The first ‘Suisse’ shop in Airport West in Melbourne in the 1970s.
It was the brainchild of organic baker Kevin Ring, who started selling pollen tablets from his St Kilda naturopathics shop back in 1972.
Ring’s hand-made vitamin tablets, inspired by a trip to Switzerland in the late 1960s, were soon doing better than the bread, and a little shop under the Suisse brand was opened in Melbourne’s suburbs in the early 1970s.
Later changed to Swisse for legal reasons, that little shop blossomed into the country’s biggest wellness company, and has just been sold to overseas buyers for an astonishing $1.67 billion.
Hong Kong-listed company Biostime International Holdings on Thursday won the auction to buy Swisse, beating out two Chinese companies, Hony Capital and manufacturer Shanghai Pharma, on the way. Swisse will remain based in Melbourne, with a head office in Collingwood, but 83 per cent of the company is now in the hands of Biostime.
The deal will lift the fortunes of Kevin Ring’s son, Stephen, and his business partners Radek Sali and Michael Saba. All become some of Melbourne’s richest men, with estimated net worths in excess of $250 million each.
It’s a long way from the company’s first outlet back in the 1970s, a “naturopathics” shop in working-class Airport West.
The Swisse deal highlights the demand for Australian brands and products in China, which are regarded as “clean and green” when compared with domestic produce. The share price of rival Australian vitamin maker Blackmores has more than quadrupled in the past year, from $31 a share on the ASX to in excess of $137.50 during trade on Thursday, on the back of massive sales growth in China.
Australian infant formula brands, such as Bellamy’s Organic and A2 Platinum, have notched windfalls sales thanks to huge demand from China.
Much of the success has come from internet and grey market sales, with gangs of Chinese students buying up stock from Australian chemists and supermarket shelves to send back home.
One milk industry CEO recently suggested Australian domestic sales of infant formula were now more than double the actual consumption by Australian babies.
A2’s Australian chief executive, Peter Nathan, admitted the success of his infant formula was partly based on shoppers sending his product to China.
“We have had significant growth on online sites such as Alibaba, and also at retail level at grocery and pharmacy where Chinese tourists and nationals are often buying products on trips and taking it back with them,” he said. “We are clearly demonstrating that we are having enormous traction with Chinese nationals. There is no question about that.”
The deal at Swisse justifies the big-spending strategy of CEO Radek Sali, a former executive at Village Roadshow. His father, Avni Sali, helped to develop the men’s and women’s Ultivite range of multi-vitamins for Swisse, which have been the mainstays of the company for the past decade.
When Radek became CEO in 2005, he embarked on a massive marketing push. Nicole Kidman and Ellen De Generes were signed as ambassadors, along with a galaxy of sports stars including Cadel Evans, Ricky Ponting and Mark Webber.
Lavish parties at the Birdcage at Flemington helped push the glamorous image.
Such was the extent of the marketing push, at one point Swisse’s $50 million annual marketing spend was almost 40 times the cost of the ingredients used in vitamin production. It was all part of Radek’s plan to make vitamins “fashionable and fun”.
That has paid off.
“We have grown from small, family-owned business in the suburbs of Melbourne to become Australia’s number one wellness brand,” Sali said after the deal was inked. “We have done it on the back of an unwavering commitment to the highest standards of quality, safety and product efficacy.”
Founding shareholder Stephen Ring was equally happy after the deal.
“I am incredibly proud to have been part of Swisse’s journey so far,” he said. “The strength of the business is testament to the hard work, passion and energy of the entire Swisse team and I thank them for their ongoing commitment.”
