BioGaia banks on digitalization: Plans to create D2C department as pandemic drove 2020 online sales

01 Apr 2021 --- BioGaia is digitalizing its business model to adapt to consumers’ increasing online presence, as highlighted in the Swedish probiotics player’s annual report for 2020. 

“To reach consumers, we need to be where they are – online. We are now focusing on strengthening our direct-to-consumer (D2C) competence, with the ambition of building global consumer-friendly marketing based on science,” Isabelle Ducellier, CEO of BioGaia, tells NutritionInsight.

“Right now, we are accelerating this process by reorganizing internally, setting up a completely new department focusing only on consumer marketing. The new organization will be in full run June 1, 2021.”

Plans to sell directly to consumers may require BioGaia to make acquisitions. However, Ducellier maintains the company will neither disclose its plans nor which areas within these sectors it is most interested in.

Other highlights in BioGaia’s 2020 annual report were the launch of its Osfortis adult probiotics line and its strategic investment arm BioGaia Invest.

“The share of online versus offline sales in the US and Asia is primarily a reflection of consumers’ buying behavior,” says Ducellier.Adopting a new marketing approach
Despite the COVID-19 outbreak in March 2020, BioGaia had a sales growth of 7 percent in Q1, followed by 10 percent growth in Q2. However, the pandemic began to negatively impact sales in the third quarter and the full year ended with a 3 percent decrease. 

Weak sales stemmed from BioGaia’s “largest and oldest markets,” such as Italy and Spain, where lengthy lockdowns prevented consumers from visiting doctors and physical pharmacies as usual.

“Restrictions on physical meetings led people to investigate digital alternatives. A growing number started to buy online. The results of changed buyer behavior took place at a rate never seen before and has in many cases become ‘the new normal,’” says Ducellier.

How to go digital?
To adapt to this “normal,” BioGaia used the lockdown isolation months of 2020 to arrange online webinars and virtual production launches. The company also intensified the work of making its products available online. 

BioGaia is complementing its marketing model with more digital consumer-oriented marketing.In 2020, further steps toward this expansion were taken by strengthening in-house skills with employees with a solid background in consumer marketing and online retail. 

The target base will be the growing amount of consumers searching for information on probiotics themselves instead of consulting a doctor before purchasing their product in an online store. 

Regional digitalization differences 
Notably, BioGaia saw “good sales” in countries where it already had implemented an omnichannel strategy, such as the US and China. 

According to the company, BioGaia’s online sales account for 80 percent of US sales. Also, it states its most important market in Asia is China, where the pandemic hit first.

BioGaia is the second largest online brand in the US within the probiotic pediatric segment. This is based on consumer reviews on the largest online marketplaces in the market, which “quite well reflects actual online sales,” says Ducellier.

“In China, we are number four in the probiotics pediatric segment and in Vietnam, BioGaia is the largest online probiotic brand.”

Developments in the Middle East and LATAM
In the Middle Eastern markets, BioGaia states its products compete in pharmacies with cheap probiotic products. The lack of digital sales channels also contributes to the difficulty of establishing and increasing business in this region. A new strategy is planned for 2021, which “hopefully will contribute to positive development.”

“Probiotic sales fell in Brazil, the largest probiotics market in Latin America, but BioGaia’s sales rose thanks to our partner’s Aché’s swift digital transition and major investments,” adds Cristián Contreras, vice president Latin America. 

Among the six largest probiotic brands, BioGaia’s products were the only ones with increased sales in Latin America in 2020. To further support and complement its digital strategy, BioGaia launched a Spanish language website in mid-2020.

According to Ducellier, the probiotic market is “still cluttered” but consolidation is “taking place.”Not a saturated market
The probiotic market is changing fast, says Ducellier. “It is still cluttered, but now we see a consolidation taking place.” 

“The fact that big players like Kerry, ADM and Novozymes are entering the probiotics market reflects the huge interest in this sector – a sector that is in fact growing, with new indications and an increasing consumer interest.”

Considering these companies have expanded through acquisitions to a large extent, Ducellier affirms the global probiotics market is “not saturated.”

BioGaia recently contributed to NutritionInsight’s industry roundtable on probiotics as a trending ingredient in the bone health sector.

By Anni Schleicher