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(Job 38006) Game Changers with Marcus Blackmore Peter Little (PL) Good evening ladies and gentlemen. My name’s Peter Little, I’m Deputy Vice Chancellor at QUT. Welcome to tonight’s Game Changer series, the last for 2015. Before we get underway I would like to acknowledge the traditional owners of the land in which we’re meeting tonight and pay our respects to their ancestors and to elders living today. The location of the State Library on Kurilpa Point was historically a significant meeting, gathering and sharing place for Aboriginal people and we proudly continue that tradition here tonight. I’d like to acknowledge and welcome tonight Marcus Blackmore, Chairman of Blackmore’s Limited, we’re delighted to have you here Marcus, a Queenslander coming home. Of course Ray Weeks, Chair of the CEO Institute who will as always be conducting the interview, members of the Library Board of Queensland, Queensland Library Foundation, the QUT Business School and the Queensland Business Leaders Hall of Fame governing committee. I would like to acknowledge our very generous donors and partners without whose support the Hall of Fame and the Game Changer series would not be possible, Crowe Horwath, Channel Seven, Morgans, NAB and RACQ. The Game Changer series was inspired I think by the aspirations of the Queensland Business Leaders Hall of Fame to celebrate great Queensland business achievers, but also to provide encouragement to Queensland business and especially Queensland entrepreneurs. The Queensland Business Leaders Hall of Fame was established around eight years ago as a partnership between the QUT Business School, the State Library of Queensland and the Queensland Library Foundation with the aim of building a Queensland business memory so that present and future generations would know how our State came to be economically developed, how it became the State that it is today and to celebrate the stories of our great achievers, whether they be individuals or businesses. So Game Changers is really an extension of that concept and we want to bring people to you who, in their business lives, have been entrepreneurial and have changed the games in their industries and we hope that as a result of that it will not only provide you with knowledge and insight, but encouragement and inspiration in your own professional and business journeys. So tonight we’re lucky to hear from Marcus Blackmore as I said, the Chairman of Blackmores Limited, a widely recognised public company which Ray will share more about in a few moments, but Marcus has paved the way for Blackmores to be a world leader in natural health. We encourage our live stream viewers to tweet in your questions as we go using the #QBLHOF and similarly for those of you in the audience please feel free to tweet in your questions or save up your questions for the post interview conversation. But on that note I’d invite Ray Weeks to come and introduce Marcus and begin the conversation. Thank you.


Ray Weeks (RW) Good evening, thanks Peter. This Game Changer series is all about brining nationally and internationally recognised and innovative business leaders here to tell their stories, to share their insights, to discuss how they build their companies, inspire teams and drive just remarkable growth achievements. Well in this last, as Peter said, the last Game Changers event for this year we’ve really filled the bill because you’re in for a treat because Marcus Blackmore fits that criteria like a glove. Marcus was born in Queensland, received his high school education at Churchie in Brisbane and gain a Naturopathic diploma from the New South Wales College of Naturopathic Sciences. Marcus Blackmore, as Peter said, is Chairman of Blackmores Limited, a listed public company as you well know employing close to 1,000 people in Australia, New Zealand and Asia, and as you well know markets the premium brand of vitamin and herbal products under the Blackmores and the BioCeuticals labels. Now like the US, and this will come out in tonight’s conversation, this country has a craze for supplements with demand continuing to rise for products that promote health naturally, and I think there’s about – I know the US is this figure – but I think it’s about half of Australians take supplements regularly, so Marcus might tell us a little more. But many people say that Marcus has a heart every bit as big as high business skills and he puts a huge amount of time into people and causes, we might come to that tonight. He was made a Member of the Order of Australia in 1998 for his contribution to industry and the community and I should tell you that Marcus started his life on the water as a deckhand, he’s had an extensive sailing careers including 13 Sydney Hobart races, and you’ve got to have serious masochistic streak right to – 13 Sydney Hobart races – and is a past Australian far 40 champion. And I’ve just got to tell you quickly, I once sailed with Marcus, well I tried, I once sailed with Marcus and a few of his mates out of Hamilton Island on his 42 foot yacht I think at the time, Manly Ferry, for about 10 days and after nine glorious days of smooth seas, clear skies, sailing to deserted islands, it all suddenly changed and we had 42 knot winds coming out of the south east, huge seas that pounded the boat for I think over 30 hours, well over 24 hours anyway, we’re all feeling less than impressed with sailing at that point and not well at that point, and I can still remember Marcus saying after being battered and rolled about for 24 hours, as soon I get back I’m going to sell this friggen yacht for $1.50 or words to that effect. Today Blackmores is a two billion dollar company and the most expensive stock on the Australia Share Market with a share price at the start of the year of about $30, today it’s at $163 within 12 months and the figure I got – you disputed it – is about 63 times earnings. That’s the nature of the confidence in this growth story. The predictability of the future earnings for this company. So please welcome a true game changer, Marcus Blackmore. RW Marcus let’s start with this growth story. You started as a small business in Queensland and you grew to a national business and then onto an international business. So just take us through some of the features, how you see that expansion.


