Its acquisition by Japanese beverage giant Kirin Holdings sees the reach of innovative Australian health science pioneer Blackmores expanding apace.
Toru Yoshimura, director of the board and senior executive officer of Health Science Strategy at Kirin Holdings says Australian health supplements company Blackmores is the “missing piece” of Kirin Holdings’ long-term ambitions. The storied Japanese behemoth wants to expand its health and sciences division — a priority the company has rigorously pursued since the 1980s, when it recognised the Japanese beer market had reached maturity.
The move also marked a major governance step change for the iconic Blackmores, a company with a 90-year history, decades-long ties to the South East Asian market, and a brand still bearing the founding family’s name. Blackmores was first listed on the ASX in 1985, until it was purchased as a wholly owned subsidiary of Kirin Holdings for $1.9b in 2023.
Blackmores CEO and managing director Alastair Symington MAICD says the company’s longstanding reputation as a trusted brand, consistently recognised by consumers in Australia and South East Asia, is a key point of difference in the market. He notes that the early foresight of the company founder in recognising opportunities in the region secured a significant first-mover advantage for Blackmores.
Yoshimura says Blackmores will enable Kirin to achieve its long-term revenue targets of $5.1b and a normalised operating profit margin of 15 per cent in the health science field.
There is sizeable, long-term room for growth. The acquisition was completed in the second half of 2023, at which point Blackmores generated about $329m in revenues and a normalised operating profit of $-5.1m. The ambition for 2024 is to generate a revenue of about $694m and a normalised operating profit of around $60m.
“Overall, we expect Blackmores to achieve growth in the mid to high single digits,” says Yoshimura, noting that brand building is one of many growth levers Kirin plans to use.
“In particular, the markets in South East Asia and China are expected to grow, and in some countries, double-digit growth is predicted,” he says. “While enjoying the growth of the market, Kirin aims to achieve sustained sales growth by further strengthening its brand power, and to become a leading health science company in the Asia-Pacific region.”
Global expansion
Blackmores has been a constant fixture of the Australian business landscape since it was founded in 1932 by Maurice Blackmore AM. It has undergone many transformations as a company and was first established as a purveyor of health foods in Brisbane. Today, it is a natural health company with a presence in more than 11 markets and a workforce of around 1200 people.
The company’s growth trajectory has been punctuated by numerous acquisitions of its own in the health and supplements category, as well as expansion into the South East Asian market, which began in 1976 when it entered Singapore and Malaysia. That same year, the company clocked its first $1m in sales. Expansion into the Japanese, Indonesian and Chinese markets followed.
Blackmores operates in a highly regulated environment, requiring robust international and local governance to meet diverse market requirements. The company applies the rigorous standards of Australia’s Therapeutic Goods Administration (TGA) while tailoring compliance to local regulations across Asia, where Australian products are widely regarded as symbols of quality and efficacy.
Life after the ASX
The Kirin Holdings buyout ushered in governance shifts for Blackmores after it embedded within its Japanese parent. However, much of the stringent governance standards and regulatory requirements that came with being an ASX-listed company for nearly 40 years have been retained.
The Blackmores board was chaired by Brent Wallace FAICD from 2018–20. Then followed Anne Templeman-Jones FAICD (2020–22), and Wendy Stops GAICD, until the company was purchased in 2023. Marcus Blackmore AM FAICD, son of Maurice, had joined the board in 1973. Executive chair in 2009–17, he stepped down from the board in 2020, later selling his 18 per cent stake in the company for $335m when it was acquired by the brewer.
Under Kirin’s ownership, Blackmores has transitioned to a new governance structure. Locally, the Kirin Holdings Australia P/L board is made up of three directors — Yoshimura, also a director of Kirin Holdings Co Ltd, Symington and Kirin’s Toru Yamasaki, who is also deputy CEO and chief strategy officer.
The company’s management reporting structure feeds into Kirin’s board. The Kirin Holdings Australia and Blackmores Ltd boards delegate day-to-day management and operation of the group’s business and affairs to the CEO and executive management of Blackmores Ltd. This lets the company operate within a control and authority framework that enables risk to be prudently and effectively monitored and assessed through the adoption of a delegation of authority.
Symington joined the company in 2019, bringing international executive experience from companies such as Procter & Gamble in Shanghai and Singapore, and more than 24 years in health and beauty consumer goods. The Kirin buyout marked continuity, rather than a drastic change in approach for him.
“The biggest change was that when you’re a listed company, your responsibility as an MD is equal to any of the other independent directors on the board,” he says. “In that respect, moving to Kirin, I’ve taken the approach that those responsibilities don’t change.”
Preparing for acquisition
Being listed on the ASX instilled a robust framework for transparency, accountability and oversight, according to Symington. “That’s been embedded in our culture. As an Australian heritage company, we’re proud of that history. Part of that is acknowledging the corporate governance environment that’s helped to foster and build some of the greatest companies in the world.”
From a governance standards perspective, Blackmores’ ASX era helped prepare it for the acquisition. In many respects, it is still governed as a listed company.
“As we transitioned to Kirin and started working with them on our new governance structure, we adopted some of the ASX Corporate Governance Council (CGC) principles and recommendations,” says Symington.
“Things like laying solid foundations for management, oversight, recognising and managing risk, instilling a culture of acting lawfully, ethically and responsibly. Some of those CGC principles apply regardless of whether you’re a listed company or not. The other thing for us to consider is we’re still headquartered in Australia and need to ensure we’re still adhering to the legislative and regulatory frameworks that exist inside Australia.”
