‘2023 best time to reposition’: BYHEALTH reveals strategies to tap into China’s new growth areas

By Tingmin Koe

- Last updated on GMT

BYHEALTH's range of multivitamins for men and women.
BYHEALTH's range of multivitamins for men and women.

Related tags ByHealth

China dietary supplement giant BYHEALTH believes that 2023 could be the “best timing” to reposition its business develop new strategies to succeed in the post-COVID era.

The Shenzhen Stock exchange company released its year 2022 annual report on last Saturday (March 18).

Operating revenue was up 5.79 per cent yoy to RMB$7.86 bn (US$1.14bn).  

However, net profit attributable to shareholders was down 20.99 per cent to US$1.39bn (RMB$201.47m).

Keylid, its joint health brand, reported a yoy 14.09 per cent drop in revenue to RMB$1.2bn (US$174.19m). Its flagship product, BYHEALTH protein powder, saw its revenue maintained at RMB$4.45bn (US$645.95m).

Life-Space, an Australian brand which it had acquired, saw its revenue went up 64.42 per cent to RMB$303m (US$43.98m) in China. 

The company believes that year 2023 is the when the nutraceutical industry would enter a new phase of development.

“Year 2023 is the first year when the VDS sector enters into a new phase post COVID-19. Looking into the next five years or even longer, year 2023 could be the best timing for re-positioning [ourselves],” ​chairman Liang Yunchao said in the firm’s annual report.

The firm has set up two goals as it enters the new phase, namely increasing the purchase rate of its products and expanding its market shares in all sales channels.

Citing data from Euromonitor, the firm said that BYHEALTH enjoyed a market share of 10.3 per cent and ranked first in China’s vitamin and dietary supplement sector, which has a market size of RMB$200bn (US$29bn).

Last year, the average spending on vitamin and dietary supplements was US$22 per person in China, up five per cent.

The firm said this amount was slightly higher than the global average but was only one-fifth of the US.

It added that most purchase of supplements (46 per cent) were made online, followed by direct-selling at 26 per cent, pharmacies at 20 per cent, modern supermarkets at two per cent, and other channels at seven per cent.

Last year, BYHEALTH’s revenue from the domestic online and offline sales had dropped 9.64 per cent yoy to RMB$1.20 bn (US$174.19m) and 3.71 per cent yoy to RMB$4.09bn (US$594.23m)

Gross margin, however, was up 6.21 percentage points and 0.03 percentage points respectively.

Overseas, revenue was up 28.41 per cent to RMB$666.29m (US$96.86m). However, gross margin down 0.28 percentage points.

As the firm enters the new phase, Liang warned against mediocre growth, such as growing at a rate slower than the wider industry and the competitors, as well as reaping higher revenues but declining in profit, gross margin, operating margin, and cash flow etc.

Opportunities for growth ​ 

BYHEALTH has identified a number of growth opportunities in the areas of ageing, meeting the needs of younger consumers, as well as new product dosage formats.

Citing statistics from the National Health Commission (NHC), the company pointed out that the country was ageing at a rapid rate, which offers huge growth opportunities for the nutraceutical sector.

By year 2025, the country’s population of seniors aged 60 and above would exceed 300 million, which would be over 20 per cent of the country’s overall population.

By year 2035, this group of population would exceed 400 million, exceeding 30 per cent of the country’s overall population, and this is when the country enters the “severely ageing stage (重度老龄化阶段).”

By year 2050, one in three persons in China would be aged 65 and above. By that time, the life expectancy for men would be 81.5 years old and women at 86.5 years old.

Aside from the ageing population, the company is also seeing opportunities in the younger, “new-gen” consumers.

“As lifestyle changes and health awareness increases, the age range of VDS consumers would continue to expand. The rise of the ‘new-gen’ consumers, together with changes in consumers’ mindset would effectively increase the overall need of the VDS market,”​ the firm said in the report.

Also, as consumption patterns increase in variety, the VDS sector is expected to see further segmentation and more scientifically backed products. The dosage formats of health foods are also expected to steer towards the format of functional foods.

These trends would speed up the segmentation of the VDS sector.

Furthermore, with the authorities exerted stricter regulatory control on the industry, the firm believes that this will boost consumers’ faith and demand for health supplements, which will benefit the sector in the long run.

Strategies for growth

BYHEALTH is eyeing the ‘blue-ocean’ markets, referring to novel health supplements categories, while securing its position in the ‘red-ocean’ market, referring to the already established categories.

For example, it aims to drive new research in the areas of anti-ageing, precision nutrition, and homeostatic health.

In the area of personalised nutrition, it is working with Hangzhou Institute for Advanced Study (UCAS) in setting up a precision nutrition R&D centre, as well as Shanghai Institute of Nutrition and Health (CAS) in setting up a scientific nutrition research centre.

The company has also published a series of studies on nicotinamide adenine dinucleotide (NAD+) as part of its personalised nutrition research endeavours last year. Some findings yielded include how NAD+ loss is more significant in middle-aged men than women​, and how low NAD+ levels are associated with anaemia in women.

On the other hand, it has developed new ingredients such as glycosaminoglycan (GAGs) – a novel form of collagen peptide,

and Lacticaseibacillus paracasei​ LPB27 isolated from the gut of healthy China infants. The strain is used for new product development under the Life-Space brand.

It has also published scientific findings on the effects of Fruitflow​ – a water-soluble tomato extract in decreasing platelet aggregation.

Overseas expansion  

This year, the company would focus on overseas expansion in the South East Asia region.

This would include entering the mainstream cross-border e-commerce platform, distributor partnership, and setting up subsidiary firms to localise operations in the region.

Apart from China, BYHEALTH’s products are already sold in​ Singapore, Hong Kong, Australia.

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