Marcus Blackmore (MB) Well my father was an English immigrant to this country, I think he did the usual things that English immigrants do you know, jackarooing and things like that in Queensland, he was illegitimate and I think to be illegitimate at the turn of the last century in England wasn’t flash and I suspect that’s why he decided to immigrate to Australia and start and new life and that’s what he did. He started off as – he became a Naturopath, he went to England and became a Chiropractor, not England, United States, came back here and started the first Naturopathic and Chiropractic Colleges in Australia. He spent a large part of his life studying mineral remedies, it wasn’t necessarily popular to do so at the time. My father was best described as a quack I guess in those days. He was thrown out of one club in Queensland because he told them he was a Naturopath. So he had a lot of undercurrent and medical opposition to what he was doing but he persevered and I think that’s the message he left with me. On his deathbed he said you know the thing that I wanted more than anything in my life is that Naturopath’s would be profession and it really wasn’t when he died in 1977. Probably still isn’t today there you know but anyway. So we then – he was supplying Naturopaths and Chiropractors with products, with these mineral remedies and then he sold the business back in probably the 50’s and it was like a co-operative, and so he sold the business to his customers. So when other companies came and tried to flog their products to these but couldn’t work out why they wouldn’t buy, well they were actually shareholders and some of those shareholders are still, or their families are still shareholders in the business today. We had the Annual General Meeting last Thursday week and was the 30 years since we’d been public and I asked people, how many of you were shareholders 30 years ago and there were quite a number of people in the audience. So it’s a pretty amazing story. So that was my dad, he was what you’d best describe as a pioneer and the business has just grown from there I guess. RW So why did he start the business in Brisbane? MB Well he actually started I think – I’m not sure. My father never worried about the past, only worry about the future son, alright. There are some lessons in the past but don’t worry about that. Anyway he started – he had a sanatorium in Rockhampton and a woman there took her mother, she was stricken with arthritis, took her mother to see my father as a patient and my father helped her enormously. That woman then started work, my father obviously offered her a job, she’s now 92, she was at the Annual General Meeting the other day, she was a nursing sister and she ran my dad’s clinics. Now in terms of brand my dad knew that he was a quack, or people thought he was and so that thing for him was to be the ultimate professional. If you went into my dad’s clinic in Adelaide Street it was, or prior to that in Wharf Street, he had a practice right next door to Lady Silento who became a lifelong friend of mine eventually, but my old man used to say when they can’t fix them in there they come in here. But if you walked into his clinic it would be like walking into the Mayo Clinic. He had a nurse, he had one or two nurses


who were nursing sisters with all the badges and stuff that nurses wore in those days and you got to see the nurse first before you got to see my father. Unlike me, I never saw my father at work without a suit on the whole day, he was the consummate professional and I think that’s purveyed in our business today. RW So what was it like growing up in the Blackmores house? I mean your dad… MB Oh a pain in the bloody neck at times I have to say. RW He understood that white sugar and white bread, I think they were banned from the home were they? MB Well he wouldn’t have white sugar in the house and he certainly wouldn’t have white bread. White bread was blotting paper you know, it’s a waste of time eating that stuff. And funnily enough you know, now people are shying away from bread, not because it’s bread but because of the wheat that we use. It’s not genetically modified but it has been modified over years and I think you’ll find that’s probably one of the reasons why we’ve got a society – I mean everything, you go to a restaurant you get gluten free this and gluten free something else. So we’re really questioning that whole thing which my father questioned 60 or 70 years ago. White sugar, I mean my wife was looking at that Gillespie documentary on sugar, I don’t know if you’ve seen that? If you haven’t seen it you should look at it, just amazing. And where all the hidden sugar is you know, in tomato sauce and Yakult, because I use that Yakult, well I did up until yesterday when she saw me, there’s a couple of teaspoons of sugar in there. So it’s all this hidden sugar. And now you know we start to realise as a society how bad sugar is for us. So yeah, it was difficult times. My dad fired me four times I think. We’d have disagreements… RW Which [00:13:42.0]? MB Yeah my father – those of you who understand star signs, my dad was Gemini, we got some Gemini’s in the place? You know they’re good half the time aren’t they? So anyway – I’m an Aries, I’m a double Aries, Aries with an Aries rising you know, got Aries in the – yeah, of course we have. Anyway, so there’s bound to be a bit of conflict and the last time is I got out of the army and we lived in Newport in Sydney, my parents moved the business, or my dad moved the business down after I got out of the army or while I was in the army – I got conscripted from Queensland. Anyway, one morning there – we had one bathroom in the house, my sister – I had a sister, since died – and mum and dad and I, four of us in the house with one bathroom. You know now the kids want an ensuite don’t they you know.


Anyway we had one bathroom and small bathroom, and I’m standing behind him and I’d redesigned our toothpaste tube. We used to sell 20,000 tubes of toothpaste you know and this is back nearly 50 years ago. Anyway I decided we’d do a new toothpaste tube so I showed it to the old man, he didn’t think much of it and I got offended – to be fair it was purple whereas he liked green – so I was standing behind him while he was having a shave and I said well if you’re not going to listen to me you may as well get rid of me. He didn’t say anything. Then he walked out a little while later out into the kitchen, the dining room kitchen thing where mum was and he just said, well son, as fathers do, I’ve given you everything else in your life I may as well give you that too. You can get the hell out of the place and get out of the house as well. Well god strike me, this is a bit of an overreaction I thought. Mum’s sitting there in tears you know. Anyway that’s it, I got the flick, out the door. So yeah, I had time to clean up my desk and you know for a week or so and I went and lived under a bed sitter at Mossman and it was fairly important part of my life I have to say. RW So who was the person who most inspired you? Had the biggest influence on your life? MB Oh no question my father. I loved my dad. You know he’d give me the flick, so our office was in Montague Road in South Brisbane and we only had like seven or eight staff there or something and I got a job at Queensland Pastoral Supplies at Breakfast Creek. Because Neville Pocock I went to school with and his father was the boss of QPS and I was into the marine thing and boats and whatever and I got a job at the Queensland Pastoral Supplies in their marine section at Breakfast Creek. We lived in Newfarm so I’d start to walk home and my dad would pick me up every night and eventually he convinced me I should go back and work in the business. Anyway a long history, I got the flick a few times. RW Just come back to the first question I asked which you haven’t answered yet which was going from a Queensland based company into a national operation, international operation, just tell us a few of the features of that, that growth story, that growth journey. MB Well we started off as I suggested before as just a practitioner business. Then some years later my dad said I think we should be in health food stores and so we employed a Sales Manager and we started selling our products in health food stores and that was the first real growth that came into the company. Then subsequently went to pharmacy and supermarkets and every time you make a move from one into another you upset the ones that you – you know when we went into pharmacy we upset the health food stores, when we went into supermarkets we upset the pharmacy and the health food stores. So it’s been – you know channel strategy has been a very important issue to us and the only reason why we’ve been able to spread across all those outlets is because of the strength of the brand.


