Map: China
Analysts say Australia's connections to China have fostered a thriving market for Australian vitamin supplements, an industry said to be worth between $1 billion and $2 billion.
PhamaCare is a marketing and distribution company riding the boom. CEO Vincent Tan said he has had trouble keeping up with demand.
"We cannot even fathom where we can take the business to," he said.
PharmaCare owns a whole host of brands including Nature's Way, FatBlaster and EaseaCold.
"More and more people are aware of the value of taking certain types of supplements," Mr Tan said.
"Because you can never get it effectively either through your vegies or through your food or whatever. You could never."
PharmaCare's products promise more than just being healthy.
"Mothers believe that whatever this particular product supplies — fish oil or tuna oil — to the average kid, it helps in their learning, their behaviour, their concentration," Mr Tan said.
"In other words raising the IQ of the average Australian, and that's what we believe in."
Blackmores, VitaCo and PharmaCare all sell much the same idea. And it is working.
At the start of this year Blackmore's share price was sitting at $35. Fast forward to October and the price has soared towards $200.
Goldman Sachs recently lifted its price target on the stock by 5 per cent to $150.
Analysts have said Chinese tourists visiting Australia, students studying at the nation's universities, and Chinese migrants have all helped the boom.
Citi analyst Craig Woolford has researched the industry and said there were plenty of stories about people who had visited Australia from China taking suitcases of vitamins and supplements.
The ABC understands Chinese students are heading to Chemist Warehouse stores, buying vitamins and supplements in bulk, and shipping them back to China via ebay, pocketing a healthy little margin along the way.
"What we call the unsophisticated traders," said VitaCo CEO Ryan d'Alameida.
"People who are basically packing boxes and sending them from Australia or New Zealand to their uncles and aunts, and brothers and sisters, and mothers and fathers in China."
Analysts say it highlights how much the Chinese value trusted business relationships.
"So many Chinese consumers are looking for international brands they can trust and in vitamins and supplements, a lot of that is coming from Australia," Mr Woolford said.
Much of that trust is also built on a growing perception among the Chinese that Australia is "clean and green" — a country with high quality products and tight quality control.
"More and more Chinese are crossing the border to come here, and they're starting to realise the quality of our products," Mr Tan said.
And now that the Chinese government has opened up official distribution lines, companies can sell products through the internet without being taxed, and the race to get in and secure hoards of potential buyers is on.
"They've been dealing with single level marketing through Amway and the like for a long time, and relying on that trust factor to transact, and what the online e-commerce channel has enabled has facilitated this exchange," Mr d'Alameida said.
Mr Woolford explained that the e-commerce channel in China is Tmall or TaoBao.
"They're both owned by Alibaba and in terms of e-commerce growth they are the largest players," he said.
Vitamins and supplements are in high demand but Mr Woolford said that was just the surface of a market.
He said the data showed the Chinese are hungry for products marketed to enhance beauty or inner health like cranberry tablets, and hair, skin and nail formula.
"Look the dining boom that's the potential for Australia fits nicely with our food bowl, with our providence, with our quarantine, the recognition of brands and products that can be trusted," Mr Woolford said.
"Vitamins and supplements fit with that."
It sounds like just the tonic for a sluggish post-mining boom economy.
VIT Price at posting:
$2.99 Sentiment: Buy Disclosure: Held
