The
Company | Nutriceutical
Materials | Government Regulation
and Health Issues | Sales and Marketing
| Duty-Free and Specialty Tax-Free
Industry | Sales and Marketing
- International | New Product
Strategy | Trademarks
The "Mother Nature Brand" has traded in
the marketplace for nearly twenty years.
In 1998 Mother Nature Health Products Pty
Ltd. became a "Proudly Australian Owned" Company and has
since changed its strategy and direction to focus its
premium products within more lucrative niche markets,
predominantly "Duty Free" outlets for the ever increasing
tourist travellers.
The products have always been attractive
to the Asian market as we have previously experienced
from sales out of Australia, but we cannot forget the
numbers that attended the Olympic Games that were held
in the latter part of the year 2000 would have also contributed
to our increase in sales over recent years.
In distributing nutriceutical products to
Duty Free outlets as gift items, each traveler will be
purchasing a vision of "total well-being" to present to
their friends and relatives on their return an alternative
healthy and longevity lifestyle.
The Company acquires its supply of Bee,
Marine and Flora products exclusively from Australia where
possible as well as within the Asia-Pacific Rim. Due to
a high demand in our products we have been compelled to
source our raw materials from as far away as the United
States of America and Canada. Although we have a number
of sources, Mother Nature Health Products maintains the
guidelines set out by the Good Manufacturer Practice (GMP),
(approved suppliers of the Therapeutic Goods Administration
(TGA) of Australia).
The Company ships its raw materials to TGA
approved contract manufacturers around the world in order
to process and package the Company's products to its specifications.
In the case of Royal Jelly capsules, the processed goods
are shipped to the Company's production location at Chatswood.
The Government of Australia under the Therapeutic
Goods Administration Act has approved the Company's facility
suitable for manufacture and repackaging of therapeutic
goods. Quality control and inspection procedures are performed
at the Company's facilities upon receipt of the goods.
The Company's products are also tested through
thorough chemical analysis performed at an independent
testing laboratory to ensure compliance with the Company's
standards and specifications. Products are manufactured
on a fixed price basis. All export sales are sold in Australian
Dollars in order to limit transactional risk relating
to fluctuations in foreign currencies.
Distribution and sales of the Company's
products in Australia is regulated under the Australian
Therapeutic Goods Act of 1989 (the "Therapeutic Act")
and the Code of Good Manufacturing Practice for Therapeutic
Goods for Human Use (the "Code of Therapeutic Goods",
that regulates wholesalers in the safe handling, storage
and distribution of therapeutic products.
Each of the Company's current products has
received a "Certificate of Listing" from the Australian
Therapeutic Goods Administration (TGA) The TGA grants
listings in the Australian Register of Therapeutic Goods
for approval of the sale of therapeutic goods. Similar
laws exist in other countries in where Mother Nature Health
Products are sold. The Company believes that it is compliant
with all such regulations or qualifies for an exemption
there from due to its compliance to Australian laws.
With respect to distribution of the Company's
products internationally, the processing, formulation,
packaging, labeling and advertising of the Company's products
will be subject to regulation by, for example In the United
States of America one or more federal agencies, including
the Food and Drug Administration ("FDA"), the Federal
Trade Commission ("FTC"), and the Consumer Product Safety
Commission, among others.
The Hatch-Harkin Dietary Supplement Health
and Education Act of 1994 will also regulate these activities
and by various agencies of the states and localities in
which the Company's product is sold in the future. The
Company believes that it will comply with these laws and
regulations in all material respects. Federal and State
regulations are designed to protect consumers, to govern
the promotion and advertising activities of the Company
and other resellers of the Company's products.
Changes in laws and regulations internationally
could materially affect the Company and any costs of compliance
associated with such laws and regulations.
The Company's brand "Mother Nature Health
Products" have frequently featured in a number of airline
magazines, including Qantas Airlines (Spirit Inflight
Magazine), Korean Airlines (The Korean Inflight Magazine),
Air New Zealand (Pacific Way Inflight Magazine) and Australia
Asian Airlines (Southern Sky Inflight Magazine) and has
been sold to airline passengers inflight as part of the
airlines' on-board Duty Free sales and product promotions.
The Company's products are also advertised in a number
of specialty tourist magazines.
The Company maintains sales offices in Sydney,
Australia and through independent sales agents. In addition,
the Company sells its products as a gift line through
airport "duty free" stores "DFS Galleria" outlets on an
international basis and location attracting visiting tourists.
