China sees greater shifts in multivitamin spending from pharmacies to e-commerce – Haleon

06-Nov-2024 - Last updated on 06-Nov-2024 at 05:03 GMT

China consumers are increasingly buying multivitamins on e-commerce platforms than from pharmacies, says Haleon. ©Getty Images

China consumers are increasingly spending on multivitamins in e-commerce than in pharmacies, says Haleon in its Q3 2024 financial results.

The company pointed out a growing preference for spending online, leading to “some weakness” in the pharmacy channel.

E-commerce now brings in about 30 per cent of the company’s revenues in China, up 13 per cent yoy in terms of organic growth.

“It’s also worth noting there has been some weakness in the multi-vitamin category in the pharmacy channel, which is being partly offset by strength in the e-comm channel,” said Tobias Hestler, CFO, at the results presentation.

China is Haleon’s second largest market after the US. The consumer health company is especially strong in China for its bone health brand Caltrate and pain relief brand Fenbid.

“We have a strong position as the number one multi-national in the country and have delivered consistent share gains resulting in attractive growth.

“This reflects the resilience of our overall portfolio, which capitalises on our local production footprint, our innovation capabilities and our strong route to market including our e-commerce business, which now makes up around 30 per cent of our revenues,” Hestler said.

Haleon’s e-commerce performance also mirrored the ongoing e-commerce boom in China.

According to China’s Ministry of Commerce, online retail sales across the country hit RMB$10.9 tr (US$1.54tr) in the first nine months of 2024, up 8.6 per cent.

Online sales of physical items hit RMB$9.1tr (US$1.28tr), up 7.9 per cent. Mobile phones, AI learning machines are some of the popular items purchased, as well as tour packages and dining.

VMS growth rate in Q3 lower

Haleon’s vitamins, minerals, and supplements (VMS) organic revenue grew 3.7 per cent to £407m (US$528m) in Q3.

The growth rate was lower than the first two quarters of this year, which reported 9.9 per cent and 8.5 per cent increase respectively.

The lower growth rate in Q3 was due to a high-base performance in the same period last year, said Hestler.

“You’ll recall that Centrum grew by 14 per cent in the US and 22 per cent in China in Q3 2023 and against those tough comparatives, Centrum sales were broadly flat with the US flat and China down…Importantly, Centrum continues to gain share in both these markets and also globally,” he said.

Bone health brand Caltrate continued to see strong growth in China, reporting double digit growth in the market.

“VMS grew 3.7 per cent, underpinned by Caltrate, which was helped by our Bone-Up programme in China which is centred around the treatment and prevention of osteoporosis.”

Multivitamin brand Centrum, on the other hand, saw revenue growth “broadly flat” in both the US and China due to exceptionally high demand in the same period last year.

Elsewhere, Centrum grew double digit in South East Asia, Taiwan, Middle East and Africa. Sales of Emergen-C, a major brand in the US, were up low single digit.

VMS growth in line with expectations

In the first nine months of 2024, Haleon achieved 7.3 per cent organic revenue growth for its VMS arm, which is said to be in line with expectations.

“The VMS category still grows around this single-digit, and we’re outperforming that. It’s very much on our long-term growth algorithm.

“And also, our nine-month selling with seven per cent is exactly where it should be growing ahead of the category,” said Hestler.

The company’s total revenue, including its oral health, respiratory health, pain relief, digestive health and other portfolios for Q3 was £2.78bn (US$3.6bn) – an organic revenue growth of 6.1 per cent.

For the first nine months of this year, its total revenue was £8.47bn (US$11bn), a 4.4 per cent organic increase.

China’s perception of health supplements

About one in five individuals in China fully agrees that consuming dietary supplements without proper advice could lead to side effects.

This is especially the case for individuals below 45 years old and married without children, with two in five (41 per cent) saying so, according to “2024 Haleon China Self Care White Paper”.

They are also more likely to bear with common mild ailments, with 40 per cent full agreeing that they can do so.

The findings also showed that young adults are more likely to proactively take actions for their health due to recommendations from family and friends.

Parents with children are more likely to take advice from healthcare professionals or physical retail stores.

Findings reported in the whitepaper came from an online study conducted by Ipsos in June.

A total of 1,008 individuals between 25 to 65 years old from China’s 161 cities – including four first tier cities, 42 second and third tier cities, and 115 fourth and fifth tier cities – took part in the survey.