its CBD nutraceutical product line in the country; the agreement also involves YuShop providing sales, marketing, logistics and customer services for MGC in China.
The e-commerce platform — which has 1,500 retail partners in addition to its digital platform — is also in the midst of an eight-week market test campaign to gather data for a full-scale sales and marketing campaign to commence in June.
The initial launch has brought four of MGC's nutraceutical CBD products to China: CBD hemp protein powder, BCAA CBD capsules, a water-soluble CBD solution, and the CBD herbal V-Pen.
Now, the firm has also expressed its interest in expanding to Thailand, Vietnam, Japan and South Korea.
MGC, which has offices in Australia, Slovenia, Malta, the Czech Republic and the UK, consists of three divisions: pharmaceuticals, nutraceuticals and botanicals.
It sources its ingredients mainly from Germany and Slovenia, where it also has a manufacturing facility.
The importance of imports
MGC is tapping into China's consumer health market, where imported products are prized for their perceived higher quality, especially as there have been countless incidences of food fraud and counterfeit products among local brands.
Taking advantage of YuShop's target demographic of "the middle-class and affluent Chinese consumer", MGC hopes to drive growth by catering to the country's rising consumer interest in CBD supplements and a desire for innovative health products.
Market data has identified over 350 million middle-class vitamin and supplement consumers in China, with a projected expenditure of over US$20bn in the sector expected in 2020.
MGC says it is stepping up to the plate by offering quality CBD products few other manufacturers can, thanks to its pharmaceutical origins.
Speaking to NutraIngredients-Asia, Ron Lipsky, MGC's VP of business development and international relations said: "MGC is ultimately a pharmaceutical company, so our pipeline even for our nutraceutical products is very clean and pristine, and all our products and ingredients are certified and traceable.
"Everything has to be held to pharmaceutical standards, and we produce only food-grade CBD ingredients at our manufacturing facility in Slovenia."
YuShop CEO Nathan Halsey said he expected MGC's CBD products and strategy to "lead a technology-backed CBD product demand surge in China".
"Where most CBD brands today are limited to CBD oil tinctures and gel capsules, MGC Pharma's expanded line of CBD-infused protein powders, multi-purpose vitamins and nutraceuticals are not only advanced for the UK and North American markets, they are in a category of their own currently in China."
Asia-Pacific product planning
MGC intends to continue using its wealth of pharmaceutical expertise and R&D in the development of its nutraceutical products, cross-referencing across its different divisions to maximise the use of its resources.
In addition to its three pioneering divisions, it also has a cosmetics brand, MGC Derma, which has contributed to the formulation of its CBD nutraceuticals.
Lipsky said: "One of the things we started out doing was to establish a pipeline for our cosmetics arm, MGC Derma. In creating our cosmetics formulations, we learnt a lot about the solubility of cannabinoids and how they could be emulsified and so on.
"Eventually, we were able to transfer that knowledge from our Derma products — which have been very successful — to our nutraceuticals arm.
"This allowed us to create water-soluble CBD nutraceuticals that contain a high level of bioavailable cannabinoids, along with high-quality protein, vitamins and minerals."
The firm is also keen on expanding its CBD nutraceutical range, but is taking a more measured approach to NPD as it observes its market performance in China, as well as how it can incorporate certain ingredients to better cater to local tastes
"We'll have to judge whether we should expand our range as we go along. I would love to have a reason to be able to do so in China, especially with the use of Chinese medicinal herbs, which is something we've always been very interested in," said Lipsky.
Complexity of legality
As for MGC's interest in Vietnam, Thailand, Japan and South Korea, the firm has emphasised the importance of navigating the rather complex regulatory landscape before making any decisions or announcements.
Lipsky said: "There are very specific restrictions and allowances for CBD products in Japan, for instance, and the laws differ from country to country, so we need to be very familiar with these laws before we enter a market.
"We do already have relationships with distributors in Thailand and Japan, but we will have more detailed announcements in the later part of 2019."