The less competition there is, the more opportunities there are, and this could very well be said of Cambodia’s health supplements market.
The South East Asian country, surrounded by Thailand, Vietnam, and Laos, is often overlooked when discussing business opportunities for health and nutrition companies.
Talk about consumers’ spending power, Singapore usually comes to mind first.
Talk about potential for untapped opportunities, Vietnam has climbed to the top of the list in recent years.
Thailand and Malaysia, on the other hand, remain popular options for companies cracking the region.
Aside from exports, there are also a flurry of activities coming from homegrown brands in these two countries.
In Thailand, there is the trend of conglomerates adding health supplements into their portfolio, with Major Development Public Company Limited being one of the latest to do so. It showcased a series of products designed for middle-aged consumers under the brand HealthScape at this year’s Vitafoods Asia.
Malaysia, on the other hand, has major pharmaceutical companies like Duopharma active in the nutraceutical space, as well as firms specialising in local botanicals.
Incontech and Australia Healthy Vitality, however, are some of the few industry players that have expressed confidence in Cambodia’s market potential.
This is despite its lower purchasing power as compared to other South East Asian countries and challenges around product distribution.
Its allure, ironically, lies in its lack of development.
Lesser brands operating in the market means fewer options for consumers, and ultimately lower market competition.
“Emerging markets are where all the opportunities are and emerging markets are where we can educate the consumers from young, which is what we are very good at,” said Cachino Thong, founder and managing director of Incontech.
The Singapore-headquartered company is best known for its PN brands of health supplements, especially PNKids – a line of functional pectin-based gummies for children which it is also selling in Cambodia.
To Australian Health Vitality, Cambodia is an example of a misunderstood and as a result, overlooked market.
“Spending power is obviously very strong in countries like Australia and Singapore. But where you have big spending power, you also have plenty of options – with lots of, lots of, lots of brands competing for the dollars,” said Jimmy Seervai, director at Australian Health Vitality.
“When you look at countries which are the new markets, the spending power is there, because a lot of people just overlook the markets.”
The company’s flagship brand, Haircarebear, is present in Cambodia via about 300 mum-and-pop stores.
This series of VitamINSIGHTS seeks to bring you closer on what’s happening on the ground in Cambodia’s health supplements market, consumers trends, and challenges through the lens of Incontech and Australian Health Vitality.
Cambodia’s market gaps and opportunities
PNKids started in Singapore. Today, it is present in eight countries, including Cambodia where it made its debut about two years ago.
As of February 2024, the products are available in about 2,000 retail outlets ranging from pharmacy chains to independent outfits.
Examples of pharmacies selling its products include Ucare Pharmacy, Herbal Plus Pharmacy, Lykong Supermarket, Iron Wellness Pharmacy, and Legit Pharmacies.
A main reason for going into Cambodia is to leverage on the market vacuum for health supplements as well as to capture growth opportunities driven by the growing middle and upper class.
“We are in Cambodia because it is an emerging market, and there is a growing number of middle class and upper-class families, which means better education (on health supplements),” said Thong, adding that the opportunity came after a business partner approached the firm.
Cambodia has a population of slightly over 17 million as of year 2023, with 48.9 per cent males and 51.1 per cent females, according to data from the Cambodia’s National Institute of Statistics.
This year, Cambodia’s imports of nondurable consumer goods, including food, has picked up from last year’s reduced spending following COVID-19 related consumer spending boom in 2022.
Foodstuff imports, in this case, went up by 6.1 per cent in the first quarter of this year, said the report titled “Cambodia Economic Update” dated June 2024 by the World Bank.
“During the first quarter of 2024, top ticket items of imported nondurable consumer goods, which include diesel, electronics, gasoline, foodstuff, garments, and soft drinks, expanded by 17.1 percent, 42.5 percent, 28.7 percent, 6.1 percent, 8.4 percent, and 26.9 percent, respectively,” said the report.
While Incontech has a variety of supplements for kids and adults, it has so far introduced only its kids supplements in Cambodia.
The bestsellers in Cambodia so far are its PNKids Super Vision, Super Brain, and multivitamins.
