The boss of Blackmores says the vitamins and supplements giant is not really relying on Chinese “daigou” shoppers anymore as it gains more market share in Indonesia and Thailand, while the huge opportunity of densely-populated India will be a slow burn.
After delivering the company’s latest results on Thursday, chief executive Alastair Symington also said customers should not expect a price war with Blackmores’ competitors as too many discounted promotions led to “a lack of differentiation between brands”.
It also means lower margins for the business, which wants to maintain its premium positioning in the market, highlighting its superiority with things like the ethical sourcing of fish oil.
The company booked a 9.6 percent rise in underlying net profit for the first half, with earnings margin growth in Australia and New Zealand of almost 18 per cent credited to “strategic pricing and operational improvements”.
Mr Symington said the results were ahead of expectations in all markets despite volatile and uncertain trading conditions due to the pandemic.
Blackmores’ overseas business is leading the charge, with revenue up about 50 percent.
Mr Symington said 110 percent growth in the massive market of Indonesia was particularly pleasing, driven by consumers snapping up vitamin D and zinc on the back of clinical evidence these improve immune health – a key consideration amid lockdowns.
Growth in Thailand of 40 percent was also a highlight, he said, but Australian consumers were still behaving very cautiously and there had been a “stuttery start” to sales this calendar year, with ANZ revenue dipping 1.2 percent.
But Blackmores has its eyes on a very big prize – India – where it launched in September in partnership with Amazon India.
The company recently entered a distribution partnership with Udaan, India’s largest business-to-business e-commerce platform, expanding the reach of its products to independent pharmacies in at least 10 metro cities across the continent, which is home to well over one billion people.
“There’s a lot of promise in that India business,” Mr Symington said.
On China, he said the daigou market – whereby visitors send goods back home – would not return to the loft heights seen in 2016 and 2017, when dedicated stores offering resellers in-demand products and delivery services popped up around Australia.
Blackmores recorded an 8.5 per cent lift in revenue to China in the first half, “driven by continuous improvements in e-commerce fundamentals … partially offset by a 7 per cent decline in the corporate daigou channel”.
“We’re not really relying on that (diagou market) moving forward,” Mr Symingto