Lockdowns forced a shift with vitamin purchases happening mainly in supermarkets
The COVID-19 pandemic pushed people away from pharmacies and towards supermarkets to buy vitamins – and when they got there, they bought less, according to Blackmores CEO Alastair Symington.
Blackmores delivered its annual report this week showing its vitamin and dietary supplement category fell $200 million in retail sales on an annual basis, with a 14% decline in its Australia/New Zealand revenue.
In the report’s CEO Year in Review, Mr Symington wrote that the past 12 months of restrictions and lockdowns in Australia “have led to a consumer shift, with foot traffic moving from pharmacy to grocery, and from traditional retail to online”.
While its focus for the financial year 2021 had been to ensure Blackmores had “foundational elements in place while dealing with the disruption caused by a pandemic” he admitted its ANZ division had “faced unprecedented challenges”.
The considerable drop in Australasian revenue was partly the result of “fewer sales to travellers and international students in retail outlets and a decline in average weight of purchase,” he said.
Over and above that, he noted, “traffic to both traditional and discount pharmacy was down, as lockdowns forced a shift to grocery channels where the average spend per trip is much lower”.
Coupled with this lower pharmacy foot traffic was the decline of the Daigou trade, which had also hit the company’s bottom-line.
Although its BioCeuticals brand was still the “leading practitioner brand in pharmacy in Australia” sales of its largest BioCeuticals sub-brand ArmaForce declined “as a result of pantry loading in prior year 2020 and the lack of a cold and flu season”.
One bright spot, he said – likely to be cold comfort to community pharmacy – was the March 2021 launch of its personalised online direct-to-consumer service B(more) “which allows consumers to consult with our online naturopaths and build personalised vitamin subscriptions, delivered straight to your door in convenient daily packages”.
Mr Symington said that “for many sectors, COVID-19 has highlighted that the move to a more omnipresent digital economy is much closer than what we all predicted just 12 months ago” with its e-commerce sales now contributing 27% of sales in FY21.
But in a supplementary interview with the Australian Financial Review, he said while some people had being buying online there was still a gap in overall sales during lockdowns.
“Some of it translates to online, but not all of it,” he told the paper.
The company’s growth had been driven by its international division, which was up 27%, with China up 28%, offset by the ANZ region’s 14% decline.