Popular organic food and beverage company Bellamy’s Australia Ltd [ASX:BAL] is today leading the market, jumping to $11.26 per share after an increase in value of 17%.
The sharp increase is due to news out of China, where the State Administration for Market Regulation (SAMR) has given the green light for the sale of the company’s new infant formula products.
Bellamy’s to tap China’s offline market?
Though the state administrator released a series of approvals for the company, investors have welcomed the news that a new-line formulation series will be produced at the ViPlus Dairy facility in country Victoria. This is the first time Bellamy’s and ViPlus have worked in partnership.
For the company, such good news from China brings them one step closer to their plan to infiltrate further into the Middle Kingdom’s ‘offline’ market — such as chemists and supermarket chains.
In response to the good news, CEO Andrew Oates said in the latest update:
‘This is the first step in recommencing sales in the China offline channel and executing a multi-tier product strategy. It will position us well to compete in the critical battleground of Tier 3 and 4 cities.’
ViPlus, a third-party manufacturer based in Toora, will provide long-term production capacity on the back of Bellamy’s $4–6 million investment in the scheme (which is also performance dependent).
At time of writing, Bellamy’s is still waiting on SAMR’s approval of their plan to produce new product series at Camperdown Powder.
Optimism on all sides
Their plan to enter the offline market seems like a strong move from Bellamy’s, based both on their standing as a reputable Australian producer of infant formula and the particularly frenzied growth of the daigou market at home.
And although they continue to wait on further approvals in the long term, investors today showed their optimism in a plan that has barely even begun to show rewards — a mere week after short sellers bet on a bad result from Chinese regulators.
While investors could hold on a little while longer until all approvals (including Camperdown) have been made, it looks like Bellamy’s remains confident, at least for another day.
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