Biocurious: EZZ’s tennis sponsorship serves up 300 million Chinese viewers

The supplement outfit’s Australian Open sponsorship exposes its brand to 300 million Chinese viewers.

Ace deal: EZZ's tennis sponsorship serves up 300 million Chinese viewers. Pic via Getty.

• EZZ last year entered a three-year Australian Open sponsorship deal covering China and Southeast Asia

• While the Chinese market continues to grow, the company is eyeing US expansion

• Recent selling has pared back EZZ’s spectacular share gains

EZZ Life Science (ASX:EZZ) had 300 million reasons to shell out for the Australian Open’s exclusive three-year marketing rights for healthcare supplements covering China and Southeast Asia.

“The Australian Open is the most watched tennis tournament in the world, way in front of the Wimbledon and the US and French Opens,” says EZZ chairman Glenn Cross.

“There’s one reason for that: 300 million Chinese watch it because we are in the same time zone.”

For that reason, EZZ hopes to hit a winner with the outlay which – while unquantified – is the company’s biggest marketing venture to date.

The spend was even enough for Tennis Australia’s marketing people to escort the Australian Open trophy to Sydney for an EZZ event, attended by more than 200 Chinese sales people (many flown in for the occasion).

Rock star moment

Cross admits he didn’t know much about tennis before the deal – he’s more of a golf nut – but he sure had first-hand experience of the Chinese marketing game.

He recalls a ‘rock star’ moment when he found 500 of China’s top influencers in the room at a launch in Guangzhou of the company’s tie-up with ecommerce platform HIC.

“It was incredible,” he said. “They were mainly women and I had my photo taken with every one of them. They were lined up for about 150 metres.”

Cross’s instant appeal may have had more to do with the traditional Chinese reverence to chairmen, rather than celebrity status.

But the encounter shows that despite the problems faced by cross-border channels in recent years, the Chinese health and wellness market is hardly fading away.

“We have not found the Chinese market difficult at all,” Cross says.

China drives 79% revenue boost

Reflecting that, EZZ boosted revenue for the year to June 2024 to $66.4 million, 79% higher.

Of that, four-fifths derived from greater China compared with 60% in the 2022-23 year.

EZZ’s biggest sellers are an anti-ageing supplement called NMN (nicotinamide nueclomonotide).

NMN is essential for cell rejuvenation, but the body produces less of it over time.

Other top sellers are a lycine (amino acid) growth dietary supplement and a bone growth chew for adolescents.

“Our sales are broad based; we sell a bit of a lot of stuff,” Cross says.

EZZ also distributes the products of local skincare group Eaoron, such as face hyaluronic acid masks.

This franchise has become less important in EZZ’s revenue mix, but remains a high-margin contributor.

Sorting the science from the snake oil

While the sector abounds with unproven claims about efficacy, Cross says  EZZ’s offerings are scientifically validated.

The products are made in Australia under good manufacturing practice (GMP) guidelines  (by contracted partners) and registered with the Therapeutic Goods Administration (TGA).

“That’s an important factor, but once you go into Asia is very important,” Cross says.

The company also recently launched a range of dairy based ‘functional food’ supplements made in New Zealand.

“A big focus on our strategy is that we developed our products in conjunction with key nutritional experts and universities (the University of Sydney and the University of Auckland)."

EZZ has released a probiotic product for helicobacter pylori and is working on a probiotic for human papilloma virus.

“We have a bit going on in R&D and we will continue to release new products,” Cross says.

“Our team in Sydney completely understands the business. I would put them up against a team in health supplements anywhere in the world.”

Clicks and mortar model

In the 2023-24 year, 92% of EZZ's revenue derived from e-commerce channels.

The company sells via Doigen, China’s equivalent of Tik Tok, Ali Baba and some new channels including Kuaishou.

EZZ also is bolstering its physical presence.

Locally, the products are stocked in chemists including Chemist Warehouse and Priceline and has signed up with some Asian pharmacy chains.

The company also has a duty-free presence at airports via Lotte.

Tackling the US$100 billion-a-year US market

While the company is aceing it in the Middle Kingdom, management recognises that having such a heavy Chinese skew presents geopolitical risks.

Given that, EZZ has just entered the US market via Amazon, with the US Food & Drug Administration approving nine of its products.

The US supplements market is worth US$100 billion a year – even more than the US$80 billion Chinese sector.

Promisingly, some key Republican figures in the new Administration are red-hot on supplements – event to the point of selling them personally.

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“We are going in cautiously. It’s the biggest market in the world but it is competitive,” Cross says.

“We will just see what happens in the US. It’s a matter of getting ourselves known and getting ourselves out there.”

Selling to 'everybody and anybody'

The company expects to expand into other Asian geographies and has looked at Europe, having sent a team to the industry’s biggest trade show (in Cannes).

EZZ also has recorded first revenue from Vietnam as well as via its Hong Kong partner Pinehills.

Cross says the company competes with “everybody and nobody”.

“We service the top end of the market. We don’t sell vitamins and multivitamins per se,” he says.

“We won’t get into the vitamins or cannabinoid business; we will stay with health supplements where we can identify a growing area with our existing science.”

An ASX 'orphan'

These days, EZZ is an ASX orphan given the takeover of vitamins giant Blackmores by Kirin Holdings in 2023 and BWX’s inglorious exit after overpaying for Zoe Blake-Foster’s Go-To business.

In the 2023-24 year EZZ managed a net profit of $6.9 million, up 92% and dispensed a full-year dividend of 3.5 cents.

“Our gross margin has stayed above 75% for a couple of years, which is a credit to our Sydney-based team in supply chain management and manufacturing,” Cross says.

EZZ's December quarter report is imminent, but the June quarter numbers should reflect the impact of the tennis sponsorship and the Chinese New Year, which starts on January 29.

Over the last year EZZ shares gained as much as 730%, but a recent tsunami of selling has pared these gains to around 270%.

The stock joined he MSCI World Micro Cap Index, effective from November 25.

EZZ is modestly valued at $130 million, with no debt and cash of $18 million (some of which may be used for a potential acquisition).

Originally published as Biocurious: EZZ’s tennis sponsorship serves up 300 million Chinese viewers