On 24 August, Ausnutria Dairy Corporation
Ltd. (Ausnutria) announced the acquisition of Australia-based premium nutritionals
business Nutrition Care, part of Brighthope International Pty Ltd.
(Brighthope). The investment involves Nutrition Care's businesses and assets at
USD20.0 million (AUD26.4 million) and its land and production facilities in
Australia at USD3.9 million (AUD5.2 million).
Source: Baidu
Nutrition Care's founder and owner, nutritionist Professor Ian Brighthope, will
retain a 25% stake in the business and will take up a post as an advisor. "The
localised operation, the key managing team and the business model will be
retained alongside the original site,' stated Ausnutria: "Besides, we will
increase investment in R&D and will continue offering quality, high
efficacy and natural nutritionals to consumers.'
Ausnutria will take on Nutrition Care's assets which include:
-
Its accreditation with the Australian
government's TGA (= Therapeutic Goods Administration), its intellectual
property rights, clients, stocks, production facilities and buildings
-
R&D, production and OEM (= Original
Equipment Manufacturer) contracts for healthcare products, dietary supplements
and herbal formulas
-
Services and education activities related
to complementary therapy, herbal formula and healthcare products
Nutrition Care was established in the 1970s, and achieved TGA accreditation for
production and processing in 1998. It is the only premium-marketed nutritionals
brand having its own plant in Australia, with a portfolio spanning fish oil,
vitamin additives (such as Vitamin E / C / Q10) and healthcare medicines for
liver, weight reduction, beautification and detoxification.
This is a significant step by Ausnutria in
internationalising and also diversifying its business in the rapidly growing
international nutritionals market to complement its established infant formula
business.
In 2015, the company declared its aspiration to be an "internationally leading
infant formula and nutritionals supplier, and the most reliable nutritionals
& health consultant to consumers', so the deal is not a surprise,
especially since it was known to be in preparation since June.
It comes on the back of Ausnutria's strong H1 figures, with YoY rises of 37.1%
and 150.7% in sales and net profit respectively (please see Ausnutria: Sales to
Rise by 37% in H1 on P6 Dairy Products China News August 2016).
"Our infant formula business performed well in H1,' stated Yan Weibin,
Ausnutria's Executive Director; "If we have Nutrition Care's certified
production facilities, its rich product mix and its professionals' knowhow, our
nutritionals business will also develop well.'
Ausnutria's financial performance, H1
2012-H1 2016
|
Item
|
H1 2012
|
H1 2013
|
H1 2014
|
H1 2015
|
H1 2016
|
|
Sales, million USD
|
107.0
|
119.4
|
140.3
|
136.6
|
187.3
|
|
YoY change
|
N/A
|
+11.6%
|
+17.5%
|
-2.6%
|
+37.1%
|
|
Net profit, million USD
|
9.8
|
9.4
|
8.0
|
6.1
|
15.2
|
|
YoY change
|
N/A
|
-4.0%
|
-14.7%
|
-24.3%
|
+150.6%
|
Source: Ausnutria Dairy Corporation Ltd.
Ausnutria is not the only Chinese company
pushing into the international nutritionals market. For instance:
-
September 2015 – Biostime International
Holdings Limited (Biostime) spent USD989.8 million (HKD7.7 billion, USD/HKD
exchange rate @ 7.7552 on 5 September, 2016, sourced on hexun.com) acquiring
83% of shares in Swisse, outbidding Chinese private equity firm Hony Capital
and drug manufacturer Shanghai Pharma to take over the Australian healthcare
brand which had developed strong sales in China on Tmall and Taobao (and of
course Biostime actually began in infant supplements before moving into infant
formula)
-
June 2016 – New Hope Group acquired
Australian NaturalCare Pty Ltd.
-
August 2016 – Shanghai Pharmaceutical
Holding Co., Ltd. noted its decision to acquire a 60% stake in Australian
Vitaco Holdings Limited at USD140.5 million (RMB938 million), a process
still underway
Biostime's financial report shows that its nutritionals business has been a key
contributor - the sales of its adult nutritional and nursing products were up
by 34.9% YoY to USD193.7 million (RMB1.3 billion), making up about 43% of its
sales mix, and the company almost doubled its net profit for the period - the
company attributed this rise to the acquisition of Swisse.
Ausnutria will be looking to emulate such performance, but success is not a
given:
1. Swisse is a brand which had already become well recognised by Chinese
consumers – not all acquisitions of foreign nutritionals brands will bring the
same results.
2. China's healthcare market is marked by increasingly fierce competition, with
many overseas brands entering. Moreover, the Administrative Measures for
Healthcare Food Registration and Filing which was implemented on 1 July, lowers
the threshold for market entry (A new system of dual-regulation
–"registration + documentation" – has been introduced to the domestic
health food market, replacing the previous registration system. The
documentation mechanism is a particular highlight of the reforms.
After receiving dossiers from applicants, the food and drug administrative
departments make a record of those which immediately meet requirements,
issue documentation certificates for them and make documentation publicly
available on official websites. The new registration procedure is also
simpler than previous ones, saving companies' time. The implementation of
such policies could well persuade some pharmaceutical enterprises to enter the
health food industry, intensifying competition as a result).
3. Currently, foreign brands are mainly marketed online. Given stricter
controls on cross-border E-commerce business, this type of business will increasingly
be under scrutiny.
4. This is a fast-changing category where the constant evolution in consumers'
preferences and who those consumers actually are provides an ongoing challenge:
for instance, in the past, the elderly population constituted the main
consumers of healthcare products in China, but now sports nutrition
and beauty-maintenance products have become increasingly popular amongst
the young crowd.
This article comes from Dairy Products China News 1609, CCM
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Tag: Dairy