CHINA – As Bubs Australia awaits approval for permanent approval from FDA to establish its presence in the US infant Formula market, the company has entered into a manufacturing and licensing agreement for goat’s milk infant formula in China with Heilongjiang Ubeite Dairy Group.
Bubs, which will own a 75% stake in the joint venture, said the Chinese-labelled goat’s milk formula is expected to hit the market in the second half of the fiscal year 2023.
Bubs Australia currently sells its infant formula products in China through a cross-border e-commerce channel, which accounts for roughly 20% of total infant formula sales in the country.
After inking the agreement, the Sydney-based company said the “ultra-premium” formula, developed specifically for the local market using the A2 goat-milk protein, will be made per new standards in China coming into force in February.
As part of the joint venture, HUG has submitted the renewal application to State Administration for Market Supervision (SAMR) for the manufacture and sale of the products, Bubs said.
Although the Chinese parties are already SAMR-compliant they have to renew the license to get new authorization under the upcoming so-called GB regulations – an acronym of the anglicized Guojiabiaozhun.
Announced in March 2021, the new rules apply to infant formula not sold via cross-border e-commerce channels.
If the SAMR grants approval, the firm will be able to sell its Chinese products in the remaining 80% of the market, Bubs said in their statement.
HUG has also “granted first right of refusal” for Bubs Australia to secure SAMR approval for its ultra-premium A2 cow’s milk formula under its Supreme A2 brand.
Founder and chief executive Kristy Carr said “We are pleased to announce this important milestone for the company to renew an existing registered SAMR brand slot for Bubs China label Goat Milk infant-formula products in partnership with a reputable Chinese infant-formula manufacturer.”
She added that in fiscal 2022, Bubs’ revenue from its English formula varieties grew 179% to more than AUD42m.
Strong growth in China – revenue was up 166% year-on-year, representing 55% of Bubs Australia’s sales – helped to underpin record sales for the company in its last financial year. In the 12 months to 30 June, group revenue more than doubled to AUD89.3m (US$57.5m).
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