Wellnex Life relists on the ASX to grab a slice of the trillion-dollar global health and wellness market
Wellnex’s strategy is to shake up Australia’s health and wellness sector and expand internationally.
The former Wattle Health Australia relisted on the ASX today as Wellnex Life (ASX: WNX) as part of its plan to offer innovative and sustainable Australian health and wellness brands and products worldwide.
Wellnex aims to shake up Australia’s health and wellness sector and will take with it to the ASX 15 brands.
The name change from Wattle reflects the company’s “focus on better health and wellness outcomes” by taking “authentic Australian innovation” to the world.
According to Wellnex, the relisting is part a strategy to reposition the business, which has more than $20 million in annualised revenues, as well as a network of pre-existing distribution channels.
This includes a 10-year agreement with Australia’s largest pharmacy chain Chemist Warehouse, and distribution deals with Coles, Woolworths, Priceline, Sigma Pharmaceuticals and Australian Pharmaceutical Industries.
Additionally, Wellnex is cashed up to pursue its growth strategy with a recently completed $2.88 million entitlement offer.
Global health and wellness market
Globally, the health and wellness market exceeds $5 trillion in value.
Wellnex estimates Australia’s health and wellness market is about $5.6 billion, with this number expected to grow to $7 billion by the end of 2023.
Within this market, Wellnex is focused on Australia’s $3.1 billion vitamin and dietary supplement segment. The company also has its sights set on cornering the $1.31 billion sports nutrition segment.
Driving the growing health and wellness industry are more health-conscious consumers who are seeking preventative solutions over traditional medicine and have a greater awareness of the types of products on offer.
Wellnex solution
With a fast-growing market, many product innovators and brands in the health and wellness space face barriers to market penetration.
These include manufacturing capability, distribution infrastructure, experienced sales teams and branding.
Other barriers comprise market knowledge, servicing teams and distribution channels.
Wellnex aims to “bridge the barrier” and offer these companies a competitive advantage in the segment.
The company can provide specialist infrastructure and manufacturing capabilities, skilled branding, sales support, distribution expertise, plus existing key relationships and distribution network.
Growth strategy
Leveraging off its existing portfolio and infrastructure, Wellnex plans to capture a wider market and boost its distribution channels.
Its key market categories will include: organic, ageing, mental health, energy and sleep.
The company also plans to increase its brand portfolio through acquisitions and new product development.
Current brands include Uganic organic nutritional milk products, Simply 7 lentil chips, Iron Gummies, Wakey Wakey energy gummies, Little Innoscents organic baby skincare range, Wagner Liquigesic soft gel ibuprofen and paracetamol capsules and Compeed plasters.
To generate higher profit margins, Wellness will look at enhancing efficiencies and business model agility as opportunities arise.
Brand Solutions Australia acquisition
To facilitate it repositioning, Wellnex acquired health and wellness branding company Brand Solutions Australia (BSA).
This decision followed an extensive review of new market opportunities to complement Wattle’s existing nutritional dairy range.
Established in 2010, BSA has grown to achieve about $14.5 million in sales revenue during FY 2020.
Wellnex chief executive officer George Karafotias said acquiring BSA was part of Wattle’s original strategy to innovate, develop and grow Australian health and wellness products.
“BSA, with its product development expertise and strong retail customer relationships across pharmacy and grocery, positions us strongly to achieve this at greater scale – locally and globally.”
“While the business pivots for future growth, we also remain a business proudly using Australian mile to produce nutritional and care products for all stages of life,” Mr Karafotias added.
As part of the deal, BSA founder and managing director Zack Bozinovski has joined the Wellnex board as executive director and chief strategy officer.
Mr Karafotias noted Mr Bozinovski’s previous experience includes senior executive roles with leading Australian businesses such as Uncle Tobys, Goodman Fielder, PepsiCo and Sigma.
Wellnex secured BSA for $2.75 million in cash, plus $2 million fully paid shares at $0.15 each and up to $500,000 in cash to repay existing debt.