Vitamins frenzy

With all the doom and gloom in the markets this is the hottest sector on the ASX by a mile.
I reckon it has only just started and has a long way to go.

Vitamins frenzy spills over as Nature's Way, Bioglan owner gets buyout offers
SMH, 30 sept 2015

The Australian vitamins frenzy has spilled over into the private sector as one of the nation's biggest vitamins, supplements and skincare companies, Sydney-based PharmaCare Group, is being courted with big buyout offers that it has spurned to focus on expansion into China.
PharmaCare, which generates annual revenues of almost $450 million from a stable of consumer products including its big-selling vitamins brands Nature's Way and Bioglan – along with skincare and toiletries brands Brut, Norsca, Rosken and Skin Doctors – has received a string of overtures. But its chief executive, Vincent Tan, says the company is not for sale.
"Everybody would like to get a piece of the action," Mr Tan told Fairfax Media.
"People are always looking to get their hands on us."

PharmaCare is headquartered at Warriewood on Sydney's northern beaches and was founded 30 years ago by businessman Toby Browne, who has steadily built it up into one of Australia's big players in vitamins and supplements.
"We are not for sale," Mr Tan said. He declined to say where the buyout offers had come from, but said they had been a regular occurrence and had sped up as Chinese demand for Australian vitamins soared.
PharmaCare is located in the same Sydney northern beaches region as high-flying Australian market leader Blackmores, which continues to astound investors with a soaring share price defying the global sharemarket rout of the past few weeks.
Blackmores shares are now trading near $140, more than a fivefold increase from 13 months ago when the stock was trading at $25. Blackmores has about 23 per cent of the Australian vitamins market. Its close rival, Swisse Wellness, holds a similar market share and was sold for an eye-popping $1.67 billion two weeks ago to Hong Kong-listed Biostime.
Extraordinary demand from China for Australian-branded vitamins has fuelled a sharp lift in revenues and profits for makers. They are capitalising on Australia and New Zealand's "clean and green" reputation as China has been rattled by a series of home-grown contamination scandals involving milk powder, berries and infant formula.
Playing catch-up

Chinese private equity firms and trade buyers have been very active in the Australian market as potential buyers of vitamins companies. Chinese private equity firm Hony Capital and Chinese manufacturer Shanghai Pharma were two underbidders in the race for Swisse.
Mr Tan said PharmaCare's sales growth in the Australian market from its suite of brands had been very good. "Our growth in the local market has been very strong," he said.
Industry players estimate PharmaCare may have up to 15 per cent of the Australian vitamins, supplements and healthcare products sector.
Mr Tan said PharmaCare was speeding up its own plans to sell more vitamins in China and had made several new appointments in the past few months to strengthen its push into the country. He said Blackmores and Swisse were further advanced in their China strategy, but PharmaCare was making inroads.
"Blackmores and Swisse got the jump on us," he said.
Mr Tan said it was unlikely that PharmaCare would go down the same route as another rival, Vitaco, which listed on the ASX two weeks ago after a $232 million raising to help fuel its growth. PharmaCare's annual revenues are more than double those of Vitaco.
"I can't really predict the future," he said. "I don't think it's likely."
Mr Tan has just returned from a business trip to China and says the "trust" factor for Australian vitamins is a crucial selling point that shows no sign of waning.
He declined to comment on whether he was surprised at the high multiple that Swisse sold for.
"It's not for me to say."
Swisse sales have been reinvigorated by the Chinese demand after the Swisse business went through a rough patch in 2013 following missteps in a United States expansion.
The brand is heavily marketed with a range of sports stars and celebrities, including actor Nicole Kidman, MasterChef host George Calombaris, former Test cricket captain Ricky Ponting and Hawthorn AFL star Sam Mitchell fronting campaigns.