Super-premium: Swisse outpaces industry growth in China, ANZ, and taps top-end segment for future boom
Swisse’s parent company, Health and Happiness (H&H Group), highlighted the above in its annual financial report released on March 21.
The company reported growth across its revenue, gross profit, and net profit, which were all up 10.6 per cent to RMB$12.76bn (US$1.86bn), 6.3 per cent to RMB$7.7bn (US$1.12bn), and 20.3 per cent to RMB$611.78m (US$88.9m) respectively.
Of which, its Adult and Nutrition Care (ANC) portfolio, which Swisse is a part of, saw revenue went up by 12.5 per cent to RMB$4.56bn (US$662.61m).
Across its key markets in China, Australia, and New Zealand, the brand is said to have outpaced industry growth.
Citing data from Earlydata, the firm said Swisse’ online market share in the vitamin, herbal, mineral supplements category was up from 6.6 per cent to 7.5 per cent last year. In the normal trade channel, it was placed number four with a market share of two per cent.
The firm said that growth was led by the introduction of more ‘blue-hat’ SKUs and innovative categories.
“Swisse outpaced all other players in the category in mainland China, delivering double-digit revenue growth as well as profitability improvement throughout the year, underpinned by growth in both online and offline channels…”
By year end, it hopes to achieve double-digit growth in the normal trade channel, and it will tap on the Swisse Plus + range to further premiumise Swisse’s product portfolio in mainland China.
Elsewhere in Australia and New Zealand, the firm said Swisse had also outpaced industry wide growth, with retail scan sales up by 12.9 per cent versus the 7.4 per cent industry wide growth, citing data from IQVIA. It is now the second-largest player in the VMHS space in the region.
“The growth was fuelled by increasing demand for immune and wellness products, including new products led by the launch of the highly acclaimed Swisse Collagen + Hyaluronic Acid Booster, which has quickly become the No. 1 beauty innovation in the market,” said interim CEO Akash Bedi.
The launch of Swisse gummies was also said to be instrumental in driving market share growth, especially in ANZ, while its Swisse Me functional food range was popular among Gen Z consumers.
Channel wise, the bulk of the revenue (69.4 per cent) came from retail, while 30.6 per cent came from the corporate daigou channel. Revenue growth in the retail and corporate daigou channel was up 6.2 per cent and 12 per cent respectively.
Within SEA, the firm is leading in the beauty VHMS market in Singapore, based on data from Nielsen.
In newer markets such as Vietnam, Thailand, India, and Malaysia, it has grown in both offline and online channels.
“We expect overall contributions from these markets will continue to increase as we gain scale and win further market share,” the firm said.
Super-premium infant formula will be more resilient
Against the backdrop of a more competitive infant formula market in China, the company believes that the ‘super-premium’ category will be more resilient to the country’s declining birth rate and more intensive competition.
H&H Group sells infant formula marketed under the brand Biostime, which is part of its Baby Nutrition and Care (BNC) portfolio.
Citing data from Nielsen, the firm said its super-premium formula series had outperformed the market performance of negative 2.1 per cent growth. As a result, the firm’s market share was up from 11.7 per cent to 12.1 per cent in China.
Last year, the firm’s BNC revenue hit RMB$5.18bn (US$752.82m).
Of which, RMB$5.02bn (US$723m) came from China, with the rest coming from ANZ RMB$30.37m (US$4.41m) and other locations at RMB$126.72m (US$18.42m).
Growth in China was achieved by strengthening brand awareness, consumer education activities to reach out to more consumers in online and offline channels, deepen penetration in lower-tier cities and counties where the majority of births were taking place in the country.
The firm believes that the super-premium category will be more resilient to market competition and will continue to focus on this category.
“Market headwinds will remain acute, but we intend to further stabilise our IMF business by continuing to grow in the super-premium category and to gain market shares in 2023,” said the firm.
In terms of the new GB registration, the firm had submitted applications for eight of its products. Last month, it had already received approval for Biostime Alpha Star IMF series.
Elsewhere in France, it retained the top spot in the organic infant formula category and also took the number one place in the goat milk market category in pharmacies, with market shares of 41.7 per cent and 41.5 per cent respectively, it said, citing data from research company GERS.
“In our BNC segment, stabilisation, premiumisation and category leadership are our main priorities. This includes continuing to win in mainland China and France, where we are already leading categories while growing in other key markets such as ANZ, Hong Kong SAR and Vietnam,” the firm said in its annual report.
Probiotics rebound in demand
The firm is also seeing a rebound in demand for probiotics in China.
Revenue from its Biostime probiotic supplements grew from RMB$964.42m (US$140.16m) to RMB$1.09bn (US$158.06m) last year.
China alone accounted RMB$1.08bn (US$156.83m).
Some of the new probiotics launched in Mainland China last year was probiotics with lactoferrin.
This year, there will be a strategic focus on the probiotic market in Hong Kong, as well as its other supplement categories, including DHA, calcium, and gummies.
US the 3rd largest market with pet nutrition growth
Pet nutrition has become the firm’s fastest growing revenue driver, with revenue almost doubled to RMB$1.53bn (US$222.29m).
Much of the revenue came from North America at RMB$1.19bn (US$173.33m), and the region is now H&H Group’s third-largest market.
“North America has become a significant source of growth for our Group and is now our third largest market, largely due to the success of our PNC (Pet Nutrition and Care) segment,” said Bedi.
Citing data from Stackline, the firm said that the brand Zesty Paws has become the number one pet supplement brand in US’ e-commerce channel with 11.5 per cent market share, with a yoy growth of 26.3 per cent in revenue.
Zesty Paws and its other pet nutrition brand Solid Gold are present in more than 7,700 stores and 3,400 stores across the US respectively, including major chains such as Walmart, Target, PetSmart and independent pet stores.
In China, pet nutrition brought in revenue of 335,764,000 and the brand Solid Gold has become the second-largest player in the premium cat food market in China, according to SmartPath.
“In both mainland China and North America, we are continuing to see strong and durable pet nutrition premiumisation and pet humanisation trends. We are working hard to fully capitalise on this, focusing on the premium pet food category with the launch of the NutrientBoost range and functional treats and toppers,” said the firm.