The Company creates customized merchandising
programs for the duty free and specialist tax-free stores,
which sell its products consisting of point-of-purchase
displays to tourist with selections of world branded products
in a variety, similar to that of "Gucci, Chanel, Elizabeth
Arden, Tag, Chivis Brothers, Sony, etc".
In this regard, the Company develops uniform
packaging with branded product identification.
The Company has found this approach to be
particularly appealing to buyers in such channels of distribution
hence minimize their needs to work with multiple suppliers
and this avoids fragmented product presentation. This
approach to "program sales" with packaging uniformity
assists in the development of brand recognition that is
an integral part of the Company's marketing and product
development plan. The Company believes that brand name
product recognition has resulted in significant opportunities
for sales of related or complementary products.
Seasonality of products is generally not
a factor affecting the Company's sales, although certain
of its products are derived from plants, flowers and trees
whose harvest is dependent upon weather and other climatic
conditions which may affect the yield of oil produced
from a particular crop. The Company has endeavored to
mitigate such risk by contracting to buy its oils from
plantations in different regions with varying weather
and climatic conditions and from farms and plantations
with diverse plant stock and maturity levels. The Company
believes that such variety in purchasing will provide
levels of oil production within predictable and identifiable
ranges.
The Company currently sells its products
in more than 35 duty free, tax-free and specialty stores,
most of which are located in the Australia, Asia and Pacific
region. Duty free goods are sold wherever international
travel takes place; at airports, on international flights,
on cruise lines, and at international land border crossings.
It is proven that retailing of duty-free and tax-free
goods has now become increasingly sophisticated and is
now an important source of income for airports, airlines
and ferry operators, as well as a significant market for
manufacturers and suppliers of duty-free and tax-free
goods. Today, duty-free shops are found at virtually every
international airport border crossing, cruise line and
airline.
According to the 1996-1997 duty-free database
and directory published by Duty-Free News (the Duty-Free
Database), sales by Duty-Free and Specialty Tax-Free stores
in 1996 are expected to exceed $22 billion, an increase
from $20.5 billion in 1995. Among the continents, the
strongest region is Asian/Pacific that had sales of $6.25
billion in 1995, an increase of 18.7% over the prior year,
adding almost $1.0 billion in sales. The Duty Free Database
also reported that the Asian/Pacific share of the world
market in general grew from 29.3% to 30.5% in 1995.
Airports are the main beneficiaries of Duty-Free
spending, which has had a significant influence on operational
changes and investments in the airport industry. Airlines
also benefit from in-flight Duty-Free sales. The continued
growth of Duty-Free spending in airports and on airlines
is generally believed to be based upon availability and
accessibility; there is usually a higher degree of involvement
by the airport landlord; and Duty Free customers in airports
and on airlines are a captive base for retailers.
As a result, according to the Duty-Free
Database, airports remained one of the largest Duty-Free
distribution channels. Duty Free sales in airports grew
12.8% in 1995 to $8.2 billion and its share of the world
Duty-Free sales was 40.1%. Historically dominated by liquor,
tobacco and fragrances, Duty-Free shopping has emerged
as the global home of a wide variety of premium luxury
goods. The desire to purchase gifts and souvenirs by travellers
has also stimulated the production of specialty-packaged
products in the Duty-Free and Specialty Tax-Free industry.
As new travel destinations are added and itineraries change,
the assortment of products found within the Duty-Free
shop changes as well.
The Company formed an overseas company in
September 1998 hoping in the future to explore opportunities
in expand the manufacturing, marketing and distribution
of the Company's products in Asia. In addition, the Company
has entered into a number of sales and marketing agreements
with sales agents and sales consultants for various territories
within Asia and the United States. Amongst other services,
such agents and consultants assist in the development,
study and evaluation of sales and marketing proposals,
the pricing of products and other.
New Products are being developed as a "gift
line" to meet the demands of customers in the Company's
target markets, providing these products meet the Company's
current channels of distribution philosophy.
The Company depends upon the development
of brand recognition for its current and proposed products.
Currently, the Company utilizes the following trade name
in the sale of its products "Mother Nature". The Company
acquired its "Mother Nature" trademark from Collage International
Health Pty Ltd which registered such trademark for protection
in Australia in 1990 and New Zealand in 1992; registrations
are pending in Singapore, Japan, the United States, Canada,
China and Taiwan. The Company has not yet applied for
trademark protection for any of its other brand names;
however, the Company intends to make such applications
in the near future.
The Company believes that brand name identification
differentiates the Company's products from its competitors
and reflects the Company's marketing strategy of providing
customers with high-quality, value-oriented products.
