Bubs Share Price Surges 12% Following Partnership

Today, Bubs Australia Limited [ASX:BUB] announced it would be entering into a supply agreement with Fonterra Australia, to produce Bubs’ new organic infant formula range.

The agreement with Fonterra makes Bubs the first company in Australia to produce Australian-made organic certified grass-fed infant formula.

Bubs’ share price has already gained 178% in 2019. At time of writing, shares are trading 12% higher at $1.48.

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What sets Bubs apart?

According to the announcement, the supply agreement will run until the 31 July 2021. The organic milk powder is obtained from its organic milk pool group in NZ, but is manufactured in its facility in Darnum, Victoria.

The product will be available in Chemist Warehouse pharmacies within three months, which allows further organic options to be provided in fast growing segments.

Bubs Australia Founder and Chief Executive, Mrs Kristy Carr commented on the product offerings:

Super premium product offerings are the fastest growing segment of the infant formula category, and we are now able to offer two nutritional options — organic and goat, to suit individual dietary needs — tapping into the global consumer trend towards natural, sustainable and organic food production….

Bubs has already established itself as a key player in the goat dairy infant formula sector in Australia and made significant inroads into china, and is now in a position to be the first to offer an Austrliaan made certified organic grass-fed infant formula with both prebiotics and probiotics, in addition to Omega-3 DHA and Omega-6 ARA’.

Cow milk accounts to close to 95 percent of the Australian formula market and represents a significant opportunity for Bubs, which already has both a premium Australian infant nutrition brand positioning and strong organic credentials established over 13 years producing Bubs Organic baby food portfolio,’ Mrs Carr said.

Bubs share price 2019 outlook

Bubs is responsible for around 30% of the world’s dairy exports, and in a good sign for future success is the growing market presence and incremental success experienced in niche market.

Bubs has reported a gross revenue of $11.4 million this March quarter, setting a new company record for quarterly revenue. To date, the organic formula producer has generated $32.9 million in revenue this financial year.

Which was put down to ‘continued strong sales momentum provid[ing] a foundation for the Deloraine acquisition and new strategic alliances with Beingmate, C2 Capital partners and chemist warehouse’.

As we move further into 2019, Bubs’ domination in the dairy industry could continue.

We have already seen this reflected in Bubs’ rising share price.


Ryan Clarkson Ledward,
For Money Morning

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Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

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