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China health kick boosts Aussie brands

News, 01 March 2016

SYDNEY: The growing interest of Chinese consumers in health and wellness has delivered a boost in fortunes to Australia's speciality food and supplements brands, according to reports.

China's wealthy middle class consumers are now looking to Australia for organic and nutritionally-enhanced products, particularly for their children.

Brands have been quick to respond to the bottomless well of opportunity in China – but often at the cost of Australian shoppers.

Infant formula produced in Australia has been flying off the shelves to meet Chinese demand, to the point where domestic supply has been compromised and a cottage industry of "grey market" exports into China has emerged.

Organic baby formula brand Bellamy's Australia saw its stock price soar over 700% last year, with net profit up 325% on the back of sales into China. The brand was the centre of outrage in 2015, with many Australian mums unable to source the product locally due to extraordinary demand in Asia.

The boost in sales is largely from middle-class shoppers, China's fastest growing consumer demographic. Millions of Chinese consumers are distrusting of domestic brands following a series of food safety crises.


The country's food manufacturing sector has also been affected by allegations about inaccurate ingredient labelling. As Chinese shoppers are becoming more educated on nutrition and wellbeing, they prefer to buy more expensive food brands they can trust and which are manufactured abroad.

Signs in Mandarin can now be seen on many Australian supermarket shelves, advising Chinese-speaking customers that there are strict limits on buying tins of infant formula to sell onward into China.

According to a report by AFP, shares of Australian supplements maker Blackmores also increased 534% to A$217.98 in 2015. Chinese consumers account for an estimated 40% share of total sales.

Supplies of Blackmore's supplement products are now so stretched that the brand's directors are reluctant to set up a store on Alibaba's cross-border e-commerce platform, Tmall, for fear they may not be able to service additional Chinese demand.

Data sourced from Straits Times, Sydney Morning Herald; additional content by Warc staff