Wattle Health (ASX: WHA) is looking to rebrand as Wellnex Life, and trade under the ASX code WNX, after repositioning itself as a broad health and wellness business and entering an agreement to acquire Brand Solutions Australia and Pharma Solutions Australia (BSA).

The acquisition – pending shareholder approval – will give Wellnex Life 100% ownership over BSA’s extensive suite of health and wellness products and brands, including Wagner Liquigesic, and Wakey Wakey. The deal also sees BSA founder and MD Zack Bozinovski join the board and executive management of Wellnex.

BSA was founded in 2010 and now represents more than 15 health and wellness brands, and brought in $14.5 million in sales in 2020. Revenue of the combined group is expected to surpass $20 million in 2021.

Its product range complements Wellnex Life’s existing suite of products (including Uganic nutritional dairy range infant milk formula and Little Innoscents organic skincare), Wellnex Life noted.

The current 10-year distribution agreement with Chemist Warehouse, the country’s largest pharmacy retailer with over 300 stores nationally, remains in place and expands to include a joint venture to launch a range of Liquid Analgesics. 

Wellnex Life Executive Director, George Karafotias said the acquisition “remains true to what Wattle Health set out to do – namely, to ”innovate, develop and grow Australian health and wellness brands.”

BSA is set to be acquired for $4.75 million in a combination of cash and scrip.

Health and wellness market skyrockets following COVID-19

The health and wellness industry enjoyed one of its best ever years in 2020 as consumers turned their attention to their own wellbeing, and the trend is expected to continue.

The Australian market for health and wellness goods is worth an estimated $5.6 billion, according to research by Complementary Medicines Australia.

This figure is tipped to grow to over $6 billion by 2022, with vitamins and dietary supplements alone accounting for more than $3 billion. 

Immune-specific vitamins also got a shot in the arm last year with this market sector experiencing sizable growth.

This trend saw supplement manufacturers Swisse Australia and Blackmores both record a surge demand for vitamin C supplements (commonly used to boost the immune system).

“While each of our markets were significantly impacted by the ongoing devastation that the pandemic brought, short term demand for our immune support products was unprecedented,” Blackmores CEO Alistair Symington said. 

“In Australia we were fortunate to be considered an essential service, enabling our manufacturing operations to continue, and in fact step up production,” he added.

Data published by Market Research suggests this trend will continue, with the market for immunity supplements predicted to grow at a compound annual rate of 9% between 2019 and 2025.

“The onset of COVID-19 in early 2020 has stimulated the demand and sale forecast for immune supplements,” the research house said in a statement.

“More than 50% of consumers have increased their consumption levels and over 30% have planned to increase in the latter half of 2020.”

Rising health concerns among consumers and the flexible storage options available for these supplements are both expected to underpin demand until 2025.

Skimming the cream from the milk

Wattle Health’s transformation into Wellnex Life represents the culmination of a years’ worth of work to reposition the business as a health and wellness leader after the collapse of Organic Dairy Farmers of Australia (ODFA).

In May 2018, Wattle Health launched a joint venture called Corio Bay Dairy Group (CBDG) with plans to build a milk spray dryer in Geelong.

This facility would enable Wattle Health  to produce nutritional dairy products using ODFA-sourced organic milk, with the aim of selling to the then-booming Chinese ‘daigou’ market and, long term, the general trade market in China. However the onset of the COVID-19 pandemic (and its associated lockdowns) drove a sharp contraction in the daigou market.

ODFA was subsequently placed into voluntary administration, citing weakness in the Chinese market and other COVID-related pressures as reasons for the closure.

Wellnex Life – still operating as Wattle Health at the time – then underwent a corporate refresh that saw Mr Karafotias placed in charge of the business.

Under the guidance of Mr Karafotias and the management team, the spray drying facility was sold to Korean dairy business Maeil Dairy (with the sale finalised in January) for $13.5 million.

The team then successfully negotiated the terms of the BSA deal and the company rebrand with the engagement of Julius Cohen, Executive Director of Reach Markets as advisor to the board.

To stay up to date with the latest Wellnex Life company news and announcements, register your details on their investor centre.

Reach Markets have been engaged by Wellnex Life to help manage their investor communications.

Wellnex Life is the proposed new name change for Wattle Health Australia Limited (subject to shareholder approval)

Sources:

• The Top 7 Vitamin and Supplement Trends of 2021
• 2020 Supplement Business Report
• Twitter: NBJ | NBJ Summit @nutritionbizjrl
• Twitter: NBJ | NBJ Summit @nutritionbizjrl
• Swisse lifts Vitamin C production in ‘surreal’ times
• Blackmores Annual & half-year reports
• 7 Impressive Ways Vitamin C Benefits Your Body
• Immune Health Supplements Market – Global Outlook and Forecast 2020-2025
• ASX: WHA announcement 13 April 2021
• Wellnex Investor Presentation
• Chemist Warehouse: Why shop with us
• CMA: Australia’s Complementary Medicines Industry Audit & Trends 2020
• Wattle Health and Organic Dairy Farmers of Australia finalise deal
• AFR: A2 Milk shifts sights to corporate shoppers
• ABC news: Organic Dairy Farmers of Australia goes into receivership owing millions to farmer suppliers