So I guess it just great from there. We then decided about 30 years ago – I was really concerned that there weren’t enough Australians and that the future of our business was a bit soft at the time and I thought oh, what are we going to do. So I then got enthusiastic about Asia and now Asia represents, as of this year because of the China phenomenon, now represents nearly half our sales and we employ nearly 1,000 people as you said and 350 of those people are in Asia. There is no question our future is in Asia, that’s for sure. We will still have a business here, we will still have a business in New Zealand but it’s a very quick business growing in Asia. RW Let’s talk about the growth of the complimentary medicines industry in Australia as a whole. It’s grown 54 per cent between 2010 and 2014, it would be worth $3.5 billion in revenue a year. MB Where did you get that from? RW Got it out of your most recent Annual Report. MB Oh. RW No I didn’t but… MB I think it’s wrong. I think that might be at retail. I think the business is just in excess of $2 billion now. RW So give us just an idea of why the significant growth in this industry? MB I think – as I said to the shareholders at the Annual General Meeting, I started off, I said well you know the share price $30 a year ago, and then it went to $50 and I guess as shareholders you’re all sitting there saying I wonder how long this can go on you know, is it sustainable. Then when it went to a $100 I think you really started to get worried didn’t you? And then at the Annual General Meeting it was $155 before the meeting started, I said now you must really worried about whether this is sustainable. So I told them I would like to think at the end of this meeting, not this one here at the AGM, that you would have the same confidence and optimism in Blackmores that I have. We have got a great future and we’ve only just started in my view. Part of that is I think our time has come. Remember my father before me, and me for that matter, have spent our lives trying to educate people towards natural health and natural remedies. It’s the underlying philosophical value of our business. I often say you know we’re not in the spare parts business or motor cars or something, we’re in a business that really delivers benefit to individuals and it’s a philosophical understanding. If you don’t


have that – and I think part of our success in Asia is because the Asians are used to having traditional medicines. Traditional Chinese medicine in China, I mean it’s massive. I had mate, this guy that I knew, he wasn’t a mate, came to a function that we had in Beijing last year and he ran three hospitals in Guangzhou and in those three hospitals they have 20,000, 20,000 patients per day for traditional Chinese medicine. Unbelievable. There’s 30 million people in China that do most of their shopping online and so we’ll talk about China a little bit later on, we’ll come back to that. RW We’ll come back to the super China growth story that’s right. But just go back to that article you know that I was talking about, the Economist recently described the supplement industry as having a good immune system of its own, lacks regulation, potent marketing, and millions of credulous consumers keen to pin their hopes on a pill. How do you respond to it? MB Yeah, just a lot of rubbish. The right part of it is we have an inbuilt immunity. That inbuilt immunity it called consumers. Seventy per cent of the Australian population take these things, they actually pay through the nose for them. The other mob, the pharma industry, I’d say to my people, the biggest competitor we have is not Swiss or Nature’s Way or one of those, it’s the pharma industry. Pharma industry offer health solutions, so do we. We just offer natural health solutions. The pharma industry are incredibly smart. From their start in 1940 when the discovered penicillin and cortisone, two amazing drugs at the time, no question about that, they’ve been able to convince the governments of the world to subside their product. Australian government subsides the pharma industry product only to the tune of nearly $9 billion a year. They don’t give us a cracker. In fact what they do is they charge us DGST. So I’m always telling government you know we’re actually revenue positive to you guys, you should be supporting us more. So look, you know we get these articles all the time. You know we’ve got critics coming out of the woodwork. RW But Marcus you provided a briefing session to Federal politicians and bureaucrats about the millions of dollars that could be saved if complimentary medicine was more widely used. What progress do you think you’re seeing, or do you think you will see in the public policy making in this area? MB Not much. Not much. I think there are entrenched – to the Vice Chancellor’s comments before – entrenched views... RW You just promoted him. MB


Within orthodox – oh. RW You just promoted him, that’s alright. MB Oh I did? Well he should be promoted, that’s okay. There are very entrenched views within government of a medical orthodoxy and you know one of the reasons why the National Health and Medical Research Council gives next to nothing to research in complimentary medicine, next to nothing, and hopefully that will change. Having said that, the big problem with medical research in Australia is nobody gets anything. Of all the applications I think only about – oh I don’t know, it’s a small number, 10 or 12 per cent actually get funded, and Australia is quite deficient in medical research in that sense and I was for a number of years the Chairman of the Heart Research Institute in Sydney so I have a bit of knowledge of that area. But we need more and more research. I’ll give you an example. We helped fund by providing product and protocols and things to Sydney University and the study’s been going on for over a year. It’s just been published in the New England Journal of Medicine which is a very prestigious paper/journal, and it was to do with Nicotinamide, Vitamin B3 and the outcome of that trial was for those people – they did a large, I don’t know, 700 people or something over a year – those people that took Vitamin B3, the Nicotinamide not Niacin but Nicotinamide had 23 per cent less skin cancer, fairly important in Queensland I would have thought. I just went to the dermatologist last week, cut a big hole in my leg and another here, and my hand’s a mess you know. RW Thanks for sharing that with us. MB So we can get rid of 25 per cent of their business just like – 23 per cent of their business. So it’s an indication of what research can do and then we’ve got Access Economics who are part of the NAB, and we’ve got a whole bunch of NAB people here. Access Economics are doing a study for us to show us the economic benefit for Australia and I’m sure it will be of the order of $500 million. We had the Minister for Rural Health in our office the other day and I said go and tell Scomo how we can save him $500 million, you know the Treasurer, the call him Scomo, Scott Morrison who is a really nice guy of course but he’d save $500 million by just getting people, if they did but support complimentary medicine. RW Marcus let’s now talk about you, let’s come to you. I read a quote from Petrea King, Director of the Quest for Lift where she said Marcus is a very astute businessman with his heart – as I mentioned before – heart as big as your business skills but for me it says a lot about your visionary leadership. Blackmores is widely recognised for its treatment of staff, its ethical practices. Just describe the DNA, the culture of Blackmores. Why is it distinctive? MB


