It achieved revenue of RMB$6.09bn (US$936m) last year, up 15.83 per cent yoy, with most of it coming from offline retail.
Net profit attributable to shareholders also turned into the positives at RMB$1.52bn (US$234m), a jump of 528.29 per cent.
The company said profit dipped in the year before due to the acquisition of Australia’s LifeSpace Group.
Otherwise, without taking into consideration of the acquisition, the growth rate of net profit to shareholders was 45.71 per cent between 2019 and last year.
Operating revenue has been increasing successively each quarter and peaked in Q3 last year at RMB$1.9bn (US$293m). Revenue started to decline in Q4, when revenue dropped to RMB$1.06bn (US$163m).
This is because while COVID-19 affected production and marketing in Q1, its activities began to pick up in Q2 as the pandemic was brought under control.
In its statement, the company said it believes that it is crucial to revitalise itself and keep up to the needs of the younger demographic – identified as those born after 1995.
“In the future, China’s VDS market will develop towards two extremes. One direction is towards health foods with strong functionalities, the second is trending towards foods/snacks with light functionalities, fast-moving consumer goods,” the company said.
Since VDS can neither replace a normal diet nor serve as a treatment or preventive measure against diseases, BY-HEALTH foresees that the VDS industry players will compete based on their R&D and technology capabilities.
At the other end of the spectrum, health foods with light functionalities, those that come in the form of snacks and FMCG will see a huge room for growth. There are already examples of success stories from this segment, such as protein bar brand ffit8 which has since expanded into the probiotic powder category.
As of end 2020, the company had received filing approvals for 112 health foods and registration approvals for 142 health foods, of which, 20 registration and 24 filing approvals were received last year.
Examples of products which have gained registration approval, also known as ‘blue-hat’ products, include LifeSpace’s probiotic powder, BY-HEALTH’s spirulina and selenium tablet, and products from the company’s other brands, such as Naturone’s ginseng capsule, Gymslim’s algae oil and flaxseed oil soft gel capsules.
New patents
Last year, the company received 59 new patents, amounting to a total of 255 patents.
Some new additions include 1) a spirulina compound 2) a type of protein powder and the ways to produce it 3) an active ingredient extracted from vaccinium vitis-idaea¸ also known as lingonberry and 4) an active ingredient extracted from grape seeds.
The company’s research team also published 50 papers in scientific journals, with most of them published in local publications, while less than 10 were published in international journals, such as the European Journal of Nutrition, Bioscience Biotechnology Biochemistry, and Food and Function.
Brand performance in FY2020
The company’s flagship brand, also known as BY-HEALTH, brought in revenue of RMB$3.57bn (approx. US$549m), up 11.41 per cent, in FY2020.
Joint care brand Keylid, on the other hand, recorded a yoy revenue growth of 10.37 per cent to RMB$13.1bn (US$2.01bn).
Acquired Australian brand LifeSpace brought in revenue of RMB$132m (US$20.2m) within the China market. Outside of China, LifeSpace reaped revenue of RMB$567m (US$87m), growing by 23.94 per cent.
Citing statistics from Euromonitor, the company said China’s VDS market was worth RMB$174.3bn (US$26bn) last year, up by 4 per cent.
Last year, the company occupied the lion share of 10.3 per cent in China’s VDS market. Direct-sellers Infinitus and Amway were the other two leading players, according to Euromonitor’s report last November.
The company believes that there are still plenty of opportunities to develop China’s VDS market, since it started later as compared to the US, Japan, and other advanced economies.
While over 70 per cent of its revenue came from offline retail, the rate of revenue growth was faster in the online channels.
The growth rate in online channels was 62.77 per cent, while that of offline channels grew 1.44 per cent. In brick-and-mortar pharmacies, its sales revenue grew at 2.6 per cent.
The company said net profit attributable to shareholders was expected to grow 35% to 55% in FY2021 Q1 as compared to the same period last year.
Tablets, powder, then capsules
Tablet-type health foods were the most popular for the company last year, bringing in revenue and profit of RMB$2.29bn (US$352.9m) and RMB$1.67bn (US$257m) respectively.
However, those in capsules form had a larger revenue growth at 15.74 per cent, as compared to powder at 15.57 per cent and tablets at 11.41 per cent.
Capsules also recorded a higher yoy net profit growth at 1.31 per cent, while that of tablets dropped 3.34 per cent and powder declined further at 6.81 per cent.