Domestic strife: Blackmores forecasts weak Australian market into 2022 as borders stay shut

By Tingmin Koe contact

- Last updated on GMT

Blackmores has forecasted a weak domestic supplement market over the next year due to lower sales from Chinese travellers. ©Getty Images
Blackmores has forecasted a weak domestic supplement market over the next year due to lower sales from Chinese travellers. ©Getty Images

Related tags: Blackmores, COVID-19, Australia, retail channels

Blackmores has forecasted a weak domestic supplement market over the next year due to lower sales from Chinese travellers and a milder cold and flu season, but has nevertheless highlighted a number of strategies to mitigate the slowdown.

Blackmores held its shareholder briefing last week, where CEO Alastair Symington provided market demand forecast, strategies, and new product launches. 

The lack of international travellers and students have led to a reduction in domestic retail, Symington pointed out.

“These export sales are…now less than 10 per cent of the category.

“Borders are likely to remain closed till 2022, so we don’t see this to change in the next 12-18 months.

“We are forecasting that channel to be below 10 per cent and in some instances, in high single digits either next 12 to 18 months.

“Over the next 18 months, while there is uncertainty around border closures and a vaccine roll-out, I don’t believe our industry will be able to make up for almost 200 million dollar worth of retail sales per brand that has been lost due to the absence of Chinese shoppers in ANZ,” ​he said.  

He pointed out that many domestic retailers have turned to major discounts to attract consumption from the locals.

“With the borders closed, we don’t see any travellers. International students have left Australia and are not returning, we have seen the situation worsened since Chinese New Year.

“The biggest impact is the reduction in the total number of gift stores in Australia, with almost 50 per cent shutting down over the past three months. 

“This has impacted all the retailers, as foot traffic from all these lucrative shoppers has dropped and as a consequence, there has been an increase in the number of big discount promotion in the market, as retailers and brands try to drive switching with the remaining local shoppers.”

However, for the supplement industry, sales for cold and flu related products would take a further hit, due to reduced demand from previous panic buying and decline in cold and flu cases.

“Some of these channels still have products in them, and this has impacted key immunity products, including BioCeuticals Armaforce.

“The cough and cold segment will be affected for quite some time, it will take a long time to recover, [as] consumers continue to be very hygiene conscious and have adjusted their behaviour accordingly,”​ Symington said.

New launches

The company said it would focus on its same name brand Blackmores, BioCeuticals, and PAW to target consumers, practitioners, and vets respectively for growth.

In terms of BioCeuticals, Symington said the company would be launching Armaforce Protect in the middle of Australia’s winter.

The product contains Wellmune, from Kerry, a natural yeast beta glucan that helps to promote immune defence.

“It’s a product being designed for consumers to prevent themselves from getting sick or are actively protecting their immunity in the lead up to cold and flu.

“It contains Wellmune, which prevents cold and flu and upper respiratory tract infections and promotes immune defence,” ​he said.

As for Blackmores, the company had launched Run Down Rescue in end March. It is described as a multi-action formula that relieves tiredness, supports energy levels and immune system health.

The tablet formulation contains vitamin C, selenium, zinc, reishi mushroom, and astragalus. The company forecasted that there would be 2,000 distribution points for this product by June.

For PAW, the company is launching a mini chew range for smaller size dogs. Four products will be launched in the first half of next year in Australia and the company expects to see more growth from the brand.

Market reach

The company plans to reach one billion consumers by 2025, Symington said, highlighting the importance of the APAC markets.

“We know that this region will lead the growth moving forward out of COVID-19. Consumers are investing more in their personal health and wellbeing and we see high household penetration and improvements in many markets across Asia,” ​he said.

Indonesia, for instance, is one of the key revenue drivers for the company, aside from China and the domestic Australia market, the company said in its FY2021 half year report​ earlier in February.

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