Cellmid Ltd’s (ASX:CDY) subsidiaries Advangen Ltd and Advangen Inc (Japan) have signed an exclusive Asian master distribution agreement with Ourui Health Management Ltd for the distribution of its Japanese, Ju-Ju® and Lexilis® branded, anti-ageing hair and skincare products.
Ourui, based in Hong Kong, was founded by serial beauty entrepreneur Steven Ko, who was also one of the founders of Red Earth, an Australian make-up brand sold through 600 retail stores in 45 countries before it was acquired by Esprit Holdings Ltd in 2001.
Cellmid chief executive officer Maria Halasz said: “This is a transformational deal for Cellmid, as it completes the foundation of our China growth strategy.
“We expect this agreement, together with the recently revised Aeon International agreement for the evolis® pharmacy products, could contribute up to 40% of the revenue by financial year 2023, as outlined in our recent growth strategy update.”
Shares have been as much as 39% higher intra-day to 14.5 cents.
Growing market for hair growth products
Ourui founder Steven Ko said: “Jo-Ju® and Lexilis® are new brands in China, however, there is an enormous and growing market for hair growth products, especially those with proven efficacy and strong scientific story like Advangen’s Japanese brands.”
Cellmid Asian Business Development director Carolyn Heath added: “I have worked with Chinese distributors of Australian beauty brands for the last five years and I have tremendous confidence in Mr Ko’s business model and his ability to meet and exceed his sales targets.
“He is a brilliant marketer with an understanding of our products and his target customer.”
Key terms of the agreement are:
➢ Ten-year agreement, extendable by 10 additional years, subject to performance by the distributor and is exclusive for Asia (except Japan);
➢ Distributor to invest in marketing, including brand building, social media, live streaming, celebrity endorsements and traffic campaigns;
➢ Minimum purchase orders of 500,000 units of products collectively across the two brands in year one and 1 million units of products in year two, with double-digit (percentage) annual purchase increases thereafter;
➢ Shipment of products under the agreement is expected to commence during the second half of the financial year 2021; and
➢The agreement may be terminated by either party in the event of a breach. Either party may also terminate the deal if there is a change in ownership or control of the counterparty.
Other successful brands in Ko’s stable include SkinVitals, the face masks sold in Sephora, and Pearlosophy, a natural skincare brand using pearl extract and sold in China through social channels.
Ko will use an omnichannel approach when marketing Jo-Ju® and Lexilis®, primarily focusing on social commerce.