News

Chemist Warehouse will take a 10-per-cent stake in consumer products supplier McPherson’s as part of a broader strategic distribution partnership between the two companies.  

McPherson’s will become an exclusive long-term distributor of a portfolio of health and beauty brands owned or controlled by Chemist Warehouse, outside of the retailer’s Australia and New Zealand network. The range includes Wagner Vitamins, Wagner Body Science, Bondi Protein, Foster Grant, INC and Microgenics, all of which will now be available to all of McPherson’s wholesale customers. 

The distribution rights will be for an initial term of five years commencing July 1, the same date as the shares are issued to Chemist Warehouse.

“McPherson’s will have three five-year options to extend the arrangements, subject to certain minimum performance thresholds on a brand-by-brand basis which McPherson’s considers it is well placed to meet,” the two companies said in a statement. 

Chemist Warehouse will also expand the range of McPherson’s brands which the retailer ranges in Australia and New Zealand. Moosehead, Maseur, Fusion Health, Stratton, Sugar Baby and Happy Flora will be added. 

Liquor retailer Endeavour Group says supply chain challenges are impacting product availability and transport costs but the company is doing “all we can” to support suppliers and hold off price increases. 

MD and CEO Steve Donohue reassured suppliers during a virtual supplier forum this week that the company would hold off on cost increases for as long as possible. 

“Together, we have managed to wade through the availability challenge, and we are genuinely grateful for everybody’s efforts in trying to put stock on shelves and moving through the supply chain, but it’s costing more than ever before,” Donohue said. 

“What we have done is try to hone in on exactly how much it is costing us at the moment, and therefore what the cost increases for us look like. One of our intentions is to try to continue to hold that cost which we view as an investment in trying to facilitate stock movement for suppliers for as long as we can, but we’re also going to start sharing that information with suppliers to give everybody some visibility on what it is costing at the moment to move things around,” he added. 

The company has extended its 14-day payment terms first introduced in April 2020 after the outbreak of Covid-19 that allowed faster payment to small suppliers. These terms will now remain until June next year.

“In a world with so much uncertainty right now, we know how much stability and certainty means,” said the group’s GM merchandising Tim Carroll. 

“We are committed to supporting our suppliers through these never-before-seen circumstances and we recognise the economic challenges faced by small suppliers over the last two years,” 

Innovation was another core theme of the supplier briefing. 

“What customers are looking for increasingly is more discovery, more interesting stuff, more new things and more convenience,” Donohue said. Forty per cent of the products Endeavour’s stores sell today did not exist eight years ago

He encouraged the company’s suppliers to innovate more citing that in the past five years, 85 per cent of sales growth of the company has come from new product development.

He also emphasised that there was room for innovation in the wine category to meet changing consumer trends and attitudes. 

“The wine category needs to keep pace with changing customer expectations; lower alcohol, no alcohol, smaller format, easier format, something new and different like I’ve never seen before,” he said.

Uber and BP have announced a global delivery partnership in an attempt to expand delivery services to everyday convenience.

BP becomes the first major convenience retailer to team up with Uber on such a scale, and will connect more than 3000 retail locations with Uber Eats by 2025. 

The partnership will cover retail sites in Australia, New Zealand, Poland, South Africa, the US and the UK with plans to expand operations to European markets from next year.

Emma Delaney, executive VP of customers & products at BP said: “We’ve seen how the pandemic has accelerated customer demand for delivered convenience and this partnership will allow us to scale up quickly on the Uber platform.”

Pierre Dimitri Gore-Coty, Uber’s SVP of global delivery added: “With more than 20,500 locations around the world, BP’s reach is enormous. This makes them critical partners as we pursue our ambitions of helping consumers across the world get what they need to be delivered to their doorsteps.”

The companies will work to introduce delivery options onto BP’s own app – BPme, powered by Uber Direct. It will launch that in the UK, the US and Australia by the end of this year.

Ritchies Supa IGA has collaborated with zero-waste company Unpackaged Eco to debut automated refill stations. 

In an effort to reduce plastic waste and save customers’ money on packaging, the refill station features non-toxic, biodegradable Australian made products from cleansing and personal care products to dishwashing liquid. 

