Commercialisation of probiotics & commercial trendsPaul MannionDirector of Product innovationBlackmores

Blackmores improves people’s lives by delivering the

world’s best natural health solutions.

We achieve this by translating our unrivalled heritage and knowledge into

innovative, quality, branded natural healthcare solutions that work.

OUR PURPOSE

• Founded by pioneering naturopath Maurice

Blackmore in the 1930s in Queensland

• Developed a system of healthcare based on

naturopathic principles; Celloid Mineral

Therapy was the foundation of the business

• Started one of Australia's first health food

stores in Brisbane and first naturopathic

colleges and associations in the country

• His views on natural health, preventive

medicine, the environment and recycling were

nothing short of radical in the 1930s

• This belief in the power of nature has a strong

influence on the way we operate today

• Maurice’s son Marcus Blackmore is a

Blackmores Executive Director

OUR HISTORY

OUR BRANDS

BLACKMORES BRAND

#1 vitamin brand in Australia

Most Trusted Brand in SE Asia

BIOCEUTICALS#1 practitioner brand in Australia

FUSION HEALTH AND

ORIENTAL BOTANICALS

Australia’s leading provider of Chinese herbal medicine

NATURAL ANIMAL HEALTH

Leading natural health products

for animals

ISOWHEY

Clinical Nutrition, Sports, Wholefoods & Weight Management

BLACKMORES INSTITUTE

A centre of excellence for natural health research and education

PROBIOTICS VALUED AT $147M AND ARE GROWING AT

+20.6% VS YA.

Source: Aztec Grocery & Pharmacy Scan MAT to 28/08/16

0

5000000

10000000

15000000

20000000

25000000

30000000

35000000

40000000

45000000

50000000

Qtr To21/02/16

Qtr To22/05/16

Qtr To21/08/16

Qtr To20/11/16

Qtr To19/02/17

Qtr To21/05/17

Qtr To20/08/17

Qtr To19/11/17

Qtr To18/02/18

Qtr To20/05/18

Qtr To19/08/18

Total Probiotics Segment Scan Sales

Total Probiotics Segment Scan Sales Linear (Total Probiotics Segment Scan Sales)

EXPORT ACCOUNTS FOR 2/3rd OF PROBIOTIC SALES IN

AUSTRALIA

BrandTotal Scan MAT 05/08/18

Domestic Units % Domestic % Export

Total Probiotics 6,199,256 2,364,335 38% 62%

Life-Space 2,015,426 555,143 28% 72%

Inner Health 1,331,380 591,227 44% 66%

Nature’s Way 1,085,253 287,118 26% 74%

Blackmores 490,677 215,771 44% 56%

Unit Scan Sales Performance

Top Four Brands

SOURCE: Aztec Australia Grocery Pharmacy, Total Probiotics, MAT to 05/08/18 Domestic Units and Units Actual

FRIDGE-FREE PRODUCTS ARE DRIVING 96% OF

THE PROBIOTICS GROWTH

0.0

10000.0

20000.0

30000.0

40000.0

50000.0

60000.0

MAT To 01/09/13 MAT To 31/08/14 MAT To 30/08/15 MAT To 28/08/16

Australia Grocery & Pharmacy -Probiotics Value Sales ('000)

Shelf-stable

Fridge

MOVING OUT OF THE FRIDGE - CHANGING PROBIOTIC

SHOPPING PATTERNS

OUR STRATEGY AT LAUNCH

Formulated based on scientific evidence

Each product contains specially selected clinically trialled probiotic strains which have been selected for their robustness, efficacy and potency

A specialised formulation process and packaging technology prevent moisture from harming the good bacteria, helping to keep the good bacteria alive

A prebiotic, vitamins and fibres have also been added to some formulations to complement the probiotics

Convenient fridge free range so products can be taken when travelling, stored at a desk or kitchen bench so consumers don’t forget to take them

9

A RANGE COVERING THE MAIN BASES – A GOOD START

Daily Health Kids Daily Health Immune Defence Eczema Relief Bowel Support Womens Flora Balance

