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Q&A: What's the state of the supplements industry Down Under?

The CEO of Blackmores tells how the Australian supplement leader navigates trends and regulations at home and abroad.

Bill Giebler, Content & Insights Director

November 15, 2017

5 Min Read
Q&A: What's the state of the supplements industry Down Under?

Founded in 1932 by Maurice Blackmore, Blackmores is Australia’s leading supplement manufacturer. In addition to its popular eponymous brand, the company operates brands that include leading practitioner brand BioCeuticals, Oriental Botanicals and Pure Animal Wellbeing among others.

Today Blackmores maintains the company’s original passion for natural health and, according to its website, “inspiring people to take control of and invest in their wellbeing.” It does this, in part, with its “ask a naturopath” program, helping consumers take that control and navigate the company’s 1,300+ products. “Access to qualified advice has long been one of the core principles of our business as our founder Maurice Blackmore was a naturopath who was always very focused on sharing knowledge and offering education,” wrote Richard Henfrey in an email exchange. Here’s more information we gleaned from the company’s CEO.

What are emerging trends and opportunities in Australia?

Richard Henfrey: Consumers are looking for health solutions tailored more specifically to their needs, so personalized health is emerging as a clear direction for brands. Probiotics are now a mainstream part of product ranges, and the emerging trends in this area, driven by increasing evidence, take the category well beyond general gut health and into allergy, sports performance, skin health, brain health and obesity. The format to deliver nutrients is also evolving with the evolution of more food-based solutions including collagen, bone broth, ready-to-drink products and gummies.

As in other parts of the world, plant-based diets and veganism are becoming more popular, driving demand for plant-based ingredients. The FODMAP diet for IBS and bowel health is growing in popularity and is now the treatment of choice for IBS.

As for opportunities, the Therapeutic Goods Administration (TGA) is introducing a period of exclusivity for new ingredient applications which will incentivize industry to apply to use new ingredients—this should lead to an increase in the availability of ingredients, many of which are already available in other countries. Blackmores has had businesses in Asia for more than 40 years, though in recent years, e-commerce platforms have supported the growth of Australian brands for Asian consumers and this is an ongoing opportunity which many brands are exploring.

What regulatory challenges face businesses in Australia?

RH: Our single biggest regulatory challenge in Australia is that natural health is not well understood within the bureaucracy and doesn’t always fit within a framework that was developed for pharmaceuticals; therefore they find it difficult to regulate. There are interesting opportunities on the table as the TGA is going through a very significant regulatory reform process. This includes changes to advertising and complaint handling, the introduction of a codified list of permitted health indications, the introduction of statutory timeframes for approval of applications, and incentivizing industry to apply for new ingredients.

One of the big changes industry has been wanting for many years is the introduction of a new regulatory pathway giving access to higher level claims around more serious health conditions—known as the middle pathway. This will require the submission and pre-market evaluation of clinical evidence specific to the finished product that is being marketed, which will encourage industry to invest in clinical trials which will benefit the entire community as it will increase the evidence base for natural medicines and demonstrate to consumers that these medicines can be used for more serious conditions.

There are risks that the regulator will increasingly force products and claims into this middle pathway, which will increase the regulatory burden on industry and may make it harder for smaller companies to compete. Keep in mind that products in this category are very well tolerated and low risk and are made to high quality standards, so it isn’t always appropriate to force them into this higher level of regulation.

There are also risks that the regulator will apply too high a hurdle and that companies will choose not to invest as they do not see the reward as worth the risk. The rules are being developed at present in consultation with industry and there is a pilot program being started early next year to test the process.

These changes will impact the whole industry, so it is important that sponsors, manufacturers and raw material providers engage in the debate and understand the potential implications for their businesses.

At the same time, the TGA has a reputation for demanding quality and enforcing regulation. Is that an advantage on the global market?

RH: Without a doubt, the strong regulatory framework in Australia does give Australian brands a competitive advantage, especially across Asia.

Blackmores has a strong therapeutic focus with naturopaths on live chat. What are the regulatory challenges in this approach? What are the marketing benefits?

RH: Self-selection products are entirely appropriate and make it easy for consumers to access our products, but they also need to know they are able to easily get the right information about products, whether that is by calling our free naturopathic advisory service or chatting online with a healthcare professional.

Our team are all highly qualified and trained appropriately to provide this service and they direct consumers to see their doctor when they need to.

Approximately a third of your sales are in the Chinese market, a very dynamic and changeable market. Does that continue to be both challenge and focus for Blackmore’s?

RH: The channels that serve the Chinese consumers are evolving very rapidly. There has always been an element of sales for consumers outside of Australia through our retailers and this increased significantly in late 2015 when the Chinese government opened a number of free trade zones that better enabled consumers to sell across e-commerce platforms. 

In April 2016 there was speculation about changes to the regulation of cross-border e-commerce. While the actual changes were relatively minor, the smaller daigou buyer market was concerned enough to stop buying, which created an opportunity for larger exporters to meet the strong Chinese consumer demand. The Chinese government has recently affirmed their commitment to cross border e-commerce and to the free trade zones and we’ve been pleased with the progress of our buoyant Chinese business.

We recognize that now is our opportunity to build a stable and multi-channel business in China to support Chinese consumers while continuing to invest in our heartland Australian market and our other ventures across the Asian region. 

This article appears in the October 2017: Global Issue of Nutrition Business Journal. The full issue is available for purchase here.

About the Author(s)

Bill Giebler

Content & Insights Director, Nutrition Business Journal

An award-winning writer and natural products industry veteran—with decades of experience in food and supplement retail, lifestyle mail order and organic textiles product development—Nutrition Business Journal Content & Insights Director Bill Giebler reports on dietary supplements and food and agricultural trends and opportunities across New Hope Network properties.

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