Case Study: Blackmores

Longevity and shared values energise Blackmores in ASEAN

Blackmores

Sydney-based natural healthcare business Blackmores has operated in ASEAN for more than 40 years. However, the company believes its $70 million ASEAN business is only 'scratching the surface' in the region.

'In our category – vitamins and dietary supplements – the total size of that ASEAN market is about $5 billion,' explains Peter Osborne, Managing Director Asia, Blackmores.

Blackmores started operations in Singapore before entering Malaysia and then Thailand. 'Our second largest market in Asia after China is Thailand,' Osborne says. 'Overall in ASEAN our business is experiencing double-digit growth.'

Blackmores is now the number one foreign brand in its category in Malaysia, Singapore and Thailand, and has a 40 per cent-plus share of the latter market.

Despite the growing importance of China and other North Asian markets to Blackmores, the company remains extremely bullish about ASEAN. Following extensive research into the Indonesian market, in November 2015 Blackmores established a joint venture – Kalbe Blackmores Nutrition – with Indonesia's largest pharmaceutical group, PT Kalbe Farma. The venture aims to develop a vibrant vitamin and health-supplement products business servicing the country's 260 million-plus population.

'Distribution is the key to success in Indonesia due to its geographical diversity,' Osborne says. 'PT Kalbe Farma has the largest nutrition and pharmaceutical distribution network in the country.'

According to Osborne, the joint venture is proceeding to plan. 'We'll be continuing to invest in that market quite substantially to build the brand and distribution,' he says. Blackmores is providing the products, product development and sales expertise to the 50:50 venture, while PT Kalbe Farma is combining its distribution network with market insight and regulatory support.

PT Kalbe Farma also met Blackmores' criteria of working with a partner with similar values. Both companies are publicly listed and focus closely on governance, while the chairmen of both businesses are committed to improving people's lives. The corporate leaders first met when 360 Australian businesses travelled to Indonesia during Indonesia Australia Business Week in November 2015 to explore collaboration opportunities.

Osborne pinpoints three primary factors driving Blackmores' success in ASEAN to date. 'We employ very good country managers – typically from a multinational fast-moving consumer goods (FMCG) background – and build very strong local teams, because they understand their markets,' he says. 'Furthermore, we're a brand that focuses on quality and we believe that you have to educate your consumers and your partners about that.'

'We have a big focus on training doctors, pharmacists and other people who influence our category, as well as on our government relationships across the region,' Osborne adds. 'We always make a strong contribution to the communities we work in, whether it's through corporate social responsibility or other programs.'

Osborne also cites Blackmores' 85-year history in Australia and its 30-plus years in Thailand as key to building trust in new and existing ASEAN markets. 'Longevity has been one of the keys to our success in ASEAN,' he says.

Blackmores has benefited from free trade agreements (FTAs) between Australia and ASEAN countries.

When FTAs have been implemented, Blackmores has reaped the rewards of tariff reductions and similar measures. 'We firmly believe if you want a good, strong FTA, you've got to be part of the process and contribute,' Osborne says.