In its 1H20 results, infant formula producer Bubs Australia reported $28.75 million gross revenue, up 37 per cent on the same period last year. It also almost doubled its infant formula sales in China in the same period.
The company has said the key driver for its growth has been its Bubs Infant Formula across all retail channels and regions, up by 77 per cent from the prior corresponding period (pcp), with stronger forecasted demand in 2H20.
Sales in Australia were also up by 30 per cent pcp, due to the expansion into Chemist Warehouse stores and increasing demand in the Daigou channel, while direct sales in China made up 19 per cent of 1H20 group gross revenue.
Bubs Australia founder and CEO Kristy Carr said significant investments across the company were key to the half year performance results.
“During the period, the company made significant increased investments in developing channel capacity and increased marketing to support our stronger domestic distribution presence and deepen Bubs brand engagement with Chinese consumers to drive sales across all retail channels,” said Carr.
“In addition, we invested in the launch of Bubs products into Vietnam and in the development of new products across multiple segments that will be launched in the second half of FY20.
“While sales momentum continued to be strong, these investment activities to drive future accelerated growth led to a normalised EBITDA loss of $3.74 million, largely in line with the $3.56 million loss over the same period last year.”
Bubs Australia also refreshed its Caprilac brand and product offering following the acquisition of the Deloraine Dairy manufacturing facility in December, as well as entering a new supply agreement with Woolworths that is “set to double retail exposure for the Bubs Infant Formula portfolio”, particularly in the larger organic bovine formula segment.
The new agreement will see all three stages of Bubs Goat Milk Infant Formula store representation increase to 400 stores, and the expasion of its Organic 365 Days Grass Fed Infant Formula range from 300 to 700 Woolworths supermarkets,"guaranteeing Bubs an even stronger foothold on the Australian retail sector," said Carr. The new Bubs Junior Nutrition range will also be sole in 100 premium Woolworths stores.
In addition, the company has addressed the Covid-19 impact, citing it has seen “no diminution of demand and minimal disruption to the business due to the coronavirus outbreak”, and that its supply chain for manufacturing has not been impacted as products are sourced and packaged in Australia and New Zealand.
Bubs Australia said: “The overall disruption to logistics of delivering finished goods to end consumers remains challenging, particularly in relation to international flights and last-mile deliveries between provinces.”
The company predicts its new distribution channels in Vietnam and Hong Kong will contribute to further growth in the South East Asian market in 2H20.
