Source: China News Service

After 18 years of layout in the maternal and infant track, algae oil DHA has successfully broken the circle as a major product, and Newman is one of the few listed companies on the market without debt. On January 10, Newman was listed on the Hong Kong Stock Exchange with an issuance price of 0.8 yuan per share. According to the prospectus, Newman plans to issue no more than 0.25 billion shares in this listing, and the funds raised will be used to strengthen marketing efforts and expand the market.

Although there are more entrants in the health industry, it still has room for growth. According to a Frost & Sullivan report, as Generation Z becomes the mainstream parenting population, the demand for health and dietary supplements is expected to grow at a compound annual growth rate of 6.9% from 2023 to 2028, reaching 142.1 billion yuan by 2028. At the same time, the general market for adults and the elderly is expected to grow at a moderate pace.

In the view of Wang Ping, the founder of Newman, as living standards improve, people are increasingly paying attention to health. Precision nutrition, sugar-free formulas, and increasing nutritional needs for people over three years old will become important development directions in the health sector. After going public, Newman aims to do more than just a single major product; it will continuously expand the health consumer base, covering the full range of products needed by adults, pregnant women, and children.

Aiming for a major product to become 'the number one stock in maternal and infant nutrition products'

On January 10, Newman officially landed on the Hong Kong Stock Exchange, successfully becoming 'the number one stock in maternal and infant nutrition products'. It not only relied on a single major product, algae oil DHA, to achieve commercial transformation, but also stands out in the capital markets as a rare zero-debt enterprise. The achievement of this required both strength and luck.

Regarding maternal and infant products, Wang Ping has emphasized several times that quality must not have any issues, product functionality must not rely on exaggeration or deception, and quality must be ensured from the source, which is also the strategic bottom line he has maintained throughout his years of entrepreneurship.

Wang Ping stated that during his early days as a formula dealer, he investigated multiple aspects, such as experts, doctors, and sources of milk, to ensure that the nutritional substances in the formula were genuine and effective. Only after ensuring accuracy did he decide to enter the market, and this business approach was also applied at Newman. In 2007, by chance, Matyke, which provided raw materials for 99% of infant formula in the USA (later acquired by DSM), contacted Wang Ping, hoping he would sell algae oil DHA products. At that time, competition in formula milk was fierce, and major brands were eager to seize market share through innovation, but reports indicated that mainstream formulas from Mead Johnson and Wyeth had all added DHA components to their products.

In Wang Ping’s view, the market players strained their brains to find new paths, yet the major formula producers unanimously chose the same raw material, DHA, which might indicate that this component is a "good thing".

Thus, Wang Ping began his "research journey" to verify the authenticity of the story and examine the efficacy of this component. He discovered that Matyke’s DHA algae oil had been recognized as safe by the USA FDA GRAS, and substantial clinical literature indicated that DHA is an important component for brain and eye development. Moreover, the DHA extracted through microalgae fermentation also had advantages such as high content, a production process that is less prone to oxidation, no fishy odor, and stable sourcing. These characteristics aligned with consumers' expectations for children's healthy development, leading him to decide to enter the market.

No one expected that Newman's layout would precisely align with the development of the times, resulting in explosive sales of algae oil DHA. Initially, Matyke estimated that Newman's annual sales scale for algae oil DHA would be 500 kilograms, but by 2023, Newman's annual sales had reached 55 tons, with sales increasing from over 9,700 bottles in the first year to 1.6 million bottles.

According to the prospectus, the revenue from Newman's algae oil DHA products reached 0.3102 billion yuan, 3.406 billion yuan, 0.4041 billion yuan, and 0.1405 billion yuan for the six months of 2021, 2022, 2023, and 2024, respectively. According to data from Frost & Sullivan, in 2023, the total value of algae oil DHA product sales from the five major domestic brands was approximately 2 billion yuan, of which Newman's total sales accounted for about 8.1% market share.

Transforming the operation model to tap into the trillion-yuan market.

In Wang Ping's entrepreneurial philosophy, building a brand is essential before achieving sales. To make a mark in the high-end market, Newman chose to start from first-tier cities in 2007.

Wang Ping's approach attracted a group of dealers who started their businesses alongside him. These dealers were business personnel from various foreign brands with rich customer acquisition channels, and they quickly opened offline channels in the first-tier market through hospitals. More and more mothers began to recognize the importance of supplementing with algae oil DHA and chose Newman, which sourced its materials from abroad.

Until 2011, the rise of Internet E-commerce started to shift consumer behavior from offline to online, prompting major brands to increase their investment in online channels. However, in Wang Ping's view, for a brand to achieve long-term development, not only should prices be controlled, but it is also important to meet consumer needs and balance the interests of Dealers. "For online success, there must be a brand. Simply listing a marketed product online will not drive consumer purchases; the online share also depends on how well the brand is managed and its price protection."

In June 2011, Newman Science's official flagship store launched on Tmall, and in August of the same year, the store entered JD.com. Unlike other brands, although the online channel was developed by Newman Science, shipping and performance belonged to regional Dealers. Wang Ping summarized Newman Science's online strategy as "unified management, profit distribution, and local distribution."

Since then, E-commerce entered a period of rapid development, with shopping behaviors of the post-80s, post-90s, and even the post-00s Gen Z undergoing dramatic changes. They favor online shopping that offers transparent pricing and convenient experiences, which has diversified the forms of online consumption and initiated the rise of cross-border purchasing. Meanwhile, driven by economic development and the rise of Social Media, small-town youth embarked on a round of Consumption Upgrade, making the sinking market a new opportunity for brands.

Targeting these consumer trend changes, Newman Science sought transformation again from 2017 to 2020. This time, they launched cross-border purchasing, importing goods directly from the USA to deliver them to consumers domestically. Simultaneously, Newman Science was brewing a larger transformation. Wang Ping referred to this channel change as the "Heaven and Earth" plan. Specifically, heaven refers to the preference for online channels in high-tier cities, while earth refers to the potential purchasing power of "small-town youth" in the sinking market.

In 2020, Newman Science's "Heaven and Earth" plan began to take shape. Especially in the offline market, Newman Science chose two partners—Aiko and Nice—forming a combined team of over 500 people to develop the vast sinking market. At this time, what Wang Ping needed to do was to convey professional knowledge, consumer needs, and brand concepts to them, enabling them to better serve the sinking market. "There were a few issues during the pandemic year, which involved going to various places to give them lectures," Wang Ping said.

From a larger market perspective, in recent years, small-town youth have demonstrated explosive consumption power. According to Frost & Sullivan, over the past five years, the nutrition Industry in China has achieved significant growth in all types of cities. Among them, third-tier and lower cities have seen the most noticeable market expansion due to increased health awareness and the popularization of health products, with the market size growing from approximately 61.1 billion yuan in 2018 to 107.2 billion yuan in 2023, a compound annual growth rate of 11.9%. It is expected that by 2028, the market size will reach 153.7 billion yuan.

In Wang Ping's view, by combining categories such as algae oil DHA, probiotics, and Vitamins D3, Newman Science covers brain, eye, bone, and gut health. Looking to the future, Wang Ping believes that Newman Science is different from other mother and baby companies; the goal is to cater to adults, pregnant women, and children, expanding to more consumer groups.