Over the past 18 months, the Australian investment company, the Victor Smorgon Group (VSG), has been developing a new business called NutraCare as a vehicle for selling infant formula products manufactured by the Australian dairy processor, Burra Foods, through e-commerce channels to consumers in China.
The group is targeting 20,000 subscribers – once achieved, the company will then explore expanding its product offerings through the chain.
“We are looking to provide full traceable Australian product at Chinese infant formula pricing,’’ VSG managing director Peter Edwards said. “So far the sales have been good.”
The group states that it is not seeking to become a commodity trader in China, rather its goal is to grow as a direct-to-the-consumer business.
Last year the group launched another new business in Australia backed by Melbourne’s Calvert-Jones family, called My Cow, which sells an entire cow to wealthy Chinese consumers, slaughters it, and stores the cuts in a secure freezer to be supplied to the buyer on demand. The process is entirely traceable with the client able to see their cow fed and managed until the point of delivery.
VSG’s launching of NutraCare puts the group in direct competition with some of Australia’s largest dairy players in a very crowded space. Murray Goulburn and Australian Dairy Park both have licenses to export to China, while dairy company, a2 Milk also sells its products on the Chinese market through the online platform JD.com. Bellamy’s Australia has launched a Chinese version of its website with plans for expansion in the space, and in November 2014, Gina Rinehart partnered with China National Machinery Corporation in a $500 million deal to export infant formula powder from Australia to China.
But what sets NutraCare apart, according to company founder, Steve Lipshut, is the competitive price of its product and the completely different marketing method the company will employ. The company plans to use Shanghai as a hub allowing it to offer next day delivery from its warehouse to its subscribers, and NutraCare will be one of the first Australian businesses to use Alipay.com – a Chinese third party online payment platform.
“We have set up our own end-to-end operation. While we are introducing the most competitive priced Australian infant formula into the market in a highly disruptive way, it is the first step in a long-term plan to build a direct delivery online subscription model in China,’’ he said.
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