Chief executive Alastair Symington of Blackmores will be using part proceeds from a $117m capital raising to accelerate Asian growth.
Notably, part of these proceeds will be spent growing the Blackmores brand in India and Indonesia where there has been a surge in demand for health and nutrition products.
These growth channels for Blackmores is hoped to offset the decline in revenues from COVID-19 (despite the dramatic rise in sales from immunity products, overall unit volume and revenues have fallen due to lower consumer spending).
This wider expansion will aim to de-risk Blackmores exposure in the Chinese market, at a time where Australian and Chinese tensions are at boiling point and other Australian businesses with highly leveraged Chinese portfolios are facing a tough road ahead.
Indonesia is not a new market for Blackmores, previously delivering an FY19 H1 revenue increase of 72%, so Symington knows what he is doing here. A free-trade-agreement in July will provide welcomed support for Blackmores and other Australian brands looking to enter the Indonesian market.
India's nutraceutical market is set to grow at an astronomical CAGR of 21%, particularly in the functional beverage market. The VMS industry in India is valued at a modest AUD$2b however with enormous growth predictions, and a population of 1.3b, it is a market that global brands are setting their sights on.
Both India and Indonesian markets offer Blackmores opportunities to provide shareholders with returns they are so desperate for. Blackmores is trading at $81.42 a share after a successful $92m institutional placement today (28/5/20) and Symington and the team will be hoping to get it back to its peak 2016 share price of $220.
All opinions are of the author, Daniel Kitay. Daniel has previously worked as the Head of Sales & Marketing for China's #1 Vitamin and Supplement (VMS) brand BY-HEALTH with a market capitalisation of $6.5b. Daniel is a lawyer and runs DMK Consulting, offering support to food and VMS companies who are looking to grow their business in domestic and export markets.
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