Customers can bring their own containers or buy reusable glass or aluminium bottles at the refill counter. In addition, the supermarket will offer a lower price for shoppers who bring their own boxes or bottles. 

“It takes five seconds to make a plastic bottle, five minutes to consume its contents and 500 years to degrade in landfill,” said Irene Chen, founder of Unpackaged Eco,

“We started Unpackaged Eco to cut out single-use plastic packaging altogether and make refilling a simple way to do our bit for the planet.”

As demand for sustainable products grows, refill stations are an environmentally-friendly and economical option. If this trial is successful, many supermarkets across the country can see their customers using their own containers, according to Ritchies. 

ASX-listed Mad Paws Holdings has struck a $20 million deal to acquire online pet medication and healthcare products business Pet Chemist and launched an equity raising to help fund it.

Mad Paws will pay $5.5 million cash and issue $14.5 million worth of shares for the business, and up to another $5 million in the coming two financial years based on performance hurdles.

The deal valued Pet Chemist at 2½ times operating revenue, based on annualised first half FY22 numbers.

The acquisition was to be partly funded by a $5 million equity raising via stockbrokers CCZ Equities and Petra Capital.

The brokers were seeking buyers for new shares at 18¢ each, which was a 10 per cent discount to the last close, according to terms sent to potential investors.

The term sheet pitched Pet Chemist as “Australia’s leading online supplier of pet medication and premium healthcare products”, with $9 million in merchandise sold in the 2021 financial year and more than 44,000 active customers.

Pet Chemist is owned by Howard Humphreys. It was advised by Hawkesbury Partners.

Mad Paws’ brokers were calling for bids into the placement by 5.30pm on Monday.

In less than eight years, Vida Glow has become a leading manufacturer of  beauty ingestibles. Here, founder Anna Lahey discusses its overseas expansion, the state of the niche in the beauty sector, and why it’s a good time to enter airport-based retailers.

Inside Retail: Can you tell me the story behind Vida Glow and how you launched the brand? 

Anna Lahey: My own introduction to ingestibles was completely transformative. I discovered marine collagen while I was travelling overseas. I started with one serve a day, and within weeks I experienced incredible results. My skin looked plumper and felt more hydrated. My nails were growing fast and strong, and I was losing less hair in the shower.  

There was nothing else like it on the market in 2013, so I saw the gap for ingestible formulations that addressed common beauty concerns. I spent months researching and educating myself on the science behind marine collagen and the clinical evidence was there to substantiate the visible changes I was seeing in my skin, hair, and nails. With that knowledge, I launched Vida Glow in 2014 with our hydrolysed natural marine collagen. And today, Vida Glow is the global number one marine collagen brand. 

IR: How would you describe the process behind developing the marine collagen product? 

AL: Vida Glow prioritises innovation, quality, and efficacy. We’re sourcing the most potent and pure ingredients that will elicit the tangible results our consumer wants to see. And backing it with clinical data. 

Our natural marine collagen is manufactured in France with fish skins responsibly sourced under strict standards from open-water farms in Europe. It is then hydrolysed using a proprietary enzymatic process. Enzymatic hydrolysation mimics the digestive process to naturally break down marine collagen into smaller molecules that the body can more readily use. This gives Vida Glow’s marine collagen its high bioavailability, for an over 90 per cent absorption rate. 

We wanted to ensure there was clinical data to substantiate real results from supplementation. So, Vida Glow’s natural marine collagen was clinically studied in an independent, double-blind placebo-controlled trial. Now, Vida Glow sells one unit every four seconds. 

IR: How would you describe the ingestibles category right now and what’s the competitive landscape like? 

AL: When I founded Vida Glow eight years ago, marine collagen and ingestible beauty weren’t the buzzwords they are today.  Fast-forward to now, the nutricosmetics market is booming and it’s predicted to continue its momentum over the next decade. But amidst the clutter, we maintain a disruptive, first-movers approach. Vida Glow is committed to developing revolutionary formulations, leading with category education and science-led efficacy – and benchmarking what’s possible in ingestible beauty. 

