Asia Pacific growth offsets US’s VMS revenue decline – Centrum, Caltrate maker Haleon

09-Aug-2023 - Last updated on 09-Aug-2023 at 03:51 GMT

Haleon, maker of vitamin brand Centrum, says that its VMS revenue was down 0.5 per cent in the first six months of this year, with the decline in the US offset by growth in Asia-Pacific and Europe. ©Haleon

Haleon, the company behind vitamin brands Centrum and Caltrate, said VMS revenue was down 0.5 per cent in the first six months of this year, with a decline in the US offset by growth in Asia Pacific and Europe.

Vitamins, minerals and supplements (VMS) revenue was down to 816m euros (US$893m), as demand for immunity related products starts returning to pre-COVID levels. This was especially the case for the US, where sales were down double digits, said the London stock exchange listed company.

In Asia-Pacific and Europe, however, the VMS category was propped up by mid-single digit growth.

The VMS category saw a spike in COVID-19 as consumers sought immune support products and this has started returning to pre-pandemic levels, said CEO Brian McNamara.

Still, VMS category has always been a healthy category pre-COVID, he highlighted, and he fully expects it to remain so post-pandemic.

“We [VMS] were down 3.7 per cent in Q1 and up 2.7 per cent in Q2, so for the [first half of the] year, we were down 0.5 per cent.

“On immunity subcategory, we are seeing a bit of a change in consumer behaviour of the immunity category going back to more pre-COVID type of levels. We saw an incredibly strong demand in the base period as COVID-19 spikes came in.

“It [immunity] was a healthy category pre-COVID and we fully expect it to be a healthy category in the post-COVID, normalised period, but we do expect that in our outlook, that there will still be a drag on the VMS business as we look at the back half of the year. [But] nothing has changed in the medium-term outlook. We feel that it’s still a very good category,” said McNamara.

The category always had “good mid-single digit growth” even before the pandemic, he added.

China is one example where the VMS category has grown and was “in good shape” after the country went out of COVID-19 lockdowns in the first half of this year, he said.

Multivitamin brand Centrum and bone health brand Caltrate saw sales increased by mid-single digit in the country.

The company said this was due to new innovations that addressed gender needs.

“VMS was up mid-single digit boosted by new innovations such as upgrades to our gender range in Centrum,” said CFO Tobias Hestle.

In the recent 618 shopping festival, Centrum was the bestselling VMS on JD. This was followed by Swisse, BYHEALTH, Yangshengtang, and FANCL HealthScience.

Last year, VMS made up 51 per cent of the firm’s revenue from China, pain relief was the second biggest category, contributing 19 per cent of the revenue.

Digestive health, oral health, and respiratory health brought in 11 per cent, 10 per cent, and nine per cent of the firm’s revenue in China.

Including all portfolios, including OTC and oral care products, the firm’s organic revenue growth in China was up 23 per cent to 544m euros (US$595m) in the first six months of this year.

Last year this time, the rate of revenue growth was lower at six per cent to 453m euros (US$496m), which eventually culminated to 907m euros (US$993m) for the whole of last year.

China’s revenue growth for this year was also led by demand for respiratory and pain relief OTC products Contac and Fenbid, aside from VMS.

“During the half, China, our second largest market overall was up over 20 per cent following the easing of Covid related restrictions and subsequent rise in covid cases particularly at the start of the year,” said Hestle.

The firm sees significant opportunities for VMS and OTC products growth in China, given that per capita consumption of OTC/VMS is 24 euros (US$26) in the country.

This is way below that of US and Europe’s 141 euros (US$154) and 53 euros (US$58) respectively, the firm said, citing data from Nicholas Hall’s DB6 Consumer Healthcare Database.

Centrum and cognitive health

The company has also positioned multivitamin product Centrum Silver around cognitive health benefits in China and the US.

This was based on its clinical trial completed earlier this year which showed positive results on cognitive function of adults aged 65 and above.

The three-year trial, known as the COSMOS-Mind study, assessed the effects of multivitamin and cocoa flavonoid consumption on cognitive functioning in over 2,200 adults aged 65 and older.

“During the half, we activated this claim across a number of markets leading to double digit growth and market share gains in the multivitamin segment in the US and China,” the firm said in its financial results.

Multivitamins in India

Elsewhere in India, the company has been building its multivitamin brand Centrum by building awareness around multivitamin deficiency.

Last year, the firm launched Centrum in India through the e-commerce channel. The vegetarian range consists of Centrum Women, Centrum Men, Centrum Adults 50+, and Centrum Kids.

“Centrum remained the number one multivitamin on Amazon in India (by revenue), where 70 per cent of new Centrum consumers are also new to the multivitamin subcategory,” the firms said.

The firm also targeted younger consumers in the country to digestive health OTC product Eno through Eno Chewy Bites which was launched online in June.