Jennifer Hawkins the new brand ambassador at Bubs Australia
27 July 2020, Written by Matt Ogg
TV presenter, model and entrepreneur Jennifer Hawkins will be the new face of goat's milk formula company Bubs Australia (ASX: BUB), which today reported a 32 per cent rise in revenue to $62 million in FY20.
Pantry stockpiling in the third quarter meant fourth quarter sales fell slightly lower for the company, but management is upbeat with a 26 per cent rise in China direct sales and a doubling of revenue contribution from non-China exports.
Today the group is furthering that momentum with the announcement of a new vitamin and mineral supplements (VMS) range to be stocked in 400 Chemist Warehouse stores from October, and the appointment of Hawkins, former Miss Universe, as its global brand ambassador for three years.
Bubs Australia founder and chief executive officer Kristy Carr says as a new mum Hawkins is the perfect role model to represent the brand to new parents everywhere, including her legion of nearly two million followers on social media.
Hawkins will be appearing in an integrated multimedia consumer campaign to support awareness, education and ongoing engagement across all of the company's key markets.
"As a new mother it was a huge decision what brand to choose and trust when I was introducing solids to Frankie," says Hawkins.
"I actually started using Bubs Organic puree pouches and rusks before being approached to be the company's global ambassador, which is amazing.
"The Bubs ethos of healthy nutrition and wellbeing perfectly aligns with my own values, which is why I am so happy and excited to take on this role."
Carr says the VMS deal into Chemist Warehouse with its Vita Bubs range gives the company the opportunity to leverage its unique positioning in children's nutrition and as an Australian goat's milk specialist, highlighting VMS as a "material $2.3 billion category".
"The move into the vitamin and mineral supplements category is consistent with our strategy to evolve into high margin adjacent categories where we know our end consumers and can leverage existing core competencies and brand reach across multiple children's feeding and health settings," Carr says.
"We expect the launch into Chemist Warehouse will add materially to our domestic revenue."
An international roll-out of the Vita Bubs range is also planned including China, Vietnam, Hong Kong, Singapore and Malaysia over the course of this calendar year.
Carr says despite the challenging environment with COVID-19, all of Bubs' top three markets have delivered strong growth year-on-year, and the group's vertical integration and local sourcing model brought supply chain security and manufacturing agility.
"Importantly, Australian domestic consumer demand is showing signs of returning to normal pre-COVID levels," she says.
"However, the outbound Daigou Channel remains constrained as a result of the significant reduction in Chinese students and tourists, and the lack of passenger planes resulting in increased logistics costs and longer delivery lead times."
Bubs' cash position fell by more than $10 million in the quarter, including an almost $7 million decline in net cash from operating activities, taking reserves to just over $26 million at the end of the quarter plus $8 million in undrawn debt facilities available.
AuMake (ASX: AU8), another company in the infant formula space courtesy of its multi-channel Daigou retail brand, also released its results today with a 70 per cent year-on-year decline in revenue at $4 million for the fourth quarter, while gross profit was down 63 per cent at around $730,000.
More than half of those sales came from online - a category that was up 21 per cent year-on-year in terms of gross profit with a gross margin above 20 per cent.
The Sydney-based company reported operational cash outflows of $1.3 million for the quarter, including significant investment in online growth and in-store customer experience on re-opening. To help meet this goal, AuMake's online payment platforms now support leading Chinese-owned buy-now-pay-later (BNPL) providers Alipay and Tencent.
"While COVID-19 has undoubtedly impacted the revenue profile of the business during the June quarter, AuMake has minimised this by materially reducing all non-core expenditure," AuMake executive chairman Keong Chan said.
"At the same time, we are increasing our investment in long term growth drivers, enhancing our online offering and in-store customer experience.
"AuMake is strategically positioned to benefit from its growing online presence, leveraging its network of travel agent partners in mainland China to attract repeat purchasers and new customers."
Chan believes the company will benefit from the return of Asian students and tourists to Australia and New Zealand.
Business News Australia
Author: Matt Ogg