IR: I know that the beauty market has skyrocketed in recent years, so I think it’s interesting that you’ve combined ingestibles with beauty. What are you seeing in the market right now and what’s consumer interest like? I can imagine that there’s some education required. 

AL: Consumers are more results-obsessed and discerning than ever. They understand that skincare is far more than topical serums, and want to know more about ingestible beauty and the visible results that come from treating concerns on a cellular level.   

And whilst now a booming category, there is still much misinformation out there. So as the category trajectory continues upwards, Vida Glow is leading with efficacy and education. We’re breaking down the market pseudoscience and delivering clinically backed products for common beauty concerns – products that our customers have come to trust and expect.

IR: Vida Glow launched globally last year. Can you tell me about your overseas expansion strategy and where you’re at on that journey?

AL: Global expansion is an integral focus for 2022. Vida Glow has solidified a presence in the UK, France, Germany, US, Australia, and China, with stockists in renowned retailers, including Selfridges, Harrods, Liberty, Douglas, Le Bon Marché, Nose Paris, and Revolve. We’re building strong relationships with key retailers to drive brand and category awareness, and evolve our omnichannel distribution strategy in each market to propel our brand momentum.

IR: What are the unique challenges of being in the ingestibles category at the moment? 

AL: As an ingestible beauty brand, we face distinct challenges in taking our formulas across the globe. It’s partly why there are so few international ingestible beauty brands out there. To expand our formulations globally, they need to comply with stringent international regulations – subject to each country. We’ve enlisted clinical experts and invested countless hours in adapting our formulas to ensure they’re compliant without compromising on efficacy or results.    

IR: What is your bricks-and-mortar strategy and why are you investing in a physical retail space, particularly at the airport, in this current climate? I know you’ve previously created quite immersive physical experiences, like at the global launch last year. 

AL: Having a presence in bricks-and-mortar allows Vida Glow to create immersive in-store experiences that provide consumers with the opportunity to interact and try our products first-hand. One of the biggest barriers to purchase is taste. So, to be able to offer a tasting experience along with product education in-store is a huge opportunity.

With travel open once again, numbers in the airport are increasing week on week. We felt like it was an ideal time for Vida Glow to enter travel retail and partner with global power player Heinemann. They fully understood our brand vision and supported us with every step of bringing the innovative space to life.   

IR: What are your plans for Vida Glow in 2022? 

AL: There’s a lot to look forward to in 2022. We’ve started the year strong, with our official expansion into the US market and we will soon be launching our first-ever global brand campaign. The year will also bring about more revolutionary innovations, including our foray into hair care and new targeted solutions for common skin concerns like acne. We’re placing predominance on continuing to propel our international presence and placing Vida Glow’s clinically efficacious formulations at the forefront of beauty regimes globally.

Global appliances company Breville Group has snapped up Italian specialty coffee company Lelit Group in a €113 million ($168.7 million) cash and shares deal, deepening its penetration of the premium home coffee market.

Breville said on Friday it will buy Lelit – which makes high-end coffee machines and barista equipment – from the founders debt free. Half of the price will be paid in cash and half in ASX-listed Breville shares valued at $27.64 per share for the deal and subject to a five-year lock up.

Breville shares fell about 3 per cent by midday Friday, but rallied some to end the day down 2.7 per cent at $26.24.

The machines range in price from the Lelit Mara X at $2400 to the larger Lelit Bianca – costing $4600 – which can be used at home or in a cafe.

The cash portion of the transaction will be funded from existing reserves and debt facilities. Key members of the Lelit management team, including the founders, have agreed to join Breville.

The transaction is expected to complete by early July 2022 after a restructure of Lelit.

The company was founded in Castegnato, Italy in 1985 by Edoardo Epis. In its early days it specialised in ironing systems and later added production of coffee machines.

Breville chief executive Jim Clayton said Lelit’s range of espresso machines and grinders, together with Breville’s Baratza range of grinders, would create a stronger presence in the specialty coffee channel while providing Lelit with an opportunity to strengthen its presence outside of Europe.

The acquisition of Lelit brings together the two great coffee cultures of the world: Italy and Australia.

— Breville CEO Jim Clayton

“The acquisition of Lelit brings together the two great coffee cultures of the world: Italy and Australia,” he said.

