How McPherson’s Reinvented Itself with a New 3PL Model and Brand Focus

A Strategic Reset for McPherson’s

McPherson’s Limited, a stalwart of the Australian consumer goods landscape with a 165-year history, has embarked on a comprehensive transformation to reposition itself as a focused health and beauty company. This strategic overhaul, detailed in a recent investor webinar, reflects a decisive pivot away from its legacy portfolio and operating model, which had become burdened by high fixed costs and underperformance.

Central to this reset was the divestment of the Multix brand in mid-2024, a move that freed McPherson’s from exposure to volatile commodity and freight markets inherent in the bags, wraps, and foils segment. The sale not only streamlined the company’s brand portfolio but also provided crucial capital to fund the transformation.

New Operating Model, From Fixed to Flexible

Perhaps the most significant operational change is McPherson’s shift from a direct-to-store distribution model to a third-party logistics (3PL) and pharmacy wholesaler route-to-market. This transition has dramatically reduced the company’s fixed cost base by eliminating the need to maintain a large warehouse and logistics staff, resulting in a 55% reduction in workforce and a 56% cut in inventory levels.

The new model leverages specialist wholesalers’ superior distribution capabilities, offering next-day delivery and broader reach into over 4,000 independent pharmacies nationwide. This scalable and variable cost structure is expected to unlock $4.5 to $5.0 million in annual EBIT benefits, a substantial portion of which will be reinvested into brand building, innovation, and digital capabilities.

Focused Brand Portfolio and Growth Strategy

McPherson’s has concentrated its investment on five core health and beauty brands, Manicare, Lady Jayne, Dr LeWinn’s, Swisspers, and Fusion Health. These brands are positioned in large, growing categories with strong margin potential. The company is pursuing disciplined advertising and promotion strategies, supported by enhanced consumer insights and digital marketing, to drive brand growth and market share gains.

Innovation pipelines have been refreshed, with new product launches such as Fusion Health’s Magnesium Sleep Calm Mind and Calm Clear Focus supplements. Packaging and brand positioning have been modernized, notably for Dr LeWinn’s, which now emphasizes its Australian formulation heritage to resonate with local consumers.

Financial Discipline and Digital Transformation

On the financial front, McPherson’s has right-sized its debt facilities, replacing a $52.5 million syndicated loan with a $16.2 million bilateral facility from HSBC, reflecting the company’s reduced working capital needs and resulting in a $1.1 million reduction in borrowing costs. Capital expenditure is now more disciplined, focusing on systems upgrades such as Salesforce CRM and Employment Hero HR platforms, alongside a planned ERP modernization to unify data and support growth.

The workforce has been reshaped to emphasize sales, marketing, and digital skills, with 87% of employees engaged in AI training programs. This cultural shift aims to build a high-performance organization capable of executing McPherson’s refreshed strategy.

Looking Ahead

While early signs of progress are encouraging, McPherson’s acknowledges there is more work to be done to fully realize the benefits of its transformation. Sustained investment in brand building, innovation, and operational excellence will be critical to unlocking growth and delivering shareholder returns. The company also signals that its international business strategy remains under review, with updates expected in due course.