Bubs growing up fast with new deal
SHARES in infant formula maker Bubs Australia have surged after the company signed a long-term supply agreement which will “at least double” its revenue next financial year.
The Sydney-based company, which uses goat milk to make infant formula, told investors that it had signed a deal with China-based New Times Asia, who will supply the Aussie products on up to 20 eCommerce platforms in China.
The announcement sent Bubs’ shares up 7.8 per cent yesterday to close at 82¢.
New Times Asia is a professional service provider which specialises in eCommerce sales and fulfilment in China, with links to all major and second-tier eCommerce platforms.
It already represents many leading global brands in China, including numerous imported infant formula and milk powder brands.
Under the deal New Times Asia has agreed to buy $17 million worth of Bubs and its subsidiary CapriLac products from Bubs Australia in the 2019 financial year, which will more than double Bubs’ sales revenue.
The infant formula maker said New Times Asia’s minimum sales commitment will increase to $24 million in the 2020 financial year and $37 million in the 2021 financial year.
“The agreement with New Times Asia is a major step forward in our China expansion strategy, and shows the investment we have been making and continue to make in building our China presence is bearing fruit,” Bubs Australia founder and managing director Kristy
Carr said.
“Based on our annualised run rate of Bubs and CapriLac combined trading, the committed FY19 offtake by New Times Asia will at least double our total company net sales revenue.”
New Times Asia’s responsibilities include providing sales, account management, operations, fulfilment, logistics, cashflow management, customer service and marketing.
New Times Asia chief executive Michael Deng said Bubs and CapriLac are two “strong and trusted” Aussie brands. “We are confident we can quickly build brand awareness and consumer demand for Bubs in China given the trend for premiumisation as reflected in the rapid growth of specialised formula, goat milk and organics,” he said.
Bubs was founded in 2006 as an infant nutrition provider, focused on children up to 1000 days old. Last year Bubs acquired NuLac Foods – the owner of CapriLac and Coach House Dairy – for $39 million, making it the largest producer of goat dairy products in the country.