From daigou to e-commerce: COVID-19 quickens channel change as Nuchev boosts CBEC efforts
The company has thus launched a capital drive to strengthen its cross-border e-commerce (CBEC) standing in China.
The goat infant formula specialist has announced its intention to raise AUD$15m (US$10.7m).
“The daigou sales channel has been shrinking and COVID-19 has just speed up the transition to e-commerce,” CEO Ben Dingle told NutraIngredients-Asia.
The daigou channel has declined in influence since there was minimal international travel due to movement restrictions to contain COVID-19.
“The Chinese mums are now thinking, why should I wait for say two weeks for the daigous to bring back the food for my babies when I can just buy them online…Daigous are still important, but they are declining in influence,” he added.
Its flagship brand “Oli6” consists of goat milk formula for infant to children up till seven years old. There is also another formula catered for the adults.
In the last quarter of FY20, its sales volumes and net revenue were up 28% and 25% respectively as compared to the previous corresponding period, which it said was “mainly driven by strong growth in the CBEC channel.”
In the CBEC space, it said that the growth of “Oli6” had outperformed the goat infant formula category in three key Alibaba platforms, namely Tmall, Tmall Global, and Taobao.
Aside from e-commerce, Dingle said the firm would also engage social commerce – which is a fast-growing channel in China.
The company recently appointed Chinese celebrity Michelle Bai as a KOL on its Little Red Book campaign and is also partnering e-commerce channels such as Yunji.
Other than strengthening CBEC, the funds raised would also be used in areas such as marketing and brand positioning.
According to a Frost & Sullivan report released last October, the global goat infant formula is forecasted to grow at an estimated CAGR of 16.6% to AUD$13.6bn (US$9.7bn) by 2023, predominantly driven by the Chinese market.
The other popular goat-milk infant and toddler formula brands on China’s CBEC included Bubs Australia, Kabrita from Ausnutria Group, Danone Nutricia’s Karicare, and Karihome.
Vietnam market test drive
The company is also currently on a market test drive in in major Vietnamese cities Ho Chi Minh and Hanoi.
While there was also demand for goat infant formula in places such as Malaysia, Singapore, Hong Kong, and even the Middle East, the firm had decided to focus its test drive on Vietnam.
“There is no shortage in demand, but we chose Vietnam because we want to stay focus and there is a good demographics…It was a lot like how China was,” Dingle said.
Back in Australia, “Oli6” achieved the largest market share increase in the goat infant formula space over the last quarter.
By the end of Q4, the market volume share of “Oli6” had grown to 24%, almost one-quarter of the entire goat infant formula market.
Aside from Australia and China, “Oli6” is also selling in New Zealand via Chemist Warehouse.