“Both companies have a shared passion for using product innovation to improve our customers’ coffee experience at home, and we look forward to working alongside Lelit and its existing partners to further accelerate its growth and product innovation, while preserving the values that underpin its Italian identity.”

Lelit CEO Mr Epis called Breville an “ideal strategic partner to support Lelit in its next stage of growth at the same time enabling us to remain faithful to our Italian heritage and design”.

In February, Breville posted sales growth of 23.6 per cent for the first half of fiscal 2022. Consumer demand across all regions and categories – coffee, cooking and food preparation appliances – underpinned sales of $878.7 million.

This helped to boost its bottom line by 25.1 per cent to $77.7 million, and increased the interim dividend to 15¢ a share from 13¢.

Barrenjoey analyst Tom Kierath pointed to Breville’s UK operations, which filed local accounts this week showing it may be winning share from its global rival De’Longhi. Breville’s UK sales grew strongly in fiscal 2021, up 48 per cent, with sales in Europe, the Middle East, and Africa – stripping out the UK – expanded by 53 per cent.

Breville has only a small exposure to Ukraine-Russia with 1 to 2 per cent of sales coming from that area.

“We estimate that Breville’s sales per person in the UK is $1.34 vs Europe (excluding the UK) at 35¢ which points to a considerable opportunity in continental Europe,” Mr Kierath told clients in a note.

He added that De’Longhi is stepping up spending on advertising and promotions considerably ahead of Breville this year and next year, leaving a question over whether the higher investment will drive category growth or if De’Longhi will win market share.

Blackmores boss Alastair Symington says he expects Australian manufacturers that rely on imported materials to experience supply disruptions for at least the next six months.

The vitamins maker grew revenues for the six months to December by 14.3 per cent to $346 million, while profits were up 44 per cent to $20.3 million, but supply chain disruptions led to shortages of some products throughout the period.

While Blackmores had a strong local manufacturing presence, its reliance on raw materials from overseas complicated its production amid the global pandemic-induced supply chain chaos - and other local manufacturers were experiencing the same, Mr Symington said.

“We expect that at least [over the coming] six to 12 months we will have quite a bit of volatility,” he said, adding this could mean some products will be temporarily off the shelves.

“We won’t see long term ‘out-of-stocks’ in one particular market - we will see products coming in and out of stock. Shoppers might find they might not be able to find products for a few days or weeks,” Mr Symington said.

Supply chain woes also hurt the company’s PAW range of pet vitamins - and pet owners staying at home during the lockdowns didn’t help either, the Blackmores boss said, though he’s still optimistic about the future growth of the pooch pill market.

“What we weren’t planning for was the extent of the lockdowns, and people are not visiting their vets as often as we expected,” Mr Symington said. “The products are recommended by vets, and we rely on that.”

He said escalating freight expenses and rising costs of raw ingredients for the company’s products were another “big challenge”, with the cost of transporting fish oil, for example, having increased by four times over the past 18 months.

Blackmores has resisted the temptation to discount products in the local market to boost sales, maintaining that a disciplined pricing strategy was key to maintaining the premium position of its brand.

The pill maker saw a 1.2 per cent drop in sales in Australia in the December half, but China sales were up 8.5 per cent and other international markets like Thailand and Indonesia were ahead 53.8 per cent in constant currency terms. Fifty-eight per cent of Blackmores’ revenue now comes from offshore markets.

Mr Symington said the company would continue to focus on domestic sales even as overseas markets grabbed a bigger slice of revenues.

“Our ambition is to reach one billion consumers by 2025. The way to do that is through the Asian markets, and you can only achieve that if your brand is strong in the APAC region,” he said.

Blackmores declared an interim dividend of 63 cents per share, to be paid on April 12. The stock declined in early trading against Thursday’s broader market sell-off and was down 8.7 per cent to $84.64 in the late afternoon.

ASX-listed Australian beauty and wellness business BWX Group has boosted revenue by 26.5 per cent, buoyed by the acquisition of the Flora & Fauna business, and Go-To Skincare last year, along with increased sales in the US. 

