CDH-backed GO Healthy continues efforts to tap Asian demand before exploring exit in 18 months
04 November 2019
GO Healthy, a New Zealand health supplement business backed by Asian private equity (PE) house CDH Investments, will continue its efforts to capture increasing demand from Asian consumers before starting discussions for an exit about 18 months later, CDH Managing Director Thomas Lanyi said.
CDH has received inbound expressions of interest from both strategic and PE buyers for the business, which was bought nearly three years ago, but an exit looks a bit early now as the firm typically holds investments for five years, Singapore-based Lanyi told this news service.
A potential exit would be via a trade sale, he added. Before that, CDH still wants to see GO Healthy’s strong growth to “pan out a bit more” from the current revenue run rate of NZD 150m (USD 97m), the MD said.
The company’s revenue CAGR (compound annual growth rate) over the 2014 – 2019 period has been 46%, while revenue for this current financial year ending March 2020 is expected to grow by about 50% again, he added.
CDH bought an 80% stake in the Wellington-based company in December 2016, according to local media reports. Financial details were not disclosed.
Growth accelerated by CDH
At the very beginning, CDH recognized that the key to accelerate growth is positioning the business to tap Asian demand, Lanyi said, noting that the business did not have any in-house Asia-related capability back then.
Therefore the company started with the “low-hanging fruit” in the New Zealand market, selling into Asian-run pharmacies and Asian communities, and then built a much larger team in Melbourne to tap Asian demand via Australia, he noted. The company also set up a team in Singapore to make introductions to new customers and manage customer relationships in Asia.
Therefore the company started with the “low-hanging fruit” in the New Zealand market, selling into Asian-run pharmacies and Asian communities, and then built a much larger team in Melbourne to tap Asian demand via Australia, he noted. The company also set up a team in Singapore to make introductions to new customers and manage customer relationships in Asia.
International sales are mainly through key pharmacy channels, including Chemist Warehouse in Australia, Guardian in South East Asia and Mannings in Hong Kong; e-commerce platforms in China such as Kaola and Tmall, both owned by Alibaba ; and international airlines’ in-flight shopping channels, he said.
In less than three years, GO Healthy has now become New Zealand’s bestselling supplement brand in pharmacies, with a 22% market share. It is also one of the top ten fastest-growing brands among the top 30 brands at Chemist Warehouse in Australia, and among the top ten brands out of 200 brands in Singapore, according to Lanyi.
Bolt-on acquisitions
Apart from market entries and related organic growth initiatives, GO Healthy also made a bolt-on acquisition in the first half of 2017, acquiring Egmont Honey, a Manuka honey maker and supplier in New Zealand, the MD said.
In less than three years, GO Healthy has now become New Zealand’s bestselling supplement brand in pharmacies, with a 22% market share. It is also one of the top ten fastest-growing brands among the top 30 brands at Chemist Warehouse in Australia, and among the top ten brands out of 200 brands in Singapore, according to Lanyi.
Bolt-on acquisitions
Apart from market entries and related organic growth initiatives, GO Healthy also made a bolt-on acquisition in the first half of 2017, acquiring Egmont Honey, a Manuka honey maker and supplier in New Zealand, the MD said.
Egmont Honey used to be a supplier for GO Healthy and other manufacturers, with only 10% of its sales coming from its own brands. Since joining GO Healthy, the business division now generates nearly 50% of the revenue from its own brands with a dramatic lift in margins, Lanyi said.
The presence of Egmont Honey in supermarkets like Aldi also leaves the door open for GO Healthy to potentially enter its other products into grocery channels in future, he added.
Going forward, GO Healthy could acquire other health-related products that synergize with its existing distribution presence, Lanyi said.
For example, natural beauty products, such as cosmetic beauty products with natural or organic ingredients, would fit “most nicely” with GO Healthy’s existing profile, he noted.
Still plenty of room
GO Healthy still generates about 42% of its revenue from New Zealand, with Australia contributing 22% and Asia contributing 28%. It could further grow its market share in Australia and Asia, Lanyi said.
For example, the Australian market is much larger and far more fragmented than New Zealand, offering plenty of room to grow, he said. Other than Blackmores and Swisse, everyone else has a single-digit market share, he explained.
GO Healthy differentiates itself by providing therapeutic strength products with stronger formulations and a 1-A-Day capsule size that makes it much easier for consumers to take, Lanyi said.
While most competitors are using contractors to manufacture products, the company has its own manufacturing facility in Auckland, which has been expanded significantly under CDH, the MD said. It is among “a handful of players” that can make products in-house, he said, adding that Asian customers are increasingly demanding “traceability and authenticity”.
Going forward, GO Healthy could acquire other health-related products that synergize with its existing distribution presence, Lanyi said.
For example, natural beauty products, such as cosmetic beauty products with natural or organic ingredients, would fit “most nicely” with GO Healthy’s existing profile, he noted.
Still plenty of room
GO Healthy still generates about 42% of its revenue from New Zealand, with Australia contributing 22% and Asia contributing 28%. It could further grow its market share in Australia and Asia, Lanyi said.
For example, the Australian market is much larger and far more fragmented than New Zealand, offering plenty of room to grow, he said. Other than Blackmores and Swisse, everyone else has a single-digit market share, he explained.
GO Healthy differentiates itself by providing therapeutic strength products with stronger formulations and a 1-A-Day capsule size that makes it much easier for consumers to take, Lanyi said.
While most competitors are using contractors to manufacture products, the company has its own manufacturing facility in Auckland, which has been expanded significantly under CDH, the MD said. It is among “a handful of players” that can make products in-house, he said, adding that Asian customers are increasingly demanding “traceability and authenticity”.
The company has an extensive portfolio of potent and effective formulations spanning more than 150 products that cover major health and wellbeing categories, with leading products such as GO Glucosamine and GO Multi Pregnancy.
