Not a good fit: Blackmores CEO explains sales of TCM, oriental botanicals supplement arm
Blackmores announced yesterday that Global Therapeutics will be sold to McPherson’s – a fellow Australian firm specialising in health, wellness, and beauty for AUD$27m (US$19.3m).
Under Global Therapeutics are brands such as Fusion Health and Oriental Botanicals. The business started in 1999 and was acquired by Blackmores in 2016.
Speaking to NutraIngredients-Asia, Blackmores CEO Alastair Symington said the decision was made in order to focus on the three core brands that the firm has identified in a review back in February.
They are the same name product brand Blackmores, practitioner-only brand Bioceuticals, and the pet healthcare brand PAW.
“The conclusion was that the three core brands for us moving forward is to look at the combination of brands, markets, channels that we want to focus our efforts on.
“Global Therapeutics is a wonderful brand but when we have a look at the channel and positioning in the market, we didn't feel that that was a good strategic fit for us moving forward,” Symington said.
He added that while the product SKUs from Global Therapeutics took up about 27% of the firm’s over 1,400 SKUs, the portfolio had only contributed about 3.5% to 4% to the firm’s sales.
In FY2020, Global Therapeutics recorded a net revenue of approximately AUD$20m (US$14.3m).
A factor was a decline in the health foods channels – the key retail channel where the products were sold.
“For us, we want to focus our attention on bigger brands in more channels,” Symington said.
In the case of the Blackmores brand, the products are already sold in multiple markets, including China and South East Asia.
As for Bioceuticals, it hopes that by serving more practitioners it will benefit the complementary medicine segment as a whole.
The transaction of Global Therapeutics to McPherson’s is expected to complete on November 30.
Blackmores said in a letter to shareholders yesterday that it was encouraged by a solid start to FY21, with group net sales in the low double digits driven by strong pre-Double 11 sales in China.
“There have been strong sales to key customers in many markets ahead of our Oct 1 price increase.
“We are currently projecting first half FY21 net sales growth in the mid-single digits range compared to prior year. Both of our Asian regions will be the primary drivers of this growth,” said the company.
Aside from China, the company has also identified the halal markets as key growth drivers, namely Indonesia, Pakistan, and India.
Following the sale Global Therapeutics, Blackmores will focus on its core product lines with no plans to incorporate TCM or oriental botanicals into its more established brands.
“We want to focus our attention on the current product line that we have. Once Global Therapeutics goes to McPherson's, we still have more than 800 product lines in more than 14 markets,” Symington said.
“But certainly TCM has been around for thousands of years and any of the TCM that we get inspiration from, whether its TCM or ayurvedic medicine or any local traditional medicines, that's very much aligned to the thinking that we have around complementary medicines in general,” he added, giving the example of how TCM ingredients such as ginkgo is used the firm’s products.