Infant formula firm Bubs announces sales growth of over 500% amid steady China expansion

By Cheryl Tay contact

- Last updated on GMT

The increase in sales comes amid Bubs' continuing expansion plans for the infant and adult goat milk market in both Australia and China.
The increase in sales comes amid Bubs' continuing expansion plans for the infant and adult goat milk market in both Australia and China.

Related tags: Australia, China, Infant formula, Sales

Australian organic infant formula manufacturer Bubs has announced a massive rise of over 500% in sales, thanks largely to the growth in export sales to China.

The firm's gross sales increased by 531% to $8.89m in Q4 2017 alone, compared to Q4 the previous year. Sales in Q4 this year were 63% higher than in the preceding quarter.

This sales growth comes on the back of a 644% increase to $1.9m in export sales to China, which accounted for 22% of the company's quarterly gross revenue.

Founder and MD Kristy Carr said Bubs had seen a "strong growth trend"​ during Q4, with "material uplift in infant formula and overall sales to China delivering our highest quarterly revenues"​.

"The sales performance reflects both a 99% year-on-year increase in Bubs' infant formula, and the additional sales from the NuLac Foods portfolio."

Bubs had bought NuLac Foods​ for $39m late 2017 as part of its expansion plans for the infant and adult goat milk market in both Australia and China.

Profiting from partnerships

Carr said Bubs' China expansion plans had been well supported by a number of new cross-border trading partnerships. Last month, it secured a $40m equity placement to professional investors.

In the same month​, the firm also entered a binding manufacturing agreement with licensed production facility Australia Deloraine Dairy in an bid to obtain registration with the China Food and Drug Administration (CFDA) — now called the State Administration for Market Regulation (SAMR) — and signed a merchant service agreement with Alibaba to drive its e-commerce sales into China.

The latter involved Bubs opening a flagship store on Tmall Global, which saw Bubs' shares increase 5% during that time.

This came shortly after a supply agreement​ with China-based supply chain and service provider New Times Asia, which followed an earlier supply agreement with JD.com and a distribution agreement with Chinese distributor QianJiaWanPu Co. Ltd.

Carr added: "Recent capital raising will provide the necessary working capital and inventory management to support growth in market development, supply chain, brand marketing and product innovation.

"The new capital is expected to support the next stage of growth and take the company to profitability."

Bubs has been making moves into China, as well as the wider Asian market, since early 2017, when it listed on the ASX​ after raising $5.15m in a share deal that involved several big-name key investors.

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