Bubs signs agreement with major Chinese baby goods company

Written on the 6 March 2019 by Business News Australia

Bubs signs agreement with major Chinese baby goods company

Bubs Australia's (ASX: BUB) Chinese dreams are about to become reality as its new partnership with a Chinese baby goods giant comes into place.

The Australian infant formula producer has signed an agreement with Beingmate Baby & Child Food Co, one of the largest Chinese owned enterprises in the infant nutrition industry.

Under the agreement the two have agreed to form an eventual joint venture to distribute Bubs infant formula and organic baby food products in China.

The joint venture will open Bubs up to Beingmate's distribution network covering 30,000 mother and baby stores throughout China.

This deal is a significant move for Bubs as its products are currently only stocked in around 500 stores in China.

Beingmate is listed on the Shenzhen Stock Exchange with a market cap of around $1.29 billion and has 280 infant formula and baby food products in its portfolio. It is this expertise and massive size that excited Bubs founder and CEO Kristy Carr.

"Beingmate's extensive infrastructure, local knowledge, regulatory expertise and extensive domestic distribution footprint, coupled with Bubs unique premium international offering, will have the capacity to transform our business," says Carr.

"Beingmate is particularly strong in driving distribution via China's lower tier cities which are benefiting from China's new multi-child family policy, and so there are higher expectations for addressable market growth than in the Tier 1 cities where the costs to entry are high."

Beingmate's CEO Bao Xiufei says Bubs is sure to take off in China with parents in the country looking for products that they trust and believe are healthier for their children.

"We believe there is a terrific opportunity for Bubs to capture a material share of the super-premium infant formula and organic infant food sectors, both of which are experiencing rapid growth in China," says Bao.

"In particular, Chinese parents are attracted to 'clean and green' infant nutrition products for which Australia has an enviable reputation."

Shares in Bubs are up 15 per cent to $0.69 per share at 11.01am AEDT.

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