Helps restore digestive balance and maintain digestive & intestinal health

Helps support kid’s digestive & immune system health

Helps support immune system health & reduce the severity & duration of cold symptoms

Helps reduce symptoms associated with mild eczema in infants

Assists relieving symptoms of medically diagnosed IBS

Promotes and balances vaginal flora

With added Inulin L. acidophilus (ATCC

700396): 7 billion CFU L. paracasei (Lpc-37):

7billion CFU B. lactis (Bi-07):

7 billion CFU B. lactis (Bl-04):

7 billion CFU B. lactis (HN019):

2 billion CFU

With added prebiotic, vitamin C & D

L. acidophilus (CUL60): 5 billion CFU

L. acidophilus (CUL21): 5 billion CFU

B. bifidum (CUL20): (125 million CFU

B. animalis subsp lactisCUL34 (2.375 billion CFU)

With added vitamin C & Zinc B. lactis (BI-04): 2 billion CFU L. acidophilus (CUL60):

6.75 billion CFU L. acidophilus (CUL21):

6.75 billion CFU B. bifidum (CUL20):

225 million CFU B. animalis subsp lactis

(CUL34): 4.275 billion CFU

With added prebiotic L rhamnosus GG :20

billion CFU

With added FODMAP friendly fibre (beneficial for those with IBS)

L. acidophilus (CUL60): 9.375 billion CFU

L. acidophilus (CUL21): 9.375 billion CFU

B. bifidum (CUL20): 312 million CFU B. animalis subsp lactis (CUL34):

5.938 billion CFU B. lactis (HN019): 2 billion CFU

With specific combination of strains based on clinical studies

L. rhamnosus GR-1TM:1.15 billion CFU

L. reuteri RC-14TM : 1.15 billion CFU

11

STABILITY – TEMPERATURE VS MOISTURE

• Minimise water activity by the selection of dry ingredients and excipients

• Post fermentation freeze drying of the probiotic concentrates (with inclusion of cryoprotectants)

Materials:

• Pre-conditioning and tempering of the product during the manufacturing process.

• Active drying of finished product

• Use of adequate overage to ensure shelf life

Manufacturing:

• Use of molecular sieves and specialized packaging to protect in- use and over the product shelf lifePackaging:

TRIPHASE AND STABILITY MAX PROCESS

TriPhase and Stability Max – The Ultimate Stability of Probiotics

This chart compares typical stability profiles obtained with a high potency probiotic

(over 5 billion per capsule) combined with a multivitamin component

THE LOW FODMAP DIET HAS REVOLUTIONISED IBS

MANAGEMENT

LOW FODMAP DIET MAY REDUCE MICROBIOME

DIVERSITY OVER TIME

CLINICALLY TRIALLED PROBIOTICS AND FODMAP-

FRIENDLY FIBRE

SUPPORTED BY A MEANINGFUL BUT MEASURED

CAMPAIGN ACROSS A NUMBER OF FORMATS

$8M campaign will drive awareness of Probiotics+

and the importance of probiotics beyond gut health

MESSAGING IN CREATIVE WAS TAILORED ALONG THE CONSUMER JOURNEY

TO DELIVER RELEVANT INFORMATION AND CONVERT TO PURCHASE

Consumer journey from awareness to purchase

Research

Range + product specific information with proof points

Consideration

Product specific messaging with proof points

Convert to purchase

Strong call to action to encourage purchase

POS + displays (off location & shelf)

Price promotion

Offer to online members (online sales)

Awareness

Google search

Website content

Digital ads

Catalogue

Education to support

pharmacy recommendation

Predominantly broad range messaging

TV

Online catch up TV

Youtube advertising

Radio brand ads

Digital + social activity + eDM

PR campaign

Magazine advertorials

Kids’ Health

YouTube product ads

Magazine advertorials

Social influencer activity

Digital + social activity + eDM

POS + off location displays

Catalogue

POS + displays

(off location & shelf)

Price promotion

Offer to online members

(online sales)