The company says revenue reached $103.4 million and EBITDA rose by 26.2 per cent, however it recorded a net post-tax loss of $2.3 million.

“During the first half of FY22, the group delivered strong underlying growth despite a heavily impacted first quarter which saw around 7 per cent of our total distribution points forced to close in line with government responses to Covid outbreaks across key regions,” said outgoing BWX Group CEO and MD, Dave Fenlon. 

“The second quarter reflected stronger sales momentum which is continuing to accelerate and – coupled with a strong performance in our USA segment – demonstrates a broader retail-led recovery as consumers return to socialising and in-store shopping.”

Sales in the US market rose by 12 per cent, thanks to the growth of its Mineral Fusion brand (up by 33.3 per cent) and Andalou Naturals (up by 5.5 per cent).

“BWX’s unique global scale and diverse brand portfolio continued to connect with more consumers and retail partners as we deliver omnichannel distribution gains,” said Fenlon. “Our direct-to-consumer offering now accounts for 41 per cent of group revenues, with the acquisition of Flora & Fauna and controlling interest in Go-To Skincare diversifying our growth opportunities in Australia and offshore.”

In January, the first month of the company’s third-quarter, BWX says its growth momentum was sustained. 

“While the environment remains uncertain, our strategic priorities are simple and we will continue to execute through the unlocking of acquisition-led and organic brand growth and increasing our points of distribution,” said incoming BWX Group CEO and MD Rory Gration.

Noumi (formerly Freedom Foods) will throw its weight behind its popular plant-based barista milk brand, Milklab, in an attempt to bring the company back to profitability, as global milk prices edge up and the plant-based movement gains further traction.

The ASX-listed food company’s earnings dived 79 per cent to $4.6 million in the first half of fiscal 2022, as COVID lockdowns, supply chain issues, staffing shortages and rising costs ate into the company’s bottom line.

However, Milklab was a standout performer among Noumi’s portfolio of brands that include Australia’s Own, So Natural and Vitalife, with sales shooting up 32 per cent in Australia and 64 per cent in export markets despite the pandemic interruptions.

Noumi chief executive Michael Perich said Milklab would be a key focus for the business as it continues to mitigate COVID headwinds such as rising milk costs and staff shortages.

“More and more people are migrating to having regular coffees using plant-based [milk], and that continues to grow. That’s an important area for us to focus on,” Mr Perich told the Sydney Morning Herald and The Age. Noumi will also look to ramp up exports, with its latest oat milk product performing well, he said.

“Definitely for Noumi, [the] plant-based [movement] is a significant driver of revenue growth, and that is a key area of focus for us.”

Mr Perich is among a number of other food and hospitality leaders, including Grill’d co-founder Simon Crowe, Betty’s Burgers’ parent company chief Nishad Alani, and even poultry supplier Ingham’s boss Andrew Reeves who are eager to meet growing consumer demand for animal product alternatives.

Mr Perich acknowledged that inflationary pressures had led to higher input costs for raw materials such as milk, which Noumi would be passing onto its retail and distributor customers and likely onto the consumer. Global milk prices see-sawed immediately after the pandemic and have risen steadily since, and are now at levels not seen since late 2020.

“There is continued pressure on world dairy prices, which is across the board, so we will work with our customers around passing on those prices as we need to,” he said.

But he added that Noumi was contending with rising input costs across other fronts, such as packaging and fuel.

All of Noumi’s key metrics were down across the board for the first half of the 2022 financial year, with net revenue down 7 per cent to $265.3 million.

The company posted net losses after tax of $65.8 million, which had blown out by $50.8 million since the same period the year prior. The lion share of these losses were attributed to a US litigation settlement.

The Omicron wave that hit during Christmas is still affecting sales numbers, with geopolitical risks contributing to price volatility.

The company is currently facing a shareholder class action that is before the Supreme Court of Victoria over alleged misleading financial reporting between 2014 and 2020.

Noumi shares slumped over 10 per cent to 26 cents following the half-year results.

The company’s share price plunged in 2020 after the then-chief executive left abruptly, leaving major shareholders the Perich family to step in.

The company changed its name to Noumi late last year after selling its Freedom Food brands to Arnott’s.