The repositioning breathes a new life into the company, as it diversifies its milk business into the lucrative health and wellness industry.
After obtaining 97% shareholders’ approval at the AGM last month, ASX-listed Wattle Health Australia (ASX:WHA) will be rebranded to Wellnex Life (ASX:WNX) in the next few weeks.
This was the culmination of an extensive due diligence process done by the management team over the past 12 months to strategically reposition the company as a leading provider of consumer health and wellness brands.
With fresh changes made at the board level, the new company looks set to target the vitamin and dietary supplements segment of the Australian health and wellness industry, which is worth $5.6 billion and is expected to grow to $7 billion by 2023.
Health and wellness: A growing market
The Australian health and wellness industry is currently worth $5.6 billion and is expected to grow to $7 billion by 2023.
In this industry, Wellnex intends to target the significant vitamin and dietary supplements segment, which is currently worth roughly $3.1 billion domestically.
It also plans to expand into the $1.3 billion sports nutrition segment in the future.
The health and wellness industry is still a young and fast-growing market niche, and retailers are always in search of exciting products to bring to consumers.
However, getting these products to retailers at a high standard and in large enough volumes could become a significant barrier to entry for many new players.
To succeed in this market, a company would need an experienced sales and marketing team, as well as the relationships with distributors to get products on shelves.
With the BSA now onboard, Wellnex Life believes that it has all these capabilities and the network of relationships needed to execute the strategy.
The company has a strong partnership with the Big 6 health and wellness retailers, namely Chemist Warehouse, API, Sigma Pharmaceuticals, Priceline, Woolworths, and Coles.
Growth strategy
Part of Wellnex’s growth strategy is to keep increasing its brand portfolio by pursuing both acquisitions and future product developments.
The company will launch three new brands in the first quarter of FY22, which are to be sold in leading pharmacies, including Chemist Warehouse.
Wellnex is also looking to further develop its existing suite of products, including plans to expand the Uganics range to potentially include an organic A2 milk formula by the end of this year.
Scope still remains to expand the business domestically beyond the Big 6, with overseas sales also in the horizons.
Wellnex believes that its capital-light business model gives it the ability to be more efficient with its funds, which would enable it to quickly pivot to take advantage of new opportunities as they arrive.
Changes at the board level, which included the onboarding of Bozinovski as executive director and chief strategy officer, will shake the business and accelerate its strategy forward.
Apart from Bozinovski, the company is also seeking a new, independent chairperson to lead this highly experienced group to really ramp up the business going forward.
Why the rebranding
Wattle Health’s original vision was to become a leader in organic nutritional dairy products within the Chinese market.
It created a range of nutritional dairy products with a supply chain that allows the company to control every stage of the process.
To gain market share in the extensive and then-growing Chinese market, the company had worked directly via the daigou channel.
But the business encountered obstacles when COVID-19 hit, which subsequently resulted in Australia’s worsening trade relations with China.
During this time, Wattle expectedly faced challenges in attempting to raise funds to pursue potentially major corporate transactions.
However, the company took this opportunity to redesign the business. By July 2020, it had commenced a strategic review of not only its business, but of the whole market and how Covid could reshape its customers’ and competitors’ behaviour.
The outcome of the review showed the need for diversification away from manufacturing a narrow range of products for a specific audience.
It also showed that the company needed to go into the health and wellness market – a market where the company had not only built relationships and networks, but also understood its competitors.
More importantly, it was a market where consumers would become more willing to spend in a post-Covid world.
The company already had the know-how to take advantage of it, and just needed to find a way to diversify its own offering with an array of products.
After a long consideration, management decided to acquire Brand Solutions Australia (BSA), a company specialising in products within the health and wellness space.
The BSA acquisition
The BSA acquisition was the result of an extensive due diligence process, after the company disposed of key assets, including the sale of Cori Bay Dairy Group (CBDG) to Maeil Dairy.
BSA manages more than 15 brands with an extensive network of distribution deals, and product partnerships.
Heading up the BSA team was Zack Bozinovski, a health and wellness entrepreneur who already has a successful 10-year career in the sector.
Along with BSA, Bozinovski was also a major shareholder and cofounder of VÖOST Vitamins, a German-produced electrolyte formula which was recently sold to US multinational Proctor & Gamble.
As a brand founder, Bozinovski has built strong distribution partnerships with a number of key domestic players, including leading national pharmacy Chemist Warehouse.
He has single handedly turned BSA into a juggernaut of the health and wellness industry since launching it in 2010.
According to Wellnex, BSA’s suite of products complement its own, and past collaborations with the business have a demonstrated history of success.
For example, BSA had helped Wattle to get its Uganics and Little Innoscents into over 1,000 pharmacies, including leading pharmaceutical chains Chemist Warehouse and API.
Through this acquisition, Wellnex Life believes that it could become a leading health and wellness brand company with an extensive portfolio, which will provide the company with annualised revenues of over $20 million.
This article was developed in collaboration with Wellnex Life, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
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