Well we spend – let me just say something about Petrea King. She’s a most amazing woman. Twenty odd years ago she was diagnosed with leukaemia, she was told she had 18 months to live. Went and lived in a monastery in Italy, she was a Naturopath, went through all the questions why me, I’m a vegetarian, I eat all this good food, why has it happened to me and she survived obviously because she’s alive and she’s devoted her life to helping people with trauma. I send her people all the time who have just suddenly been diagnosed with cancer or loss of a loved one. She runs a Centre at Bundanoon and I’m proud to say Blackmores have been long-time supporters of her work. I don’t know if DNA’s the right word, whatever, but I’m very strong and my leadership is very strong on culture. I think you know – and I don’t know what culture means either you know, it means whether you’re happy getting out of bed in the morning and going to work, but I think you have to have happy people. So how do you have happy people? Well you’ve got to reward them well, you may have seen we got a lot of publicity recently because our staff got six weeks bonus and it was six weeks for six month’s pay. They will get another bonus next month and I think with a bit of luck they’ll probably another six weeks, will make 12 weeks for the year. And you know what, I’m really excited about that. When we can share the profit, we take 10 per cent of the profit of the company and share it with all our staff every six months in proportion to their salary. RW So what else about the culture? MB So you know strong culture gives strong performance I’m sure. But you’ve got to look after people, I think it’s really simple. We do things like you know if you join Blackmores you get a bottle of champagne when you join, for having made a good decision of coming to work for Blackmores. On your anniversary you get another bottle of champagne and you get a little card on it, thanks for another year at Blackmores. For your birthday you get a bottle of champagne. We actually use a lot of champagne I can tell you. But it’s those – you know what, it’s those simple things that are important, it’s not just how much you pay them. Of course people want to be adequately rewarded and what not but it’s those little, those little, we forget us managers how important that pat on the back is, just saying thank you, just saying good morning to people and whatever you know, it’s those little things that make that place, the environment and the culture something. RW What’s the kind of person that you want to see employed at Blackmores? What do they need to bring to the company? MB Look I don’t think we’re that different to other companies. You know we obviously have skills based, skill sets that we need but we try and insist that they have an interest in natural health because that’s the fundamental business reason for us being in business and so we want them – and sometimes you know technical jobs, you just can’t find that sort of person but I can tell you, within two or three years, and we run courses for the staff all the time, they eventually get it and become you know advocates for natural health.


RW Let’s just talk about your appetite for risk. What kind of risk taker are you? MB Look I don’t think – I can take a lot more risk with my own money, but I run a public company and I think I’m quite conservative about other people money and you know the company, fortunately at the moment because we’ve two – 18 months of really strong cash flow, we’ve basically got no debt in the business, we might get some debt if I finally get this new building that I’ve got my eye on at the moment but that’s another story. But I don’t – look I think I’m more conservative than I am a risk taker. I think you can take risks in products and things like that because it doesn’t cost us a lot to – oh what that rubbish about being an unregulated industry. Our industry in Australia is just about the most regulated industry for complimentary medicine of any country in the world, so we’re actually highly regulated but there’s a misconception that we’re not. We’ve got a few rat bags in the industry make a few sweeping claims and things from time to time, so there is a need for regulation. RW So what are the biggest challenges for you right now? There’s talk about the raw material shortages, costs… MB The biggest challenge for us at the moment is trying to make the stuff. You know we’re in an unbelievable fortuitous position where we just cannot make enough product and largely that’s the China – the underlying business, 20 per cent growth, but the China phenomenon. You know China are our second biggest tourists outside of the Kiwi’s and we don’t count them much because they won the bloody World Cup but that’s alright. And we have Chinese tourists come here, we have a very large Chinese population in Australia and they’re smart. You know they came here – while we were sitting around, all the Yanks came over here, we’re all digging holes in the ground looking for the gold, the Chinese came out here and said well these people have got to eat haven’t they, and so they started feeding them. Well who ended up with the money and the successful businesses, it was the Chinese. And we forget that China’s a communist country. Okay they’ve had 30 of something of walking around in grey suits and things like that, but underlying the Chinese economy is some very smart people. RW But the market loves your China growth story and if we’re talking about you being a game changer, the reason you’re here today, one of the elements of that is your China growth story. Well you mentioned the 50 per cent, the surge in demand. Tell us about the growth opportunities you see from here, coming out of this market for Blackmores. MB Well I think as I said you know there’s 20,000 patients just for traditional Chinese medicine, they understand the philosophy of natural health far better than the Western World does. But what happened, there’s a bit of fate in all of this. A couple of years ago the Chinese government banned supplements coming into the country and we had a business in China and had a fair bit of infrastructure and people employed and they suddenly banned supplements. So for you to supply a supplement in China it cost you


