He is fascinated by the insights companies like Blackmores gain into consumer behavior, which then can be used to fill gaps in the market and develop new products.
Last month, Blackmores delivered a 4.2 per cent rise in net profit to $20.3 million for the six months to December 31 after a 14.3 per cent increase in sales to $346 million.
Disrupted supply chains
But the group refused to give a profit forecasts for the full year because of the uncertainty around the coronavirus pandemic and global supply chains.
COVID-19 case numbers may be falling and lockdowns coming to an end in Australia, but that is not the experience that is being lived in many of Blackmores’ key south-east Asian markets. This has translated into supply chain disruptions, on top of which come higher freight costs – in many cases, far higher. Blackmores imports a lot of fish oil from South America, from where the cost of a single container has risen fourfold over the past 18 months.
“Not only is the cost going up, but then you potentially have delays because you’re waiting for containers,” Symington says, predicting that the supply chain disruptions would last for the next six to 12 months.
To compensate for higher input prices, Blackmores has pushed through a 3 per cent increase in prices in China, but is not going down that route in Australia. Locally, the company aims to recover higher input costs by increasing sale of high margin products.
“If we can bring more innovation and more new products to market that have that premium positioning, then that’s a way for us to recover costs,” Symington says, pointing to a new natural sleep product and Blackmores’ BioCeuticals range, which can only be sold by pharmacists, naturopaths and other practitioners.
Between July and December last year, China accounted for 24 per cent of Blackmores’ total sales of $346 million, while international, which takes in south-east Asia, accounted for 34 per cent. India, in which Blackmores only launched last September, and Indonesia are viewed internally as the highest growth markets, but China is still key, even if the company’s reliance on the Chinese market has declined since 2016.
And no, Symington is not fretting about the prospect of China slapping trade barriers on natural supplements from Australia, as it has done with beef, cotton, timber and coal (while placing hefty tariffs on wine and barley).
“We don’t expect that there’ll be any of these tougher sanctions that would come on international health products that the Chinese people would be looking for. I think the only time that could come is if there was a legitimate alternative locally that the consumers were as comfortable with, and we don’t see that yet,” Symington says.
Still, the Blackmores boss stays in touch with friend Tim Ford, CEO of Treasury Wine Estates, and would like to see a less combative relationship between Australia and China.
“I would encourage good, balanced bilateral discussions to be happening with any of our trade partners. It’s not for me to really comment on the Prime Minister’s approach, but certainly I’d like to see a more balanced view. We still need to recognize that China’s our biggest trading partner.”
Despite the at times fractured relationship between Australia and China, Symington still sees opportunity to lift sales into that market. Blackmores products may be recognized in tier one and tier two Chinese cities, but that is not the case in smaller cities.
“I think of China less as a country and more as a region of 31 provinces. Each province is quite different in terms of their language, their culture and their economic development. Over time, I think there’s potential there,” says Symington, who is married with three children between the ages of eight and 16.
Global brand ambitions
Blackmores’ goal is to double its customer reach to one billion consumers in five years – which will come almost entirely offshore. Customer reach refers to the number of consumers who cite Blackmores as one of the top health brands in Australia.
“If 1 per cent of that billion converts into a sale for Blackmores, then that enables us to achieve our financial goals,” Symington says, adding that a lot of Australian companies never maximize their potential to become household names globally.
“If we can reach a billion consumers, we can be one of the biggest health natural health companies in Asia Pacific. I’d like to see we have an ambition to be a legitimate global natural health company that’s based in Australia,” he says.
Closer to home, Symington refuses to discuss a nasty internal spat between Marcus Blackmore, the largest shareholder, and chairman Anne Templeman-Jones. At the annual shareholder meeting last October, Templeman-Jones was returned with just 60 per cent of the vote. Symington brushes aside the fact that five of the six non-executive directors have been on the board for less than 18 months, saying that the directors have a diverse background and bring a broad range of business experience.
Marcus Blackmore, he adds, is a “very good sounding board”. They speak about once a month, beyond which he leaves communications with the former chairman to Templeman-Jones.
So what does keep Symington – who starts the day with some intense exercise such as high intensity training, followed by a 30-40 minute walk with the family dog – awake at night?
It’s largely around culture and how to create a strong culture in a hybrid working environment. Blackmores staff are being asked to go to the office three days a week.
“How do you create a culture in three days a week? How do you create those moments where we’re role-modeling behavior in three days a week? Culture is really about the smell of the place. To be able to develop that with only three days a week [in the office] is quite a challenge.”