H&H CEO interview: Baby nutrition boom, Swisse’s expansion surge and COVID-19 contingency planning revealed
Laetitia Garnier spoke to us after the firm saw its FY19 revenue increase by 7.8% to reach RMB10,925 million (USD 1,566 million), mostly led by its strong performance in its baby nutrition and care segment.
The company released its FY19 financial report on March 23, stating that the group managed to show continued growth despite the slowing global economy.
Net profit also grew by 19.2% to hit RMB1,005 million (USD144 million).
The group has two core business segments, baby nutrition and care (BNC) which includes brands such as Biostime, Healthy Times, Good Gout, and its adult nutrition and care (ANC) with brands including Swisse.
Global revenue for FY19 for its BNC business segment reached RMB 6,933.8 million (USD 993.9 million), increasing 17.8% compared to the previous year.
In particular, the group’s core infant milk formula (IMF) category held a solid position in the premium and super premium segment in China, recording a 12.5% increase year-on-year.
Commenting on the strong performance, Garnier told NutraIngredients-Asia: “In China, we can see the premium and super premium segments were still growing in a double digit, and our Biostime IMF maintained a strong market position in this area.”
Garnier added that “The Group’s Healthy Times IMF series also outperformed the wider organic IMF market with sales growing 33.8%, accounting for 5.6% of overall IMF revenue.”
Biostime is also rapidly expanding its presence in Australia, China, France. It launched a new goat milk IMF series (‘Cute Betty’s’) in China, Hong Kong, Australia and cross-border e-commerce (CBEC) platforms.
Garnier told us: “Despite only launching in the China normal trade market in the final quarter of 2019 (having already launched in Hong Kong, CBEC platforms and the ANZ market earlier in the year), the new goat milk IMF series posted revenue of RMB146.5 million (USD21 million) and accounted for 2.9% of the group’s total IMF business.”
Biostime’s revenues in its probiotic segment also grew 20.1% to RMB1,255 million (USD179.9 million). The brand introduced new probiotic liquid drops and a probiotic HMO in several markets.
Good Gout, a French organic children snacks brand, achieved revenue growth of 175.2% compared to the previous year, driven by its expansion in the Chinese online and offline markets.
H&H Group’s innovation arm, NewH2, recently acquired a minority stake in Else Nutrition, a plant-based infant formula that will begin distribution in China, Hong Kong, Australia, France and Italy this year.
Meanwhile, H&H’s ANC business reached AUD832.3 million in revenue (USD 572.1 million), a decrease of 3.1% compared to the previous year.
According to the company, the sales decline in the ANZ market was attributed to new e-commerce regulations in China last year, which affected daigou traders who destocked inventory and reduced trading.
In response to this, the company is working with its distributors and retail partners to drive further consumer demand, while also focusing on the introduction of new products that will drive incremental growth in the ANZ market.
In an official statement, the company stated: “We have been proactive in the shift towards China active sales in line with the group's earlier strategy of transitioning the business from a passive sales model driven by individual daigou traders, to more sustainable active sales by forging partnerships with major CBEC platforms.”
Garnier told us: “Our revenues in China grew 29.7% in 2019. Our revenue split for online sales and offline sales in mainland China was approximately 89.3% and 10.7% respectively. Our China offline sales business grew 52.3%, with Swisse products available for sale in 22,369 offline retail stores by the end of the year.”
Its Swisse brand is expanding aggressively into new markets this year, including India, Malaysia and Indonesia. Garnier said: “India has the world’s largest millennial population, who are very discerning consumers. Swisse will follow a digital and ecommerce first strategy in India, launching initially on Amazon, Nykaa, Flipkart, Pharmeasy, Healthkart, Snapdeal, Netmeds, 1mg, Myntra and HealthXp.”
With the coronavirus outbreak slowing no signs of slowing, Garnier explained the company had took action to ensure stable supplies to consumers worldwide.
She said: “The Group’s supply chain for its BNC and ANC segment are so far on track and our key partner manufacturers are operating with limited disruption. However, we have identified potential risk in the supply of raw materials and logistics, and we will close monitor how the situation evolves in the coming days and weeks.”
The company is also seeing a strong increase in demand for probiotic supplements and immune-related products globally.
“We have started 2020 in a somewhat surreal situation, and one that is rapidly changing, I am pleased to report that our own approach is evolving and the adaptations we are making will help us to remain strong and to bring our nutrition and wellbeing products to consumers during this period of heightened focus on health,” Garnier added.