Bubs breaks records with strongest quarter to date

29 July 2019, Written by Paris Faint

Bubs breaks records with strongest quarter to date

Landmark deals with China, a major acquisition and an alliance with Chemist Warehouse were all part of Bubs Australia's (ASX: BUB) formula for success in 2019.

The organic baby food, infant formula and goat dairy producer closed out FY19 with its strongest ever quarter, reporting a 179 per cent yearly revenue increase to $51.3 million.

Bubs founder and CEO Kristy Carr says these results were the product of an aggressive growth strategy, coupled with key partnerships and investments poured back into the supply chain.

"We are pleased to deliver the strongest quarter in the company's history, with our fourth quarter sales exceeding that of the full year in 2018," says Carr.

"This demonstrates the validity of our continuing focus on our four-pillar growth strategy, combined with underlying investments in supply chain and capabilities, and key strategic channel partnerships, is delivering an aggressive growth trajectory and a platform for moving into profitable growth in the near term."

In March this year Bubs entered a joint venture (JV) with Beingmate, a dairy company listed on the Shenzhen Stock Exchange with a market capitalisation of AUD$1.39 billion.

The JV engaged retailer Kidswant, which in turn saw Bubs' Organic food products quickly stocked in 275 large-scale physical stores in key shopping areas of 123 Chinese cities.

One month later, Bubs initiated a $31.4 million share placement to C2 Captal Partners, a private equity fund anchored by Alibaba Group.

That crucial investment paved further inroads to the lucrative Chinese market and also provided the capital necessary to acquire Australia Deloraine Dairy for $35 million.

Deloraine is one of only 15 licenced canning facilities in Australia authorised by Chinese regulators to export into China.

The facility has the capacity to process 10 million tins with its existing production line. At the time of acquisition, Bubs said the buyout could double manufacturing capacity.

While the company is clearly performing overseas, it is exceeding targets at home as well.

Recently Bubs entered a four-year agreement with Chemist Warehouse to stock its entire collection of 28 products across 450 outlets in Australia.

Chemist Warehouse is Australia's largest pharmacy chain which generates more than $5 billion in retail sales, including $200 million which stems from the sale of infant formula.

"Our home market experienced the strongest growth throughout the quarter, driven by increasing penetration in Coles, Woolworths, Big W, Amazon and Costco, and the national roll-out of all 28 products in Chemist Warehouse outlets in June," says Carr.

"In addition, the rapid growth of the corporate Daigou segment contributed to our domestic sales more than doubling that of the prior year."

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Author: Paris Faint





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