Immunity products and China sales a major boost for Swisse-owner H&H as ANZ revenue plunges by a third

By Tingmin Koe contact

- Last updated on GMT

Net profit for H&H rose 8.9% in the first half of this year.  ©Getty Images
Net profit for H&H rose 8.9% in the first half of this year. ©Getty Images

Related tags: Australia, China, H&H Group

Swisse and Biostime owner Health and Happiness (H&H) Group saw demand for immunity products surge, especially in China, as it announced an 8.9% increase in net profit in the first half of this year, despite seeing revenues in Australia and New Zealand plunge by a third.

In its H1 FY2020 announcement, the company said total revenue was RMB$5.16bn (US$748m), up 2.6% compared to the same period last year.

Net profit rose 8.9% to reach RMB$658m (US$95m).

Revenue from China, the company’s largest market, was up 12.8% and contributed 82.6% to the total.

However, In the Australia and New Zealand market, the continued decline of daigou activity, travel restrictions and logistics challenges saw revenue decrease by 35.8% on a like-for-like basis to AUD$127.2m (US$91.6m).

Across the board, sales of immunity products were a noticeable bright spark.

Chairman Luo Fei said: “Growing demand for immunity-enhancing products and other health-related products is likely to be sustained, first online and then offline as markets around the world emerge from lockdown,”​ Luo said.

In the first six months of 2020, demand for immunity-related supplements had increased for both baby and adult nutrition portfolios. Demand for the former grew by 45.4% and the latter was up 48.5%.

The growth was most significant in China, where sales revenue from immune health supplements skyrocketed 128.9%.

Swisse, the company’s bestselling adult nutrition brand, also outperformed other brands in China.

The acquired Australian brand was also ranked number one across major e-commerce platforms during the ‘618’ annual shopping event in China and managed to achieve a market share of 5.8%.

In the country, Swisse also delivered a revenue growth of 27.9%

Across all the markets, the brand accounted for 56.5% of the company’s entire adult nutrition revenue of RMB$926m (US$134m).

In terms of immune health, probiotics was one of the top-selling categories with revenue up 48.4% to reach RMB$853m (US$123m).

Riding on the booming demand for immune products, the company launched products such as a calcium + vitamin D powder in China in mid-June.

Although introduced only recently, these products brought in revenue of RMB$10.7m (US$1.5m).

Sales from markets outside of China was up 8.5%. Moderate growth momentum for immunity-related products was seen in Netherlands, Italy, UK, and Singapore.

Robust e-commerce​ 

E-commerce will be an especially important tool for driving sales in the upcoming months, especially in China, said Luo.

“With consumers all around the world turning more digital and buying even more online during lockdowns, we are refocusing more efforts on strengthening our digital channels and relevant communications to engage with our consumers,”​ he said.

To capitalise on the benefits of e-commerce, the company said it had made a swift move to online marketing activities and used livestreaming for online consumer education activities.

In China, the company’s online sales growth was largely driven by the sales of infant milk formula, where revenue from online channels grew 32.8%. Nonetheless, total infant formula revenue fell 3.5% due to slower offline traffic.

Offline not obsolete

Despite this, the company is aiming to strengthen its brick-and-mortar retail presence in China, Australia, and New Zealand (ANZ).

New ‘blue-hat’ certified products, such as fish oil and protein powder, will be introduced in pharmacies across China.

While in ANZ, the company launched Swisse Nutra+ - its first nutra range exclusive to pharmacy channels.

“Despite the pressure faced in the first half of this year, there is still room to grow…Offline sales space remains an essential part of our business,”​ Luo said.

Product R&D

Specific nutrition products, including goat infant milk formulas, infant nutrition and ‘beauty-from-within’ supplements were identified as the key for future growth.

“The broad nutrition market is continuing to experience a segmentation trend, creating opportunities in several fast-growing new categories.

“We are focusing more marketing and innovation efforts to capture growing demand for products such as goat infant milk formulas, infant nutrition supplements, super premium infant diapers and ‘beauty from within’ supplements,”​ Luo said.

Wider Asia

Elsewhere in APAC, the firm launched its brands in India on Amazon and more than 10 other major e-commerce channels at the beginning of this year, as well as in Malaysia in May. 

It also launched Biostime’s probiotics range in Singapore, both in online and offline channels, making it the fourth global market for this range after the Hong Kong SAR, France and Australia. 

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