Joint ventures, financing, and a little bit of star power: Inside Swisse’s plans for world domination
Tuesday, September 3, 2013/
You’ve certainly heard of Swisse.
The Australian vitamin and supplements brand has been impossible to ignore. For the past five years, it’s been associated with many of Australia’s biggest celebrities. From sports stars and actors to celebrity chefs, all have spruiked its range of non-prescription health and dietary supplements.
In March, the company even brought US daytime talk-show host Ellen DeGeneres to Australia as part of the brand’s American launch, along with her entire studio audience. Its Australian spruikers include Academy-Award-winning actress Nicole Kidman, former Australian cricket team captain Ricky Ponting, and tennis ace Lleyton Hewitt.
SmartCompany yesterday attended a talk given by Swisse CEO Radek Sali, put on by the Victorian Employers Chamber of Commerce and Industry.
In an hour-long speech, peppered with motivational videos of happy Swisse customers and employees, Sali revealed some fascinating things about his business, and its plans for world domination.
Here are some takeouts.
A former cinema executive with an eye for marketing, Sali wants Swisse to become one of the world’s most successful and recognised brands.
“We see this great opportunity right across the world,” Sali said.
“In Australia, we have 17% market share. The leading brand in America has just 5% market share.
“We see huge opportunity for a brand with personality in the US – that not only does supplements but a broad range of wellness products.”
Since March, Swisse vitamins are now sold in 30,000 stores across America.
America isn’t Swisse’s only horizon.
“We’re going to go into 40 countries over the next five years,” Sali says. “We want to be a great Australian brand that’s in shelves worldwide.”
There aren’t enough global Australian brands, Sali said. And Swisse sees itself as having a unique opportunity to capitalise on its Australian origins.
“As Australians, we’re known for this extraordinary quality that’s a benchmark around the world,” he said. “We have this gold standard. And we should be proud of that.
“And the Aussies are well-known for health and wellness. We should be leading the world.”
But only breaking even
But at the moment, that drive for global dominance is costing Swisse. The company’s revenues have grown healthily since 2009, but, Sali revealed, the company is barely breaking even.
“Profitability isn’t number one for us,” he said. “Our priority is growing the market-place.”
In 2009, the company brought in $39.8 million in revenue for $1 million of earnings before interest, tax, depreciation and amortisation.
By the end of the 2013 financial year, revenue had grown to an impressive $244.1 million. But the company made a $2 million loss.
The company’s largest profit in recent years was in 2011 – when it made $10.5 million EBITDA on $98.3 million in revenue.
Based on these results, it’s unlikely the company’s three shareholders (majority shareholder and founder Kevin King, Sali, and former managing director Michael Saba) are rolling in it. At least, not yet.
Success so far
This isn’t to suggest there hasn’t been any success to show.
The Swisse brand is recognised by 95% of Australians, Sali said. It recently became the undisputed market leader in Australia.
Cashflow has been a problem in recent years, Sali has previously admitted. At yesterday’s presentation, he spruiked the company’s new financing. Swisse has recently secured a $70 million line of credit from Goldman Sachs.
“We’ve given ourselves the ability to spend in new markets,” Sali said.
Why the celebrities?
The most distinctive thing about Swisse has been its heavy usage of celebrities (the company calls them brand “ambassadors”) in its marketing.
You’d think this would cost them a fortune.
But, Sali revealed, it doesn’t cost much more than hiring actors for its ads.
“Our ambassadors hit different target markets. It doesn’t cost much more than actors and we’ve found that having someone authentic connects better than that.
“We actually don’t sit in the top 50 advertisers in this country, even though a lot of people say we advertise a lot.
“What we do is we effectively advertise. We’ve beaten the metrics by applying some simple measures to event TV that people will watch live and not fast-forward the ads or change channels. We also make it highly relevant.”
This advertising sometimes has unexpected benefits.
The Ellen DeGeneres trip was intended to boost the brand’s presence in America through coverage on her widely-watched show. But the hype surrounding the trip in Australia helped push the brand into becoming the undisputed market leader, Sali said.
Hints but no detail
Sali also hinted at two business developments that he wasn’t yet at liberty to announce.
Firstly, he says the company has almost finalised a joint venture agreement with “one of the biggest consumer brands in the world” that should help it get into 40 countries.
Secondly, he said Swisse had just about signed a sponsorship deal with one of America’s most popular female tennis players. Your correspondent can’t think of anyone other than the Williams sisters who would fit the bill.