29 April 2016
Fish oil, Omega-3, evening primrose oil, joint formula and celery are some of the most popular complementary health supplements flying off shelves in Hong Kong, according to Raymond Chan, Deputy Managing Director for Blackmores, an Australian natural-health firm supplying vitamins and supplements to Hong Kong and the Asia-Pacific.
Australia’s complementary health market is booming, thanks in large part to rising demand from Asia. Nutraingredients.com reported in March that sales of complementary health products to Hong Kong rose 122 per cent by volume last year. Blackmores, a market leader in Australia, says that strong sales throughout the region contributed to the firm’s 620 per cent growth in 2015. This year, over half of its sales are predicted to come from Asia, including Hong Kong and the Chinese mainland.
Key drivers are mainland tourists crossing the border to shop, as well as a relaxation of cross-border e-commerce rules that have seen shipments to Hong Kong grow as part of B2B trade, says Mr Chan.
In Hong Kong, a time-stretched, hard-working demographic is turning to vitamins, minerals and supplements to bridge nutritional gaps, according to a Euromonitor International report published last December. People with stressful jobs and long working hours often rely on convenience foods and take-out meals. They worry about not getting enough nutritional value, and rely on supplements to bridge the gap.
Children’s vitamins recorded the sector’s strongest growth in Hong Kong in 2015, according to the report. The rise is attributed to Hong Kong’s low birth rate, which means parents are inclined to “shower their children with love and affection,” and use supplements as a way to boost their child’s well-being, the report said.
Trends indicate that consumers will continue taking supplements to cover nutritional shortfall, but will cut intake of individual pills and convert to a multi-vitamin format. A growing focus on digestive health will also likely drive a jump in demand for probiotics.
At large drugstore chains in Hong Kong, brightly-packaged vitamins and supplements for health, beauty and workout performance fill store shelves. While at beauty-supply stores, supplements such as Vitamin B, advertised to aid fatigue and ease work stress, and children’s Omega-3 fish oil have joined the product mix of beauty balms and facial masks. While some local brands exist in the market, vitamins and dietary supplements are overwhelmingly from overseas.
Australian brands have been effective at introducing alternative medicine products into the mainstream, using celebrity endorsements and other types of major promotional activities.
“Blackmores’ Vitamin E Cream rose to become a top-selling item last year, as many famous Chinese celebrities and key opinion leaders shared positive feedback on the efficacy of the product,” says Mr Chan of Blackmores, which uses tennis champ Li Na as its mainland spokesperson.
In general, Australian-made products in many categories, from fresh fruit to milk powder, are highly regarded in the Asian market, which could also explain why complementary medicines from Australia do well.
“A strong country reputation or ‘brand’ has been described as the best gift a country can give its exporters and we are very fortunate that Australia is seen by consumers in Hong Kong as holding a clean, green image, and as having a solid quality system,” says Karen Hocking, head of government relations and industry development with Complementary Medicines Australia.
Ms Hocking says that the Australian government projects that, by 2030, there could be close to 3.2 billion middle-class consumers in the Asia-Pacific region, which natural health and preventative care providers are eager to reach. The mainland’s market size alone is worth an estimated Rmb100 billion.
The mainland poses a huge opportunity, thanks to its growing middle class and elderly population, who seek trusted products. Last September, Guangzhou-based infant-formula maker Biostime International entered the vitamin and health supplement market by acquiring a majority stake in Swisse Wellness Group, an aspirational brand and Australia’s top seller of vitamins, healthcare and minerals. The Hong Kong-listed firm outbid several other mainland companies, by paying A$1.67 billion for the company.
During Biostime’s 2015 Annual Results briefing, Radek Sali, Swisse Wellness CEO, outlined the firm’s China expansion strategy. Leveraging on Biostime’s experience and market intelligence, it will launch across multiple digital outlets, using above the line and digital advertising to create buzz and social media chatter.
Last March, it opened an online flagship store on China’s Tmall e-commerce site, aimed at middle class consumers, racking up 40,000 fans in just two weeks, despite mark-ups of 15 per cent or more compared to other brands.
Mr Sali expects online market share to grow. With just a six per cent share, yet still topping the category on the mainland’s online shopping giant Alibaba, the company has “plenty to gain,” as it works to expand the category and create greater demand.
Swisse products were selling twice as much as its nearest local competitor online in the mainland and three times more than US competitors. A plan to move into traditional retail stores is also part of the firm’s growth plans. “We’re seeing a lot of traction with the way we are selling and some excellent momentum, which is delivering some amazing sales,” says Mr Sali.
Australia’s one million Chinese residents, and an additional million or so Chinese tourists and students in the country serve as a test audience for mainland product launches, and Mr Sali said there was not much differentiation between the Australian market and that of the mainland. However, a growing interest in running and tracking fitness on mobile devices in the mainland could lead to the release of sports nutrition products, says Luo Fei, Biostime Chairman and CEO, who predicts “explosive growth” in the next few years.
Swisse Wellness Group has risen from a small homegrown firm, taking on big sponsorship deals and celebrity-endorsed campaigns in Australia. It plans to adopt the same strategies as it goes global. But its deal with Biostime marks a landmark moment, which according to Mr Sali, aligns with the company’s goal “to maximise what we see as globally our biggest opportunity, which is China.”