Hong Kong-listed Chinese milk company Ausnutria Dairy Corporation has purchased 75 per cent of natural medicines manufacturer Nutrition Care Pharmaceuticals for $30 million, reinforcing China's insatiable demand for Australian retail products.
On the one-year anniversary of Hong Kong-listed Biostime's $1.67 billion takeover of vitamin maker Swisse Wellness, Ausnutria, which makes milk products in China with raw material from the Netherlands and New Zealand, has expanded its retail offering into supplements by taking a stake in Nutrition Care.
Nutrition Care's products include vitamins and supplements such as "5 Mushroom Blend", "Cats Claw" and cranberry and pomegranate tablets. Pregnant and breastfeeding mothers are a key target market in China, where the one-child policy has been relaxed, Nutrition Care founder Professor Ian Brighthope said.
"Trusted Australian nutrition brands are highly sought after in China," said Professor Brighthope, who has more than 40 years in the industry.
"In the past, American brands were seen as the reliable option by Chinese consumers, but now Australia is viewed as the premium choice thanks to our high quality standards.
"The supplements market has seen tremendous growth both domestically and overseas.
"When I first began practising in the 1970s about 1 per cent of Australians would regularly take supplements, now it is 72 per cent. Overseas the potential is even greater – this is going to be a trillion-dollar industry."
The belief and trust placed in Australian-made products is so strong that "daigous", or personal Chinese shoppers, have wiped out supermarket shelves in Australia to send products home in China.
Peer endorsements
Chinese food safety scares mean that peer endorsements and products out of a relative's suitcase were often considered more reliable than those supplied by local retailers.
Recognising the power of daigous, the company's new dedicated distribution channel, "Nutriunion", will also cater directly to those end customers in China. In Australia, a distribution network is still being developed.
"Daigous have approached us," Professor Brighthope said. "The new distributor will deal with personal shoppers, and it's possible we will have one here in Australia, we are talking to people at the moment."
Aside from daigous, the new company will also sell on all major Chinese e-commerce platforms, including the Alibaba-associated Tmall.hk, JD.com and VIP.com tapping into the powerful Chinese e-commerce industry, which has more than 500 million users and, according to research group Nielsen, is growing at 53 per cent a year.
The e-commerce business in China is set to go past $US1 trillion ($1.3 trillion) by 2017.
Under the Ausnutria-Nutrition Care agreement, Nutrition Care will retain a 25 per cent stake in the business and will oversee the company's research and training operations globally. It has a small market in India and plans to also expand into South-east Asia.
The $30 million injection will enable the company to expand its production, sending the additional volume to China. Its local market production will remain unchanged.
Nutrition Care Pharmaceuticals has been manufacturing in a Therapeutic Goods Administration licensed laboratory in Keysborough, Melbourne, since 1996.
