Equity research Zinzino: Expansion into a large market

Zinzino increases its market exposure by expanding its operations to Mexico. We believe this is an exciting venture that provides exposure to the world’s eighth largest direct sales market. In direct sales for the wellness product category (including dietary supplements), Mexico is approximately 43% larger than the German market. In other words, Mexico comes with good conditions to become an essential market for the company over time.

Mexico has a population of around 127 million, and GDP per capita in 2022 was around USD 11,100. Today, Europe is Zinzino’s largest submarket. As a reference point, Germany has around 83 million inhabitants and a GDP per capita of around USD 48,400.

In terms of total sales value from direct sales, in 2022, Germany was the third largest market on a global basis. In the same year, Mexico ranked eighth with an average annual growth rate of 0.8% over the last three years.

Zinzino offers dietary supplements, which fall under the product category of Wellness, as well as products in the category of Cosmetics and personal care. On a global basis, these two product categories represent approximately 53% of the sales value from direct sales. The corresponding figure for North and South America is approximately 63% and 33% for Europe.

If we focus on individual countries, wellness products comprised about 60% of the total sales value from direct sales in 2022. In Mexico, the corresponding figure is 35% and in Germany about 8%. In absolute terms, we estimate that the Mexican market for wellness products, including dietary supplements, is about 43% larger than the German market.

As an external party, estimating the new market’s initial revenue contribution is challenging at this stage. However, given the market size for direct sales and the product category wellness products, the conditions are deemed favourable for Mexico and Latin America to become an important market for Zinzino over time.

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