AUSTRALIA – Global infant formula maker, Bubs Australia, has revealed that its China market revenue has tumbled in a recent trading update following the ousting of Bubs Australia Chief Executive Officer and founder, Kristy Carr.

The company said sales of infant formula and adult nutrition in the Chinese export market remained well below expectations in April and May.

According to the company’s report, the gross revenue in China was down 56% for the three-month period until 31 March.

“Significant amounts of finished goods inventory are still held in trade, predominantly Bubs Supreme a formula with the A2 beta-casein protein,” the company stated.

In its trading update, Bubs added that Jackie Lin, an experienced Chinese-Australian executive with a strong understanding of Chinese Fast-Moving Consumer Goods (FMCG) and infant milk formula markets, has been seconded to join the board and lead a strategic review of China operations.

“We have already made significant progress on right-sizing the cost base supporting the China business and resetting the China strategy with a view to creating a truly diversified multi-channel approach. We will comment further on its future prospects in China once its strategic review is complete.”

Bubs also highlighted that its H2 net revenue for China stood at A$12.9m (US$8.55m), down 52% year-on-year and it has forecasted its full-year China net revenue to be between A$13.5m and A$13.8m versus A$53.6m in FY2022.

Previously, the company entered into a manufacturing and licensing agreement for goat’s milk infant formula in China with Heilongjiang Ubeite Dairy Group (HUG).

This took place as Bubs Australia awaited approval for permanent approval from FDA to establish its presence in the US infant Formula market.

Bubs aimed at acquiring a 75% stake in the joint venture with forecasts that the Chinese-labelled goat’s milk formula would hit the market in the second half of the fiscal year 2023.

However, the company later sold 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, would be made per new standards in China coming into force in February.

As part of the joint venture, HUG submitted the renewal application to State Administration for Market Supervision (SAMR) for the manufacture and sale of the products, Bubs said.

Bubs’ current distribution agreement with Willis Trading for Bub’s goat formula, organic grass feed formula, and Caprilac adult goat nutrition is seen to conclude at the end of June.

“Bubs is working hard to improve the distribution and sell-through in China,” the company stated.

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