MGC Pharma is about to start selling into China
Health & Biotech
Health & Biotech
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Special Report: MGC Pharma will begin selling its nutraceutical products to Chinese consumers, following a successful trial with leading e-commerce platform YuShop.
Shares in MGC Pharma (ASX:MXC) got a significant boost back in April when it announced it had scored a marketing and distribution agreement for its nutraceutical products, including CBD Hemp protein powder, BCAA CBD capsules, CBD Water Soluble Solution and CBD herbal V-Pen, with YuShop, a leading Chinese cross-border and e-commerce marketplace.
And the company today revealed that an eight-week market test had been extremely successful. A full marketing and sales campaign will begin immediately.
The initial shipment of products for the campaign is already on its way to China.
That, MGC says, will lead to a significant increase in sales over the coming six to nine months, with the company to retain 65 per cent of gross sales margins.
MGC Nutraceuticals Products (supplied)
YuShop will be selling the aforementioned products to Chinese consumers via its established online platform and network of retail channel partners, including 1,500 luxury spas.
The deal presents a huge commercial opportunity for MGC, with currently over 350 million middle-class Chinese consumers that are expected to spend nearly $30 billion on vitamins and supplements by 2020.
The news gave MGC shares a nice bump, up 9 per cent to an intraday high of 5.1c.
Nathan Hasley, YuShop’s CEO, said the initial test gave his company confidence ahead of the full sales campaign.
“We are very optimistic for the full-scale commercialisation campaign of MGC Pharma’s nutraceutical products; their product suite fills an underserved product category in China today and we feel that it will set a standard in the premium CBD infused health products,” he said.
“Our next phase will include rolling out the product suite in over 1,500 premium locations spanning all top-tier Cities in China, and we expect to reach over 1.5 million targeted consumers per month by end of Q1 2020, with sales expectations to increase over that time accordingly.”
Roby Zomer, co-founder and managing director of MGC Pharma, said the deal was proof of his company’s growing revenue streams.
“The successful completion of the market test campaign and the positive initial response received from the Chinese market represents an exciting new potential revenue opportunity for the company,” he said.
“It will assist in the advancement of the Company’s overarching growth strategy to become a leading international producer of cannabinoid based products.”