$50,000 per product, it might take a year or two to get the registration through. So they banned the supplements and we said well are you banning the supplements? Oh well we’ve got to do some new regulations. So you know if you run a communist society you say well we don’t want all that stuff coming in now, we just ban everything until we get the regulations in place. I mean you could never do that in Australia obviously but they can, and so they did that. Then September last year the Chinese government – remember there’s seven guys at the top, the Standing Committee and they run the joint and if you don’t like it you’re in deep trouble. So they made a decision that they’d open up a free trade zone in Shanghai. It is massive I can tell you. What it means is we can now ship our product into the free trade zone. The requirement is you can only supply individuals, we can’t supply pharmacy in China out of the free trade zone, but what it does is open up the whole of the online business and it’s just been amazing you know. I’ll give you an example. Vitamin E cream we make, we’ve had the product for 30 years, it’s much more than a Vitamin E cream, it’s got vitamin A and glyceric-esters and avocado oil and all sorts of things, it’s a very superior Vitamin E cream, more expensive than the rest of them for good reason. And so about three years ago the Chief Operating Officer came and said oh Marcus, we’re going to delete Vitamin E cream, we’re only selling about 4,000 tubes a month. Ahh, no you’re not, I use it and I’m sick of you deleting products that I use. Oh okay, so they didn’t delete the bloody product. My Chief Executive Christine said we think – well I’ll tell you the story. There’s a Chinese film star, Phan Bing Bing her name is, I’d never heard of her and I don’t think many people have outside of China and she’s on a show of some description, or on video and out of her handbag pops a tube of Blackmores Vitamin E cream. Wow and it sort of goes viral on the online business. So all of a sudden we’re starting to see these big orders coming from pharmacies in Australia who are supplying China, from Chinese tourists and from Chinese Australians supplying their family in China, all of sudden this stuff’s taken off. We think, Christine thinks that we could sell four to five hundred thousand tubes a month. It’s like a $20 million business for us or something. RW So you have massive growth expectations built into your share price, just describe the strategy…? MB No well have we? RW You have massive growth yep. MB Yeah don’t take it in, you mention all this PE stuff, I reckon that’s a lot of rubbish. You know I don’t think you can apply – you can use your investment criteria by looking at prices earnings ratios in businesses that are growing rapidly like ours has. RW


Correct. MB Yeah our PE’s 60. I think if we meet our targets for this year our PE will end up more like 30. RW Thirty or under. MB Still high but… RW Question But still – no but describe your strategy from here then. MB We’ve got a basic strategy in the business, we haven’t changed from that. We sit down as a group with the Board ever year and define our strategy and whatever and its really about growing our business in Asia, it’s about doing a better job, still taking care of our Australian and New Zealand business and investing in that, but a big significant investment in China, investment in our – we’ve got a veterinary business that I paid – I don’t know, what did I pay? A million bucks for it, it was doing $800 grand a year a wasn’t making any money about five years ago. That business will do six of seven million dollars this year, still doesn’t make a lot of money because we’re investing back in the business but if I wanted to sell it would be worth a lot. The BioCeuticals business – I told you our history was in the practitioner space and the last 20 years we haven’t done really well with the practitioners, mainly because our products you can buy them in pharmacy and that sort of thing. So we decided to buy part of our channel strategy this practitioner business called BioCeuticals, a blue label. We bought it, we paid $41 million for it, turnover was $38 million, we’ve owned for two and a half years, this year it should turn over $60 million or something you know, and it’s far more profitable. When you buy a business like that, first thing we did and said what are you paying for freight, they were paying like 50 per cent than Blackmores were paying for freight so we fixed that in a day. RW So Marcus let’s just come back for a moment. If I asked some of your team members to tell me about you. MB Yeah. RW What would they say? MB Probably say I’m a pain in the arse. I don’t know. Look I’d like to think they would say that I’m generous and I care for people because I’m very focussed on doing that. They


would certainly say he flies off the handle. What else would they say? I don’t know Ray. You ask me difficult questions. Yeah they would say don’t get on the wrong side or Marcus because it’s really hard to get off once you’re there yeah. RW But they’d also say they know where they stand with you right. MB Yeah well I think – yeah that’s the case you know. You know I say to people if you’ve got a secret don’t tell me because I can’t keep secrets, I’m hopeless. So don’t tell him any secrets and you’ll get what you’re looking for, hopefully. RW I was telling you the other day I spoke to Jack Cowen one your close friends, and one of the questions I asked him which I want to ask you too. Looking back on your personal journey as a leader, as a business leader, what were some of the biggest lessons along the way? MB Listen I’ll just tell you one of the lessons. It was before – you know I went to Churchie –you know my father’s a quack, how are we going to get this kid into this public school you know, it’s not easy to get into Churchie, certainly in those days, I don’t know so much now but anyway. My dad treated an Anglican Minister who was almost blind, he wore glasses like the bottom of coke bottles sort of thing you know and in desperation – they told him he needed to learn braille, we called him Padre, he spent a lot of time in the Solomon Islands or whatever. Anyway, he went to see my dad and I think in hindsight now he probably had macular degeneration, we’ve got a product for that now, and so Padre went to my dad in desperation, he died with his sight, he could still read when he – with difficulty – but he could still – his sight never got any worse and he became very close to the family and being an Anglican Minister I think that probably helped me getting into Churchie. But let me tell you a lesson. You know I went through the State school system, I went to Rochedale State School and Jones’ Hill State School which was a one teacher school outside of Gympie, we lived there on a farm for a number of years and so on, Clontarf State School, Boondall State School, Maryborough State School. My father used to keep moving around all the time you know and he’d paint the bloody house green, everything was – anyway. So I go to Churchie. First week I’m there I’m in – because being very English you have the Remove A and Remove B was the scholarship, I was doing my scholarship that year, eighth grade I guess it is. So anyway, this morning the kids, we’re all supposed to go to school and we’re not supposed to be doing our homework, we’re supposed to be doing our study, whatever that was and there was two rooms at Churchie and one class, Remove B is in this room, Remove A is in that room right. We decided we were going to have an ink fight because remember we all had fountain pens in those days. So we’d rush up, pull the door open and spray the mob in next door, and then they’d come in and do that same. Now normally you have a Master sitting there to control behaviour like this but he wasn’t there that morning. Anyway subsequently he walks in the room and he was Head Master


