Interesting read in the Financial Review

Australian Pharmacy Alliance's 650 independent outlets make daigou bid

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Infant formula maker Wattle Health is among the Australian Pharmacy Alliance's launch brands. Kylie Pickett
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by Michael Bailey
A network of 650 independent pharmacies will aggressively market selected Australian brands in a bid for the Chinese personal shopper or "daigou" market hitherto dominated by Chemist Warehouse.
The Australian Pharmacy Alliance, owned by independent pharmacies with a collective annual turnover of $1.3 billion, has partnered with DaigouSales, a platform for brands to sell direct to daigou, to launch a brand incubation program called Slingshot.
For $7500 over three months, the brands – which are vetted for their potential appeal to Chinese consumers – will have prominent display near the front of the 650 pharmacies, plus marketing and logistics services. The two launch brands are ASX-listed infant formula maker Wattle Health and Koala Eco, which makes natural cleaning products from Australian flora.
"Unless you are an established brand, the big-box pharmacies and the daigou don't want to know you," said DaigouSales founder Mathew McDougall. "If you want to export to China, your product's brand awareness needs to be on the rise in Australia and you need to be achieving strong local retail sales."
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DaigouSales founder Mathew McDougall (left) and Australian Pharmacy Alliance chief Darren Dye. Supplied
While there are now more than 1000 "pack and send" stores targeting daigou living in Australia, which are gradually being consolidated by the likes of ASX-listed AuMake, the giant of the trade is still Chemist Warehouse, said Australian Pharmacy Alliance chief executive Darren Dye.
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Mr Dye estimated about $1 billion of the $4 billion annual turnover through Chemist Warehouse's company-owned and franchised network was thanks to daigou, and the big-box chain had an even split between revenue sourced from drug dispensary and revenue sourced from retail.
The split is 80 per cent in favour of dispensary at the Australian Pharmacy Alliance members, a ratio Mr Dye hoped would balance as they became known for stocking emerging Australian brands not available elsewhere.