Over 300 stores, still going strong

Over 300 stores, still going strong

It was done with minimum fanfare, just like most things with homegrown healthcare group Eu Yan Sang International (EYS).

But the fact is, EYS now owns 100 per cent of the largest health-food chain in Australia.

The chain, Healthy Life, sells a wide range of products - from vitamins to healthy snacks and organic foods - through its 89 stores across the land Down Under.

Twenty-five of the stores are run directly by the company and 64 by franchisees. The latest outlet opened just two weeks ago in Melbourne.

Healthy Life is EYS's route to a retail brand which resonates better with Westerners, says Richard Eu, CEO of EYS.

He said: "If you want to go very mainstream with the pure EYS brand, it might be more difficult for us. It's hard to shake off our image as a traditional Chinese medicine (TCM) company. "In reality, we are not just about TCM, so this is a signal to the market that we are more than a pure TCM company."

In the acquisition completed in February, EYS took over the chain for just the value of the stocks - $5 million - from Healthzone, which had gone into receivership.

EYS's 16 per cent stake in Healthzone had had to be written off. Going forward, the Singapore company will have to pump working capital into the Healthy Life stores to stabilise and grow them.

Mr Eu said: "The health-food industry in Australia is similar to ours. It's not a very big sector - 700 to 800 stores, very mom-and-pop, and slow. We want to see how we can revitalise it - in a way, do it up with TCM, try out some ideas we have, in terms of presenting our own herbal products there."

Australian consumers are quite receptive to a natural approach to healthcare, he said, adding that EYS has been able to capitalise on the trust and goodwill it had built up among its small base of customers.

"The thing is to try to replicate the trust our existing customers have with us, and bring it across to a broader audience," he said.

EYS aims to have its own products in the Healthy Life chain before the close of its current financial year on June 30 next year.

Besides getting the regulatory approvals to sell the products, it also needs to get the packaging and labelling right, said Mr Eu.

This is EYS's second crack at the Australian market: Back in 2001, it started the YourHealth chain of integrative clinics from scratch and built it up to a turnover of A$12 million (S$15.3 million).

Seven years later, it bailed out because it was in the red from corporate overheads, even though the clinics themselves were profitable.

"There were also some management issues. The way we structured it, it wasn't correct. And we started from scratch. So we were groping in the dark a bit," Mr Eu said.

The lessons learnt from that venture will now be applied in the group's second foray into Australia.

Healthy Life may restart the clinics; the two-week-old Melbourne outlet has a naturapath consultation room, and all store employees are naturapaths, he said.

Healthy Life will also create for EYS the opportunity to learn about the franchising business model, which will give an avenue for expansion into other markets down the road.

Healthy Life will boost EYS's top line this financial year; the chain had a revenue of A$60 million to A$70 million prior to the holding company's receivership.

Mr Eu said he did not expect revenues to get back there so quickly, "but in the medium term - within three years - our target is to exceed that".

EYS also aims to get its Australian business into cash flow-positive territory in the next nine months.

In its financial year ended June 30 this year, the Australian retail chain contributed three months of revenues, making up 4 per cent of the EYS group's turnover of $290 million.

Hong Kong, China and Macau accounted for 41 per cent of group turnover, Malaysia, 28 per cent, and Singapore, 27 per cent.

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