of the junior school, he walked in the room and he just said boys, boys, you know you shouldn’t do this. All boys who had been involved in the ink fight be up at my rooms at three o’clock. I’m sitting there saying this blokes kidding isn’t he? Got to be kidding. I can tell there was about eight of us or something involved in the ink fight, I was the only one that didn’t go up to his room at three o’clock in the afternoon and I can tell you I’ve lived with that my whole life. And that’s why we put so much emphasis on trust and honesty in our business today, that’s the lesson I learnt. And it has, I’ve lived with that all my life, sadly. What else do you want to know? RW Who’s interviewing who here? MB Other lessons. I don’t know, there’s all sorts of lessons in business. RW Now how do you create clarity and purpose in Blackmores? How do you get that clarity and purpose and people fully understand that direction? MB Well look, we sit round every year and do our mission statements. I think it’s a whole lot of rubbish to be honest. You know we had a professor from Macquarie University came and was the lead facilitator for that meeting, he called it strategic intent was the word, yeah strategic intent with deference to the academics in the place you know. They come up with a bit of different terminology and you’ve got to go and get more of this, a new story or a new book or something, so this was – he was a good bloke, I knew him quite well and what he said to me there, what he said to us was look, you could take the Fortune 500 companies, you could get their mission statement all up on the wall, you could mix them up overnight, go back the next day and nobody would know the difference. And I think that was a fairly true statement. I had a guy work for me and you know it’s really dangerous when you send people on marketing courses because they come back thinking they’re going to run BHP or something you know. And I don’t think the business schools tell you so much about it but most of them leave that job and go and join BHP or something or whatever. So this guy went and he came to me and he said we haven’t got a mission statement. I said so what. And he said well I think we really need one. I said well go and make one up, that’s fine. So he did. So he comes around with this bloody sign which he puts up all around the office and it says – a beautiful family crest on it, I remember it vividly – it says our aim is to make the best quality products and give the best possible advice. Hallelujah you know, if you don’t do that you won’t be in business will you but anyway, up on the wall. I’ve only seen one mission statement in my life that I thought was any good and that was Komatsu and Komatsu’s mission statement was kill the cat. Kill Caterpillar. He’s got a slightly different version. RW It’s a slight different one yeah. We won’t let facts stand in the way of a good story right?


MB Having said all that you know, look I embellish the story a little I suppose but the actual process of sitting down between the board and the management and trying to work out where do you want to be in five year’s time and 10 year’s time and come out with some strategic priorities I think is a very important business process. And we’ve got those, we’ve stuck with them unchanged for the last four years and we put them in our Annual Report, everybody can see it and I think that’s delivered in spades for us. RW Any questions from the audience? Let me just ask you one question while you’re just thinking of something you’d like to raise with Marcus. What excites you most about the future? For you personally, what excites you most? MB I continually get asked you know what’s my vision for the business? I mean oh God here we go. RW No, what excites you? MB I think the answer is – my answer to that question has been I just want to be bigger and better at what we do and that’s a function – you know recently we gave Sydney University $1.3 million over three years or four years or something to establish the Maurice Blackmore, my dad, Maurice Blackmore Chair of Integrative Medicine at Sydney University and for me it was like – I mean I had tears in my eyes just to think that you know everything that my father stood for before me and he taught me in life about natural health and natural remedies, here we are at a prestigious medical school like Sydney University Medical School with a Maurice Blackmore Chair of Integrative Medicine. That’s the sort of thing that excites me about life. You feel that your life’s purpose for so many years, it’s not just about making money and a lot of it’s about defending our position and to see something like that was just incredible. RW We’ve got a microphone coming, just one sec. MB Grab the microphone because I’m deaf. I was in the army for – I was a gunnery officer in the army for two years. I had a girlfriend – this is getting off the track, doesn’t matter – I had a girlfriend 20 – I got married two years ago for the first time in my life you know. You talk about risk taking, I mean some decisions take a while I have to tell you. RW Do you have a question? MB


Don’t worry about the question. This girlfriend I had, she searched the world – this was 20 years ago – for you know one of those bloody great brass horn things which she tried to buy me because I was deaf. Anyway use the microphone. Question I wanted to ask you about Naturopaths and what’s going to change recognition of naturopathy as a qualification and Naturopaths as people that administer good advice? MB Look I don’t think anything’s going to change for a while. The naturopathic professions in Australia have always been a mixed bunch of people you know. There’s different professional associations, they have different views, they never really seem to get their act together but they’re certainly for registration because there are a bunch of quacks out there you know. But I was with – Jane Halton was Secretary for Health with the Federal Government and I said Jane, what about registration of Naturopaths and you know, Chiropractors are registered, we are the only country in the world that registers traditional Chinese medicine practitioners, the only country and the Chinese are going to spend a lot of money promoting traditional Chinese medicine in Australia. So she said, the role of Government for registration is to register things when harm is being done. She said, we don’t see any harm being done. So I don’t there’s the impetus from Government to register them for a while. It’ll happen, it surely will happen eventually. Question Marcus I’ve had a question from Twitter before we come to another question in the audience. Do you invest in research firms that are coming up with new products and processes? MB Yeah. We spend a lot of money in R&D. We have what’s called the Blackmore’s Institute which is part of our organisation run by Professor Lesley Braun who lives in Melbourne, comes up to Sydney three days a week. That’s the institute that gets involved with this project like Sydney University has just done on the vitamin B3. We spend some monies outside the business for supporting medical research and we also have our own internal R&D people and you know very well qualified people that produce our product. We don’t try and be all things to all people. Other competitors like Swiss and what not, they proliferate massive amounts of product, we don’t see that as our role. But yeah we spend a lot of money on that sort of thing. RW You see you’ve got a number of budding entrepreneurs in the audience, so some advice. What does it mean to be an entrepreneur and do you have any advice would be entrepreneurs in this field? MB I knew you were going to ask me this question. Look I don’t even know what an entrepreneur is to be honest.


