NAD+, liver health needs driving China’s adult nutrition revenue jump – H&H Group
The Hong Kong Exchange listed company announced its FY2023 financial results last week.
Its adult nutrition and care (ANC) business in mainland China, which mainly consists of supplements under the brand Swisse, was said to have “exceeded expectations”, according to Akash Bedi, Group CEO and CEO of North America, Europe, Middle East and India.
The business grew by 37.4 per cent in revenue from the year before to RMB$4.06bn (US$561.94m).
High-end sub-brand Swisse Plus+ was said to have made a double-digit contribution to the company’s adult nutrition revenue in mainland China and drove profitability for the overall business.
Both Swisse Liver Cleanse and the NAD+ range from Swisse Plus+ were highlighted as the key products driving growth.
H&H Group’s total revenue was up nine per cent to RMB$13.93bn (US$1.93bn) and adjusted net profit up 6.4 per cent to RMB$778.3m (US$107m).
“Our ANC segment in mainland China has exceeded our expectations, led by our Swisse brand which reinforced its leadership in the online market.
“We have successfully stayed abreast of key consumer trends, particularly the rise in health conscious Chinese post-COVID, to achieve tremendous results both on and offline, ranking no. 3 in normal trade with 2.6 per cent market share, covering 62,393 offline distribution points,” said Bedi.
China contributed 66 per cent to the Group’s entire adult nutrition revenue last year.
Revenue growth was seen from both offline and online channels in China.
Normal trade, which was responsible for 23.8 per cent of sales, grew 62.4 per cent last year.
More products also achieved the “blue-hat” registration – up from 17 SKUs in 2022 to 21 SKUs last year. The Group had a total of 55 adult nutrition product SKUs in China last year.
“Blue-hat” registered health foods could be sold offline and also in local e-commerce platforms in China. Otherwise, the products could only be sold to China via cross-border e-commerce.
Mainland China was also the Group’s biggest revenue source, with revenue up four per cent to RMB$9.97bn (US$1.38bn) or 71.6 per cent of the total Group revenue last year.
Baby probiotic supplements offset formula milk sales decline
Infant formulas, the Group’s biggest revenue driver in mainland China, had however declined 15.5 per cent in revenue to RMB$4.24bn (US$587.98m).
The decline was due to a shrinking infant formula market in the country and increased market competition from the stricter GuoBiao (GB) or national standards.
As of December 31, the Group’s infant formula brand Biostime had seven products securing registrations from the new GB standards. They include Biostime Pi-Star, Biostime Organic Milk (Healthy Times), Biostime Goat Milk (Cute Betty’s Care), and Biostime Alpha Star approved last year.
“These infant milk formula (IMF) series make up a super majority of our IMF sales in mainland China and are geared towards the relatively stable and higher-margin premium and super-premium ends of the market, anchoring our future competitiveness and profitable growth potential in a changing sales landscape.
“The transition and re-launch of each of these GB standards-compliant series has been completed,” said H&H Group’s chairman Luo Fei.
The decline in its infant formula revenue, however, was offset by growth from its paediatric supplement business – including probiotics.
Revenue from its paediatric probiotic and nutritional supplements, also sold under the brand Biostime, grew 8.8 per cent to RMB$1.2bn (US$166.33m).
This was due to increased demand and the launch of new innovative products, including probiotic gummies, DHA and calcium which support the physical and mental wellbeing of children, said the firm.
“Despite some destocking by customers and lower traffic in the pharmacy channel in the second half of the year, we strengthened Biostime’s position as the leading paediatric nutritional supplement brand in mainland China,” said Luo.
Key categories driving growth in ANZ
Australia and New Zealand, the Group’s second largest market, reported a 28.7 per cent increase in revenue to RMB$1.8bn (US$248.61m).
The ANC business is the biggest portfolio in this region, contributing RMB$1.78bn (US$246.04m) to the business, while the infant formula and paediatric supplements business were smaller, with revenues of RMB$17m (US$2.36m) and RMB$1.51m (US$209k).
Digestive, liver health, beauty-from-within, multivitamins, and muscle health were the key categories fuelling its ANC business.
“In ANZ, we’ve had an exceptional year with Swisse solidifying its place as the no.1 overall VHMS brand in the domestic market, thanks to our continued focus on its home market. Swisse has extended this leadership across multiple categories including no.1 in Digestive & Liver health, Beauty from Within, Multivitamins and Muscle health,” said Bedi.
The brand was also said to be second in bone health, heart health, nutritional oils, stress/sleep, superfood supplements and women’s health.
Swisse Gummies for adults were said to be number two in the category and enjoyed 14.3 per cent of the market share.
Double-digit growth in SG, HK
Elsewhere, the Group reported double digit revenue growth in Singapore and Hong Kong.
In Singapore, Swisse brand claims to have achieved the number one market position in the liver health, men’s health, and vitamin and mineral supplements category.
The company also expanded across other parts of South East Asia, India, and the Middle East.
Revenue from these regions, including Hong Kong, was RMB$661.04m (US$91.58m), up 9.82 per cent.