For Kirin, Blackmores’ ASX heritage made for a more streamlined transaction. “Blackmores’ existing strict governance practices were very helpful in Kirin’s detailed understanding of their situation,” explains Yoshimura. “In particular, during the acquisition process, the strict governance system made it easier to obtain information during the due diligence phase.”
Blackmores’ long history in South East Asia made it an attractive buy. “We saw in Blackmores a great opportunity to expand our health science domain with its strengths as a leader in naturopathy and health science products, its robust sales network in Oceania, South East Asia and China, as well as a leadership position in Oceania and South East Asian markets,” says Yoshimura.
Genba: where the work is done
While Blackmores’ expansion into China has been well-documented, particularly as it capitalised on the rise of the Chinese diagou reseller market in the years preceding COVID, lesser-known is its long-entrenched presence in other Asian markets. Today, 60 per cent of its revenue comes from South East Asia and China.
The region’s strong performance is the result of a long-term strategy as part of the company’s ambitions to reach one billion consumers by 2027. To achieve this, Blackmores has invested heavily in local operations in Asian markets, which now include a research facility and the development of products tailored to meet local consumer needs. Rather than being an export business, Blackmores has established subsidiaries, based in Asian markets and staffed with local and international talent.
This structure also aids regulatory compliance, as each market in South East Asia has differing regulatory requirements in the health supplements sector.
Blackmores has two regionally based leaders in South East Asia. Andrew Fuary helms the South East Asian and Korean markets, and has recently relocated from Australia to Thailand. Kitty Liu is the company’s managing director in China. Symington also regularly travels to Blackmores’ offices across the region, as well as Kirin Holdings’ headquarters in Tokyo.
“Over the past five years we’ve tried to shift from being an Australian-centric headquarters sending out directives to the markets, to being in a situation where the markets have more authority,” says Symington. “Moving to the Kirin Group was seen as being a real advantage. There’s a term they use in Japanese — genba. In translation, it essentially, means ‘go local, go to the market’”.
Local focus
Symington adds that Blackmores’ management structures in Asia have helped the company localise, grow and nurture relationships with stakeholders in the long term.
“It means we get signals back from the markets at a much quicker rate,” he says. “Our teams here are set up to support the market needs. So you don’t necessarily need to travel all the time, but you do need good, strong relationships with the country managers, sales and marketing, and regulatory teams based in each of those markets.”
A key part of Blackmores’ growth has been fuelled by localising its marketing and sales on popular local ecommerce channels such as Tmall, a Chinese-language website for business-to-consumer (B2C) online retail, spun off from Taobao and operated in China by Alibaba.
Symington is a firm believer in localising management, research and product development operations in other markets. “It’s really important for companies to consider, particularly in the consumables area,” he says. “Because you can export up to a point, but at some stage, you really need to make sure those products you’re developing are suitable for local market needs. Having that sensibility and understanding of those market needs is really important.”
The company’s post-merger integration with Kirin Holdings has also included collaboration from the exchange of human capital to the development of products. This year, Kirin is set to launch LC-Plasma, a post-biotic that supports immune health. Immunity is the number-one consumer health concern throughout South East Asia, according to Yoshimura.
As he explains, “There are a lot of back-and-forth assignments between the two companies, and mutual understanding and the building of a relationship of trust continues to progress.”
Climate and biodiversity risk
Navigating non-financial risk, in particular the climate-related variety, is front of mind across all markets for Blackmores CEO Alastair Symington MAICD. Its effective management is critical to the company’s core business operations.
“The thing that keeps me up at night is the ability to source high-quality ingredients,” he says. “In some instances in our industry, a lot of our ingredients are single-source, they come from one location. For us to get dual-sourcing options at the right cost is something we’re continuously working on. We don’t have any sovereign capabilities in raw material manufacturing here in Australia for the products [so we can’t] sell at a price consumers would be willing to pay.”
As an example, Symington cites fish oil, a large commodity in the health supplements sector. Studies have projected a decline in the global availability of the ingredient for human consumption, as a result of global warming.
In Blackmores’ portfolio, fish oils account for 25 per cent of total vitamins and supplements sold. Globally, prices for the ingredient have surged in recent years against a backdrop of slowing supplies of naturally sourced omega-3. “Climate change has meant the yield on fish oil has been reducing,” says Symington. “Over time, climate risk will lead to escalating prices of fish oil to the point where it will be unmanageable from a consumer point of view. We need to start thinking about more sustainable sources of omega, the active ingredient in fish oil. There are more sustainable, plant-based sources of omega. So, is there an opportunity in Australia for us to develop ingredient manufacturing of a really key health supplement?”
Nature-based risk assessments are a key part of Blackmores’ work, particularly in preparing for its nature-related financial reporting — in line with Taskforce on Nature-related Financial Disclosures (TNFD) guidelines — this year.
“Part of the work we’ve been doing at Blackmores is ensuring we get a good understanding within our supply chain of where the nature-based risks are,” says Symington. “Thousands of ingredients go into our products, and getting a good understanding of where biodiversity risk is will mean some of those ingredients may not be available in the future. That’s probably the key risk, I’d say, the combination of access [to ingredients] and long-term impact from climate change.”
This article first appeared under the headline ‘Healthy outlook’ in the February 2025 issue of Company Director magazine.
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