RW Risk taker. MB I mean some might say I’m an entrepreneur but I’m not a great risk taker so I probably don’t qualify. Some people say just owning your own business qualifies you as an entrepreneur. I think what you’ve got to have in your organisation is entrepreneurial behaviour as opposed to having a whole bunch of entrepreneurs. If you had too many entrepreneurs they’ll probably all leave anyway. But it’s how do you create that culture of entrepreneurship. The advice, I knew he was going to ask me this question, I thought I haven’t got an answer. So I looked for an answer and here’s my answer sir, and this comes from Bill Gates. Now he is an entrepreneur, there’s no question. Bill Gates invented no new technology and was never a creative software programmer. He is however an entrepreneur and a builder and I think that’s the important thing. He says, we were young but we had good advice, we had good ideas and lots of enthusiasm. So I think that’s the best bit of – Bill Gates is a better entrepreneur than me. I’ll tell you another thing, I’ll tell you another thing. When I answer this question I’ve done it before. I think we’ve got a misconception at times about entrepreneurs that you have to make a hell of a lot of money. I’ve got a mate that’s an entrepreneur, there’s two of them in Sydney. One is a Catholic Minister, Father Chris Riley, and the other one is the Exodus Centre, Bill Cruise. Now Bill Cruise runs a restaurant, you can’t book, you can’t pay, he does 1,000 meals a day, the food’s good and then he runs a radio program at night, he feeds people in what’s called Loaves and Fishes because Singo went to the races one day, won a big bag of money, rang Bill and said Bill, if I give you all this money I just won what will you do with it. And Bill Cruise said I’d start a soup kitchen and Singo very creative from the advertising said call it Loaves and Fishes and I’ll give you the money. So that’s what he did. So it’s Loaves and Fishes restaurant at Ashfield in Sydney, it’s an unbelievable restaurant, that for me is entrepreneurship. You know he’s a builder of things and he’s just done an amazing job and I’m proud to be one of his serious financial supporters in terms of what he does for – you know he runs a literacy centre there. Can you believe, in our community, we’ve got kids of 12 and 13 years of age who cannot read, they cannot read and Bill’s view is what happens to these people, these kids in school, they fall further and further behind. And so eventually as he says they fall through the cracks and then they end up on the streets. You know the father might be jail or whatever, some of them have got a pretty tragic history at times. So Bill’s got a couple of vans and he goes round to the schools, local schools near Ashfield, picks the kids up, brings them back to his literacy centre and they spend really, well not one on one, but small class teaching and Jack Cowen’s wife, I’ll tell you something beautiful about Sharon. After I got married – Bill married us – so some of my mates said this guy Bill puts a wonderful view of religion you know and its acceptable you know he’s not – and so I said okay, well I tell you what I’m going to do with some of you rich buggers. We’re going to go out there and we’re going to have lunch one day out at Ashfield with all the deros and what not that turn up and you know some people just abuse him, he never questions anybody that comes into the place.


So I turn up with some of my rich mates and Jack Cowen, Jack and Sharon were there and I raised $300,000 at lunchtime, we bought him two new vans and Sharon was so impressed with the literacy centre – she used to be a school teacher – she signed up as one of the teachers. I think that’s a beautiful story. RW That’s great, great story. MB This man is just a great Australian, and so is Father Chris Riley. Now these guys run massive businesses. Question Another question from Twitter. Marcus, which of your products, which of your products are part of your daily life? MB Look I take a lot of – I take what I think I need at the time. I fly a helicopter so every two years I have to go and do a medical. I’ve got high blood pressure, talking to people like him, so my blood pressure has to be below 150 and I’ve always struggled. So I’ve got a cardiologist who’s a great mate of mine, I’ve known him for 30 years and so he says to me, Marcus, Marcus, we’ve got to get your blood pressure down. He said I know you don’t want to take all these drugs and things and I said no I don’t. And he said but I don’t want to see you sitting in an old men’s home in a wheelchair dribbling or something and you’re a mate of mine so I’ve taken his drugs and it’s just like bloody snakes poison you know, I’ve never felt so weak in my life. Anyway, so I’ve taken a lot of things to compensate for those drugs that he gave me. I finally rang him up from Europe the other day and I said mate, you’ve got to get me off these things, it’s killing me. Anyway he said see me as soon as you get back. Anyway they’ve changed the formula that I’m taking and I’ve got to tell you I feel a hell of a lot better. So I take Vitamin C every day, you’ve got a bottle of Executive Stress in there, it’s been clinically proven that if you’ve got anxiety or stress you know I think you’ll find quite a benefit. Don’t worry if your pee goes yellow, that will happen, it doesn’t mean somethings failed inside, it just means that there’s a fair bit of B group vitamin in there and that turns the urine a bit yellow, so don’t worry about that if that happens. So you’ve got Vitamin C and you’ve got – I think if I was going to recommend anything to anybody, and certainly my cardiologist says take fish oil and good multi and you’ll cover most area. Other than that it’s about knowing what your body needs. RW So now you feel better about your urine, are there any final questions? Yes please. Question Marcus if I can just get you to expand on China again. Just the growth prospects that perhaps you’re seeing, not only for Blackmore’s but perhaps for Australia? Just that growing middle class, the amount of money that’s being invested into this country. MB


