CEO Sunny Liang told NutraIngredients-Asia that the company hopes to emulate the success of big names such as Unilever and Procter & Gambler, which he said had focused on product distribution in their early days but later invested in building successful household names.
Its brand business currently makes up over 60 per cent of its overall revenue, with the rest from OEM manufacturing for other companies and product distribution.
The plan is to increase its brand revenue and OEM manufacturing to take on a supporting role.
The company is revamping its business following a change in management.
“If you look at some of the brand companies, like P&G and Unilever, they started as a distributor for different brands, and then they became a brand company, and then they just keep on adding different brands into their portfolio and continue to grow the brands.
“And some of the brands, as you know, have lasted a decade, more than 50 years, or even a century.
“This is something that we really want to emulate. We want to be a brand owner that continues to find the right brands and in the right categories to promote and bring a good product to the end consumer based on all the research and data that we have collected,” said Liang who was promoted to CEO from chief operating officer earlier this year.
Neurio and Moroka are the two in-house brands that Jatcorp will focus on for a start.
The two brands carry a range of milk powder formulated with lactoferrin as the key ingredient, with young children all the way to seniors their target audience.
The products are also formulated with functional ingredients such as immunoglobulins (lgG) and fructo-oligosaccharides (FOS).
The product Moroka Platinum Formulated Milk Powder with Lactoferrin + igG, for example, also contains vitamin A, D, B6, C, D, E, zinc, selenium, and iron. It comes in a tin of 60 sachets.
Another example is Neurio Formulated Milk Powder with Lactoferrin, which contains sialic acid, zinc, iron, and calcium.
The brands have found success largely in China where over 80 per cent of its revenue are from.
The products are sold in China via omni-channels – from e-commerce platforms JD, Tmall, to social commerce apps Douyin, Kuaishou, and offline in mother-and-baby stores where the products are sold as food supplements which do not require the blue-hat registration.
Tap on fast-growing subcategories, new markets
Jatcorp will be focusing on fast-growing health supplement categories and new markets to build up its brand business.
Liang has cited immune and gut health as examples of fast-growing sub-categories.
He noticed that immune health is still seeing strong demand in China post-COVID as seen in the company’s sales of its lactoferrin products in China.
Sales of its lactoferrin products in China, as well as investments in sales and marketing channels, have pushed Jatcorp’s FY24 revenue up by 42 per cent to AUD$52.5m (US$35.4m).
Net profit also went from a loss of AUD$4.6m (US$3.1m) to AUD$1.6m (US$1.1m) – an increase of 135 per cent for the Australian Securities Exchange-listed firm.
“Lactoferrin is a small category of the health supplements sector, but since the pandemic, I think people are more conscious about their immune health.
“That’s why the category has been growing at a very fast rate in the last few years. For three or four years, they've been growing at a 20 per cent plus rate.”
Based on data collected by the company, Liang said that globally, the lactoferrin category has been growing at a compound annual growth rate (CAGR) of nine per cent and this is expected to continue until at least 2030.
“We will try to identify the niche market, because the traditional health supplement categories are already occupied by the big players like P&G, Unilever and in China, there’s Swisse, Biostime, BYHEALTH which are dominating the traditional categories.
“There’s still a lot of growing subcategories that we try to identify and go into, so examples are gut health and immunity. There will be more subcategories that will emerge in the next few years based on the technology and new clinical study findings,” Liang explained.
It will also grow its brand business by expanding into new markets.
Earlier this year, it made its foray into Vietnam’s retail and e-commerce scene and Hong Kong across the pharmacy chain Mannings.
It is also exploring the US market with the use of social commerce through TikTok and will be attending Vitafoods Asia in Thailand to source for potential distributors.
Acquisition target
Jatcorp is also on the lookout for successful Australian health and nutrition brands as acquisition targets.
Liang said a goal for the upcoming year was to acquire one of such brands to bolster Jatcorp’s umbrella of brands.
The plan is to introduce the brand into overseas markets, especially into China and South East Asia markets.
“We are now trying to focus on all our resources around building brands, starting from our own existing brands and it won't stop that. We will continue to try to activate more brands, or even through M&A market.
“We find the right brand with good innovation and ingredient or formulations, we will probably take them on board and put it into our channel.
“We have very experienced distribution partners that work with us to promote our brands, so we can just embed the new brands into this channel to continue to grow our company.”
He revealed that he has been in talks with a couple of small and medium sized Australia brands but they will need to complement and synergise with Jatcorp’s business.