Eye health products are in demand because the target audience – children from the upper-middle class – spend a good amount of time on their own digital devices, a habit common in kids living in developed countries, said Thong.
Both PNKids Super Vision and Super Brain cost US$18.95 for a bottle of 30 gummies on Ucare Pharmacy. A bottle of its multivitamins is priced lower at US$14.95.
The lack of competing products in Cambodia could also be due to difficulties in getting product registrations – a process which could take six months to a year, said Thong.
In comparison, he said that there was “ease of entry” into Singapore since health supplements were not subjected to approvals and licensing by the regulator for their importation, manufacture, and sales.
The 2023 Enterprise Surveys by the World Bank showed that the time required to obtain an import license could take around 28 days in Cambodia, more than two weeks longer than Vietnam’s 11 days, Indonesia’s nine days, and four times longer than Singapore’s seven days.
“It’s very difficult to get the registration done in Cambodia, but because we have been doing this in eight countries, we do know the requirements that’s needed,” Thong said.
The company is also not a greenhorn when it comes to experimenting with less developed nutraceutical markets.
In fact, it has been present in Myanmar through independent pharmacies coming to nine years. It is in fact, its second largest market for the company in terms of market value, only behind Singapore.
This is mainly due to its bigger market size, and hence, it has surpassed the domestic Singapore market with sheer quantity.
Watch the following video as Thong explains more.
Australia Healthy Vitality, on the other hand, started selling in Cambodia about 12 months ago. It is present mainly in the first-tier cities with its beauty-from-within gummies under its Haircarebear brand.
“We’ve targeted the first-tier cities because our distributors are stronger in those first-tier cities,” Seervai said, adding that there were plans to enter tier two and three areas.
“I don’t think it’s fair for someone to say, oh, just because the market makes more money and there’s more money, I think we should target them only.
“We’re a consumer health brand, we’re a general consumer health brand. We should be looking where we can find the best opportunity for our customers,” he said.
Selling in Cambodia – challenges and strategies
In a way, Cambodia’s health supplements retail scene is similar to that of India, with independent mum-and-pop stores a core sales channel.
For Haircarebrand, the brand works with traders to distribute its products to the retailers.
“It’s not as straightforward as going to the retailer into the market, but we’ve had a lot of success with smaller shops in Cambodia, and when we say smaller shops, we’re talking about 300, 400, and 500 shops. Still, the opportunity is there,” said Seervai.
This also means that there are logistical challenges to overcome.
“Product distribution in Cambodia is not as straightforward. The products almost have to be delivered to every shop individually, and that we’re finding it a little bit of a challenge, but we are working through that at the moment.”
This contrasts with other places like The Philippines, where the company works with its largest partner Watsons Philippines, which is the same for Singapore and Malaysia.
Incontech, on the other hand, has a marketing staff on ground to monitor and ensure that the products are selling.
“Being present in 2,000 stores is sizeable, but we’ll have to look at the repeating orders also.
“[While] getting into the stores is very easy, having consumers to actually do a repeated order is the difficult part,” said Thong.
Giving out product samples is a strategy that Haircarebear has adopted to attract new consumers. Back in the domestic Australian market, however, the brand relies more on advertising to reach consumers.
Each sample pack contains two pieces of gummies.
“In fact, it costs me more money to pack it, but we ended up doing that because when you’re asking someone to commit to a substantial price for a product that you know is good for you, without having that ability to sample it, really try, taste it, you wouldn’t be able to say to the consumer this: “We believe in our product and we want you to try it.
“We didn’t do this in Australia. We just relied more on advertising cooperative spend, whereas in Cambodia, Thailand, and also Philippines, we’ve delivered more in the sampling space,” said Seervai.
Thong added that the company would be introducing more SKUs into Cambodia, including its latest sugar-free PNKids gummies.
“We only registered our bestselling products in Cambodia when we first entered, which was five out of nine products.
“This means that there are opportunities to enter with all the other products, including the latest products which are the sugar-free gummies, but for that, we will need to wait until when the market really needs it, and then we will get it registered.
“We’re just about two years in the market, it’s not fully exposed yet. We do have a biannual meeting with our distributors to ensure that they are on track and that our targets are fulfilled,” said Thong.
