Infant and maternal health market opportunities in Vietnam and Thailand
As the birth rate continues to decline in China and infant formula regulations tighten, companies are now looking for opportunities in the infant and maternal health market elsewhere, with Vietnam and Thailand becoming the alternative growth options.
This is according to the observations of Australia’s organic milk powder company Nutura. The firm has recently embarked on expanding its presence into both Vietnam and Thailand.
In Vietnam, the company is partnering Natural Foods Group in launching its organic infant milk formula, as well as its pregnancy and conventional infant milk formula.
Co-founder Jeremy Okraglik said that Vietnam has become a growth hotspot that Australian businesses have been turning to.
“There's a big opportunity in Vietnam, as there have been challenges in China over the previous few years, a lot of Australian businesses have been turning to Vietnam as an emerging market,” he said.
He said that while organic and premium infant formulas were in high demand in Vietnam, the company has also decided to launch a conventional formula for consumers looking for a more economical option, which was especially so for those that shop via the general drug trade channel.
“We like to assess each market individually and make sure the products are right for the market…In this case, we have provided a product which is also of high quality and comes with the fresh milk difference, but in the conventional format.”
Another Australian brand, Herbs of Gold, has also identified growth opportunities in Vietnam for breastfeeding support products.
It has developed a product known as Breastfeeding Support, a traditional herbal formula containing fenugreek seed extract and blessed thistle for lactation support.
Last year, the brand made its debut in the country after securing a deal with mum-and-baby store chain store Concung.
“We are definitely seeing an interest from a lot of Vietnamese daigous and local retailers in Australia for breastfeeding support products, which are seeing strong interest in the Vietnamese market,” Shaun Rutherford, CEO of Herbs of Gold ANZ, told us previously.
Similarly, in the South East Asia region, Thailand is said to be the “biggest opportunity” and the “most untapped” market for Australian infant formula brands among the neighbouring SEA countries.
“In my opinion and my observations, if you look at China, Malaysia, and Vietnam, there've been a lot of brands from Australia and New Zealand which have been able to penetrate these markets and pick up significant market share from the traditional MNCs or pharma companies.
“Thailand is one of the only countries which I have noticed in Asia, which doesn't have any of these innovative smaller boutique brands emerging from Australia and New Zealand. They have just products from the five or six traditional international brands,” said Okraglik.
According to Global Data, the key players in Thailand’s baby food market are Nestle, Danone, Kraft Heinz, Mead Johnson, and Srichiengmai Industry in year 2022.
Okraglik said that there could be a few reasons for this, including a more challenging regulatory landscape and a different distribution and retail ecosystem.
Nonetheless, these hurdles are not stopping Nutura from exploring the Thai market.
It recently entered into a distribution agreement with Thailand’s CP Foods, where the latter will help introduce its products into the Thai market.
Australia’s Back to Nature (BTNature), which specialises in milk powder products, also sees Thailand and Vietnam as markets with new growth opportunities. China is one of the biggest markets for BTNature at the moment.
“Other than China, we see market opportunities in South East Asia, including Thailand, Vietnam, Malaysia etc.
“They have a similar model to China, for example, they do not many farming pastures, the developments of their dairy products industry are being limited, but their population is on the rise – so is their income level and they are upgrading their product consumption,” Eddy Luo, the CEO of BTNature China, told us.
There are also other SEA countries, such as Philippines and Indonesia, where there is also a small presence for brands from Australasia, but similarly, Okraglik said that those markets have complicated regulatory landscapes as well.
“If you'd like to look at these markets, you need to factor in that there might be a bit of a lead time between beginning the process and then finally getting into market,” he said.
Bayer also told us earlier that Elevit’s launch in Indonesia had coincided with a major policy change, where the authorities have started to move from just an iron and folic acid recommendation to multiple micronutrient supplements as the standard of care for pregnancy.
A place for premium products in Cambodia?
Cambodia might not come straight to mind when we talk about growth opportunities for premium health supplement products, but major nutraceutical player Swisse has set sight on capturing market share in the country.
Last October, the brand officially launched into the South East Asian country, where over 100 attendees, including retail partners and health professionals have attended, as well as Justin Whyatt Australian Ambassador for Cambodia and Dr Kan Channmeta Secretary of State of the Ministry of Industry, Science, Technology and Innovation for Cambodia.
The brand’s products are stocked in over 164 pharmacies across the country.
“Swisse has quickly made its mark with ranges in over 164 pharmacies and already established strategic partnerships, showing a promising future for expansion across Cambodia where health consciousness is on the rise,” said parent firm Health and Happiness Group.
Even before its official launch, the brand has already gained a large following on social media, with an active Facebook page since February 2022 and amassing 34k Facebook followers.
Another Australian brand, SpringLeaf from Homart, has also made its products available in Cambodia, with an office established in Phnom Penh.
The New Zealand government has also identified Cambodia as a potential market for the country’s premium products.
In a 2021 report, the government cited opportunities for high-value, consumer-oriented products, such as health supplements, skincare, and some segments of food and beverage.
However, it did note that the health supplement market is still at a nascent stage, but potential for growth could come with shifts in lifestyles and fitness habits.
It also said that consumers want high quality health supplements and prefer products from Europe, Australia, US, and Japan.
According to the product, Cambodian consumers perceive products from France, US, Australia, and New Zealand as having high quality and premium.
Products from Japan, Thailand, and Cambodia are seen to be of medium quality and price range while products from Vietnam and China are deemed to be at the other end of the spectrum.
The report noted that New Zealand exporters could exploit the opportunities for multivitamins, dietary supplements, organic and natural supplements aimed at the middle to middle-upper income consumers. The products could be sold via modern retail outlets, medical experts, or standalone flagship brand stores.
“Cambodia has been one of the fastest growing economies in the world, with an average GDP growth rate of 8 per cent between 1998 and 2018. Growth in household incomes along with increasing urbanisation are contributing to lifestyle shifts, which are expected to strengthen demand for imported goods,” said the report.
It added that New Zealand’s exports to Cambodia amounted to almost NZ$14.9m in 2019, which increased at an annual rate of 35.8 per cent from 2016.
Indonesia’s ripe for growth
Indonesia has one of the biggest populations in the SEA region and it is one of the top three SEA nutraceutical trading countries with China in year 2022, making it a nutra market to watch out for new growth opportunities this year.
In 2022, Indonesia was the biggest SEA dietary supplement importer into China, followed by Malaysia, and Thailand.
The country exported US$450m worth of health foods into China that year, up from US$400m in 2021, with edible’s bird’s nest its major export.
At the same time, Indonesia was also ranked number three when it comes to the nutraceuticals traded out of China into SEA, only behind Malaysia and Vietnam, said a report by China Chamber of Commerce for Import and Export of Medicines and Health Products (CCCMHPIE) last October.
Indonesia’s nutraceutical scene is indeed seeing a flurry of activity. Blackmores said last year that Indonesia was only behind Thailand among its international markets sales, with the two countries contributing five and nine percent to its net sales respectively for its FY23.
Some companies, such as Singapore’s precision gut microbiome firm AMILI, has announced plans to expand in Indonesia, after having established partnerships in Malaysia, Thailand, Vietnam, and the Philippines.
Last August, it said it aimed to grow regionally on the back of recent funding and positive market responses.
“We are looking to grow deeper within each of these markets. The ASEAN region, including Indonesia, are important to us, and we are currently exploring various collaborations to help expand our reach within each country.
“Our recent funding, led by venture capital firm East Ventures, will drive our expansion into Indonesia, with emphasis on localised gut health solutions,” Clifford Chow, Vice President of Consumer Health and Communications at AMILI told us previously.