Bubs Australia (ASX:BUB) will soon see its products hit the shelves of 30,000 mother and baby stores in China, thanks to a new deal with Beingmate Baby & Child Food Co, a $1.3 billion Chinese infant formula business.

Bubs told investors this morning that it would create a joint venture with Beingmate within the next month to distribute and promote Bubs’ infant formula and organic baby food products in China.

Bubs already sells infant formula into China, but only through e-commerce channels, as a company needs approval from the State Administration for Market Regulation (SAMR) of its formulation and brand to sell in brick and mortar stores, and China has cracked down on approving those licences.

The memorandum of understanding with Beingmate would get around this issue, as Beingmate owns the largest number of registered infant formula brands in China — including 17 sub-brands and 51 product lines — that are successfully registered with SAMR and currently being physically distributed throughout China.

Beingmate was the first infant nutrition company to obtain certification since the new registration system was established, Bubs claims.

 

Bubs founder and CEO Kristy Carr said the deal had the potential to take her business to the next level.

“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,” she said.

“We have shared values and commitment to best practice in sourcing and manufacturing, and are uncompromising when it comes to product quality.”

Charles Li, Bubs’ COO for China, added that Bubs had an “unrivalled advantage” in terms of making premium quality infant formula.

“This gives us a special opportunity to fast-track our development of the China market and to become a leading player in our segments,” he said. “With the strength of Beingmate as our partner in the marketplace, I am very confident in our joint prospects for the Chinese market.”

Bubs shares jumped 22 per cent the moment the market opened on Wednesday morning, rising to a high of 73c, the stock’s highest point since late August last year.

Bubs Australia (ASX:BUB) shares over the past year.

Bao Xiufei, Beingmate CEO, said Bubs had a reputation for producing “clean and green” infant nutrition products.

“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,” he said.

“We are particularly attracted to the control Bubs has over its goat milk supply chain from the farm gate to the end consumer product, and the sheer size of their milk pool. As well, Bubs organic baby food products, particularly cereals, are also highly regarded.”

Bubs has been approached for comment.

 

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