Bubs shares have jumped after the infant formula maker announced a supply agreement it says will increase the freshness of its goat milk powder.
Shares in Bubs rose as much as 5.3 per cent on Wednesday after it said it had entered into a long-term partnership with Bega Cheese subsidiary Tatura.
Bubs says the proximity of the Tatura facility in Victoria to major sources of fresh goat milk means raw milk can be blended with other ingredients and spray dried without the usual intermediate drying and rehydration stage.
‘The one-step nutritional blending and conversion of our own exclusive goat milk supply by Tatura will bypass the intermediate step, delivering a fresher product, an improved nutritional and taste profile, and better solubility when made up for consumption,’ founder and chief executive Kirsty Carr said in a statement.
Ms Carr said the shorter process would also benefit the company financially.
‘One-step conversion generates a number of critical efficiencies for Bubs: The production and ingredient cost are significantly reduced, making the new production method margin accretive,’ Ms Carr said.
‘As well, production lead times are cut, and so inventory is better managed and cashflow is improved.’
Bubs has completed trials and commercial production will begin next month.
At 1125 AEDT, shares in Bubs were 4.4 per cent higher at 59 cents, having been as high as 59.5 cents earlier in the session.
The stock is up nearly 30 per cent this calendar year, having declined by 40 per cent in 2018.