I didn’t get all that. RW What he’s asking is the growth story for China, not just how it affects your company, but the prospects for Australia coming out of the China growth. MB I think that we forget that China is a communist country and so it’s a high risk market for a lot of companies. So what do we do? We’ve got a guy who’s been going to China for 30 years. He was Senior Trade Commissioner for Austrade in Beijing for six years. He speaks Mandarin, he lives in Taiwan, he has a Taiwanese wife and we have in China what’s called a WOFE, a wholly owned foreign enterprise. So unlike a lot of our competitors Blackmore’s China is actually a Chinese company employing Chinese people. The Chinese government, you know they know they’ve been selling all this cheap stuff for years. I was at Harvard Business School and I was having an argument with – I was revving up one of my Yank mates and I told him you know, you bastards gave us the global financial crisis lending all that money to people that couldn’t pay it back, and then it all building up and the fund’s managers put it together and got a AA rating and then the whole thing came crumbling down. And then he said to me Marcus I don’t think you understand the spirit of the American people will get us through all of this. I said wow. And he said the Chinese people, they blame China for a lot of their problems, the Chinese aren’t creative. I said what? I said mate when somebody makes a whole lot of rubbish and you buy it they end up with the money. Now you, because of all your antics on a global financial crisis, you’ve run out of money. So who’s lending you the money? The Chinese. I said that’s creative. RW Any final questions? MB So I think from our point of view, I think we’ve got a lot of things in place with our WOFE, we’ve got a joint venture arrangement with a company called Sinopharm, the bigger pharmaceutical wholesaler in China, fourth biggest in the world, we do joint ventures and things in terms of our opportunities in some of these countries that we don’t know well enough ourselves. So I think we’ve got a lot of things in place that will – you know you’ve got 30 million Chinese buying most of what they need online and this free trade zone, its opened up the whole of the online business. And you know I said Vitamin E, Evening Primrose Oil you know was not a big product for us, it was a good product, suddenly gone through the roof you know. And as I say, the Chinese people are used to these things, they understand the very philosophy that my father and I have spent our life thinking about of natural health and natural remedies. So I think we’ve got a hell of future in China. At this stage we’re only – you know there’s a lot of them, we’ve only scratched the surface. I hope. RW Any final questions?


Question Hi Marcus, my names Dave, Dave Capenick, I grew up in Rockie which is a redneck town North of here and my mum and dad were school teachers and they had me on different vitamins as I grew up and all my mates thought we were hippies and crazy. And my question is, like even now I’ve got mates like one of my mates wife, she’s a dietician and she says I’m wasting my time taking my vitamins and it just goes straight through you. What’s a simple reply to something like that or do I just not bother and go well, I’m happy, don’t worry. RW So he’s looking for a simple response, a simple reply to someone that says vitamins are doing you no good, supplements are doing you no good. MB The woman that ran the Dieticians Association, her name was Jo Rodgers at Royal Prince Alfred hospital in Sydney and I used to have that same sort of battle all the time. See the dieticians, particularly the older ones, believe that only they know about what food you should eat and for you to say people should have organic and natural and all those sort of things, oh that’s just a lot of rubbish you know because they were never taught, that exactly the same doctors were never taught complimentary medicine when they did medicine. You know I don’t know that there’s a simple answer to that but you can – we brought a guy to Australia last year, was a cardiologist. He had the same view, it’s a lot of bunkum you know I don’t believe in any of this stuff. So he said, what worried me is so many of my patients coming in saying they were taking all this complimentary medicine sort of thing. So he said I sat back one day and I thought I’ll do a bit of a literature search. He found 1,000 studies just on cardiology and complementary medicine. He then wrote a book, what your doctor didn’t tell you about heart disease and he’s got a series of those things. So look I don’t know that there’s a simple answer to that but you know, get your head out of the sand is probably the best answer. RW Does that give you enough? Audience Yeah that’s great, thanks very much. MB Don’t upset her, don’t upset her and blame me whatever you do. Audience No, no, he’s me best mate, I won’t stir her up. RW I told you it was going to be a treat, I told you it was going to be an interesting ride. So can I ask you please to thank Marcus Blackmore.


PL Marcus, Ray did say it would be an interesting show and having spent some time with you beforehand I knew it would be and can I say it’s been wonderfully entertaining, certainly the most entertaining Game Changer interview we’ve ever had and very Queensland, very Queensland and we love that. This is what it’s all about. This is all about Queensland. MB And I barrack for the morones, my wife barracks for the blue mob and fortunately I’ve done a hell of a lot better than she has in the last 10 years. PL Well Marcus you said you’re not sure what entrepreneurs are but we always say here that entrepreneurs and game changers, whatever else you might say about them, they are people who see things that others don’t. They not only see things that others don’t but they act on what they see and a couple of things stood out for me tonight. One in speaking about your father and you were sort of dismissive about him in some respects, but obviously deep reverence there because he was a game changer clearly and a real leader who saw the potential of complimentary medicines and stood out against all the pressures of those days which would have been you know very, very hard days and a very hard life for him. In the same way you saw the opportunities in Asia 30 years ago and you acted on what you saw, when a lot of Australian companies – I can remember the public debates about Australian business going to Asia and we’ve not been very good at it, but you have been spectacularly successful and a lot of that success is in recent times. But that comes from a really solid base of participation in Asia over 30 years and you saw that and you persisted and I think really the wonderful thing, which was your reply to one of the last questions, was the opportunities that you see and the optimism that you bring notwithstanding all of the success. You know the wonderful optimism you have and the passion you have to drive even further and that’s really an inspiration for anybody here who has a start-up, or building a business with a great product or a great service and wanting to not only be a national business but an international business you see what building from passion and vision and through resilience and that’s been a great lesson to everybody here tonight. Can I finally say thank you for promoting me because I realise that my salary will now got to over a million dollars and after tax I’ve worked out that I’ll be able to buy 3,125 Blackmore shares and I’ll be very pleased to do so. So thank you very much for your contribution tonight. Would you thank Marcus again and we just have a very small gift. MB Oh good. Thank you, thank you. PL


And would you please thank Ray Weeks for another fantastic interview and for a great series. If you would like to revisit the conversation or share it with friends or colleagues or use it for staff training, and we really encourage you to use it for staff training and development, the webcast and transcript will be available on the SLQ website within a week. Thank you all for being here on behalf of the Queensland Business Leaders Hall of Fame. We’re working on next year’s series right now and we hope that you will come, we hope that you will spread the word about the Game Changer Series and about the Queensland Business Leaders Hall of Fame, this is celebrating your achievements, the achievements of those in the past and those who are to come, building a great Queensland through business entrepreneurship. Now would you please join us on the terrace for refreshments courtesy of our generous sponsor Clovelly Estate, and once again can I thank our generous sponsors Crowe Horwath, Channel Seven, NAB, RACQ and Morgans. Thank you very much. Good night. [end of recording]

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