The Hong-Kong headquartered company, which counts Biostime and Swisse among its brands, released its financial results for the first half of year 2023, where revenue across its adult, baby, and pet nutrition portfolios was up 17.2 per cent to RMB$6.98bn (US$972m).
Net profit also increased 28 per cent to RMB$608 million (US$84m).
In mainland China – its biggest market accounting for 72.7 per cent of its total revenue – growth was seen across adult and pet nutrition sold under the brands Swisse and Solid Gold.
Adult nutrition registered revenue growth of 55.9 per cent. Some of its best-performing supplements were across the beauty, immunity, women’s health, detox, multivitamin, thistles and heart health range.
Pet nutrition revenue, on the other hand, was up 21.9 per cent.
Its infant formula milk business shrunk 10.2 per cent in revenue to RMB$2.2bn (US$308m). This was offset by a 48.7 per cent growth in its Biostime paediatric probiotic and supplement business, which included products such as the Biostime Kids Gummies range.
Still, the company’s overall baby nutrition and care business contracted 2.1 per cent to RMB$3.11bn (US$433m)
Systemic challenges across China’s infant milk formula industry were cited as reasons for the decline. Against the backdrop, the firm said it has been focusing on its super-premium infant formula products.
“Though our BNC (baby nutrition and care) segment faced challenges, we continued to focus on the super-premium IMF market, while sustaining our ranking as the no.1 paediatric nutritional supplement brand in mainland China,” said interim CEO and chief strategy and operations officer Akash Bedi.
He added that six of Biostime’s infant formulas have passed China’s new national GB registration standards. Examples of the approved products are Biostime Pi-Star, Biostime Organic Milk (Healthy Times), and Biostime Goat Milk (Cute Betty’s Care).
One of the ‘hero’ ingredients used in the formulas is lactopontin (LPN), which has been studied for its immune health benefits.
China’s infant formula market has been facing challenges from low birth rates, macroeconomic conditions impacting retail sales, as well as increased competition driven by excess industry capacity, said competitor firm The a2 Milk Company in its FY23 full-year financial results released this month.
Nutrition supplements will remain the largest growth contributor
Moving forward, the company expects its nutritional supplements to be its largest revenue and growth contributor, with mainland China remaining its largest market bringing positive growth and stable profitability.
In the first half of this year, nutritional supplements across adult, baby, and pet nutrition made up 60.1 per cent of the group’s total revenue.
“In the first six months of 2023, Swisse, Biostime and Zesty Paws all celebrated momentous milestones. Swisse celebrated surpassing AUD$1 billion in global sales, a three-times sales increase since our acquisition in 2015, while Zesty Paws is now officially recognised as the no.1 pet supplement brand in the US, reflecting clear leadership for our core brands in their stronghold markets,” said Bedi.
While mainland China is the largest contributor to its adult nutrition revenue, revenue growth of 19.4 per cent was also seen in Australia and New Zealand. Multivitamins, detox, beauty from within8, muscle support & recovery and sleep were the top-performing categories.
As for pet nutrition, the company would seek global expansion especially in mainland China, Canada, the UK and Singapore.
“For the second half of the year, we will continue focusing on winning in core by pursuing organic growth strategies in our stronghold markets and new markets.
“Nutritional supplements will continue to be our largest revenue and growth contributor, with mainland China remaining our largest single market with positive growth and stable profitability. North America and Asia look set for faster growth with positive EBITDA,” said Bedi.