Blackmores chief ‘bullish’ about Chinese market

Since the pandemic, China has seen an exodus of many multinationals and foreign brands amid rising competition from domestic brands, a new report found. However, some international brands, such as Blackmores, are bucking the trend.

Alastair Symington is chief executive of vitamin and supplements company Blackmores

Blackmores chief executive Alastair Symington said he is still “very bullish” about growth in the Chinese market for the vitamins and supplements category, as the business continues to ride the tailwinds of local demand for premium consumer health products.

Since the pandemic, China has seen an exodus of many multinationals and foreign brands amid rising competition from domestic companies, a recent Forrester report found.

However, some international brands, such as Blackmores, are bucking the trend.

Blackmores, a 90-year-old Australian-born company, was purchased by Japanese drinks giant Kirin Holdings Co. a year ago for $1.88bn.

China currently accounts for approximately a quarter of Blackmores’ revenues and along with Southeast Asia, is a market that still represents a sizeable growth opportunity for the business, Mr Symington told The Growth Agenda.

Southeast Asia (plus China) comprises 60 per cent of the company’s revenues. Mr Symington said the market remains a priority for Blackmores, which has been operating there since 2013.

“Localisation” has been a key part of the brand’s growth in China and the region, and has formed a “foundation” from which Blackmores will continue to build, he said.

This includes localised and cross-border e-commerce sales channels and product development. Those products are then created via dedicated “innovation” centres located in China.

“The fundamental difference that we’ve developed here at Blackmores, is the fact that we do take local market insights, we do have teams based on the ground who continuously feed back that information,” Mr Symington said.

He also said that data from digital sales informs how the company develops products for Chinese consumers.

CSIRO data estimates demand for vitamins and supplements in Australia is forecast to reach $5.2bn by 2030, representing growth of approximately 3 per cent per annum. This includes both domestic demand, and export opportunities with strong demand from China for “authentic” and “safe” supplements, according to CSIRO.

“For us, China is the second largest vitamins and supplements market in the world behind the United States,” Mr Symington said.

“I would prefer to be offering products into Asia Pacific, with China as one of your key strategic choices, than trying to take on every brand in the US at this stage. Because we have a presence we’ve built over the last 10 years in China, and over the last 40 years in Asia, generally,” he said.

“We were seen as one of the most trusted and reputable brands in the region. For us, there’s still so much growth opportunity to reach more consumers. Our aim is to reach a billion consumers. We can only do that through markets like China and the markets we play in Southeast Asia.”

Embedding the Blackmores brand in the Chinese market over the past decade has been defined by three “phases”, Mr Symington said. The first six-seven years were primarily introductory, as the company had seen growth driven by demand from Chinese customers who were curious about international brands.

Mr Symington called this a “first wave” of growth, which was defined by building brand awareness via word-of-mouth, and equipping consumers with information to engage with the brand. The brand’s trusted position in the Australian market has also played a role in Blackmores’ appeal to Chinese consumers, Mr Symington said.

“There was a bit of work to be done to set up the sales channels and set up the route to market and ensure that Blackmores was top of mind for Chinese consumers,” he added.

“We’ve now entered into the second phase. (Consumers) have got a lot more information around brands and have spent a lot of time engaging and trying a lot of ­different brands. So now you’ve really got to stand on your own two feet. And this is where this localisation piece comes in.”

For Blackmores, this “localisation” includes the development of products that are specifically tailored to the Chinese market and consumers via its innovation centre. The next step, Mr Symington explained, will bring other activities to further cement Blackmores’ position in China.

“Phase three would be ensuring that the products are fit for the local market, and they can then be sold in retail stores in mainland China.

“I think the real symbol of whether or not you’ve been able to crack the local market is the fact that you’ve got both e-commerce and penetration into local retail stores in the local market, and you’re competing head on with local manufacturers.”

Blackmores’ growth in the Chinese market suggests its formula is working for the business, but Mr Symington, who regularly travels to China, said it is an ever-changing market that requires agility.

“You’ve got to keep at it. You can’t rest on your laurels. You’ve got to keep finding the next wave of opportunity that you see in a market like China.”