Health and Happiness records double-digit revenue growth in H1 on back of strong infant nutrition performance

27-Aug-2019 - Last updated on 27-Aug-2019 at 00:49 GMT

H&H registered 11% revenue growth in first half of 2019 ©H&H Group

Related tags H&H Group Infant nutrition swisse China Good Gout

Health and Happiness (H&H) International Holdings Ltd has reported 11% revenue growth in the first half of 2019, from its two core business – baby nutrition and care (BNC) and adult nutrition and care (ANC).

The company announced its H1 financial results, ending June 30, 2019, and said it remained confident of growth despite slowing economic growth and intense market competition.

Revenue in H1 2019 increased 11.4% to reach RMB5bn (US$720m), from RMB4.5bn (US$650m) in 2018.

The company had also announced plans to expand its product portfolio and international presence.

Baby nutrition and care

The company’s BNC segment, comprised of infant formula, probiotic supplements, and paediatric products, accounted for 64% of total revenue.

Revenue was reported at RMB3bn (US$420m) in H1 2019, an increase of 17.4% from 2018.

Within this segment, infant milk formula (IMF) contributed the most revenue at RMB2.4bn (US$335m), and growth of 14.7%.

The growth was attributable to the successful launch of Biostime organic IMF products in Australia at the beginning of 2019, and its goat formula products in China and Hong Kong.

The company has also launched several initiatives to drive consumer demand for premium BNC product categories.

For example, its MAMA100 loyalty program was launched to recruit new consumers and retained existing ones, improving repurchase rates.

Another initiative involved stepping up digital and social media marketing and professional endorsements to enhance brand awareness and word-of-mouth effect.

The company said it would continue to maintain a strong position in the super premium segments, where it sees greater potential.

The company’s paediatric product segment (RMB 270 million) grew an impressive 107.4% in H1 2019, compared to the same period last year.

This growth was largely supported by the acquisition of French organic snack company, Good Gout, to capture the fast-growing infant and kids’ healthy snacks market in China.

The probiotic supplements segment (RMB588m) grew the slowest at 6.3%, which was partially affected by new brands entering the segment.

The company said it hoped to carry out consumer education on the benefits of probiotic products so as to maintain the sustainable growth of its probiotic business.

Adult nutrition and care

H&H other core business, ANC, contributed 36% of revenue (RMB1.8bn) in H1 2019.

Compared to BNC, ANC segment recorded slower growth at 2.1%.

The company said overall performance were lower than expected, due to slower growth of the Chinese vitamin, herbal and mineral supplements (VHMS) market in Q2 2019.

However, it remains optimistic that the China Government’s ‘Healthy China 2030’ Initiative will eventually support the growth of VHMS industry.

The implementation of the new e-commerce law in China had also resulted in daigou traders destocking inventory and reducing trading, which had impacted businesses in Australia.

Australia and New Zealand (ANZ) sales decreased by 11.7%, while China active sales increased by 21.9%.

To drive consumer demand in the ANZ market, the company is working with customers to manage inventory while also engaging daigou channels with new products and marketing campaigns.

From a China perspective, the company will focus on launching several new products in H2 2019, such as Swisse’s K2 Bones and chlorophyll liquid on cross-border e-commerce platforms.

It will also transition its Swisse business from a passive sales model driven by individual daigou traders to a more manageable and sustainable active sales model in China.

In addition, H&H had also recently acquired Aurelia Probiotic Skincare and plans to launch it in China as well.