MULTI CHANNEL SOCIAL MEDIA

SOCIAL MEDIA CREATIVE

Digital

TV CREATIVE

PHARMACY IN-STORE EXECUTION

CATALOGUES POS SUITE

IN-STORE AND ONLINE TRAINING FOR HCP AND PA

COMPLEMENTARY MEDICINES AUSTRALIA –

BEST MARKETING CAMPAIGN 2018

INITIAL RESULTS ARE ENCOURAGING

1.7 1.8 1.7 1.4 1.6

4.9

6.97.5

8.1

6.9

8.1

0

5000000

10000000

15000000

20000000

25000000

30000000

35000000

40000000

45000000

50000000

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

Qtr To21/02/16

Qtr To22/05/16

Qtr To21/08/16

Qtr To20/11/16

Qtr To19/02/17

Qtr To21/05/17

Qtr To20/08/17

Qtr To19/11/17

Qtr To18/02/18

Qtr To20/05/18

Qtr To19/08/18

Total Probiotics Segment Scan Sales Total Probiotics Blackmores Share of Total Probiotics

Linear (Total Probiotics Segment Scan Sales)

Source: Aztec, Australia Grocery Pharmacy, Total Probiotics

BLACKMORES PROBIOTIC PENETRATION GREW

FROM 0.2 TO 1.1 IN 12 MONTHS SINCE LAUNCH

Penetration Probiotics by Brand

AUS – ALL SHOPPERS – MAT TO 27/01/2018

WHAT WORKED?

Burning platform =

< 2% share of a

growing market =

fast decision

making

Overall product

design and

positioning has

ensured we have

satisfied

consumer needs

around credibility

and efficacy.

Synergistic

marketing

campaign activity

punched above

it’s weight

Recognition of

market shift

towards shelf

stability

COMMODITISATION OR DIFFERENTIATION?

$32,000,035

$7,364,850

$-

$5,000,000.00

$10,000,000.00

$15,000,000.00

$20,000,000.00

$25,000,000.00

$30,000,000.00

$35,000,000.00

Total Krill Oil Market - $s

THE RISE AND FALL OF KRILL

IS BRAND ENOUGH OF A DIFFERENTIATOR?

30

MAYBE NOT…

COMMODITISATION CAN BE REVERSED

Figure 1: (a) The progression of economic value and (b) The regression of economic value Sources: “The experience economy” by B.Pine and J. Gilmore, 2011; Research and Innovative Technology

Administration Bureau of Transportation Statistics, 2012; U.S Centennial of Flight Commission, 2011; “The inflation calculator” by S. Friedman, 2010

PROBIOTICS IN EVERYTHING – “HEALTHWASHING”

THE CFU ARMS RACE

FORMULATION BASED ON SCIENCE AND STRAINS?

IS STABILITY A LIABILITY?

Therapeutic Goods Order No. 78

Standard for Tablets and Capsules

… but stability testing isn’t always undertaken by manufacturers and independent testing has shown some products have far fewer probiotics than they claim.

GROWING POPULARITY = SCRUTINY & SKEPTICS

CREDIBLE RESEARCH CAN MAKE A DIFFERENCE TO THE

DEBATE

THE RISE OF MEDICAL MICROBIOME MANAGEMENT

FOCUS ON CONSUMER HEALTH BENEFITS

I have been suffering from a type of eczema known as

pompholyx eczema for about two and a half years now.

When I would get a flare up, I would get large patches of

blisters on the inner part of my feet and smaller patches on

my fingers and heels of my palms. It was so painful and itchy

at times I would not be able to sleep. For months I struggled

using prescribed steroid creams as well as courses of oral

steroids with not much relief. It not only caused me physical

pain but I was also embarrassed about the way it looked.

Being 21 and being ashamed of people looking at your feet

because of the sores is not a good feeling.

About 2 months ago, I saw advertised the Blackmores

Probiotic Eczema Relief and thought I might as well give it a

go, and I’m so glad I did. After taking two courses of the

product my eczema has completely cleared up. My scaring

has decreased and new skin is forming where old eczema

sites used to be. Normally over summer wold be the worst

time to get flare-ups, however,

I have only had one minor blister patch come up on a very

hot day.

I’m so happy with this product and have recommended it to

some of my friends who also suffer from eczema. The

results have been way above my expectations.