Bubs shares have surged after the goat milk formula maker announced a marketing and distribution partnership with Chinese dairy producer Beingmate that it hopes will expand its reach in the country.
Bubs shares jumped as much as 21.7 per cent on Wednesday on news the two companies intend to form a joint venture to market and distribute Bubs’ infant formula and baby food products in 30,000 mother-and-baby shops across China.
The stock was still up 15 per cent at 69 cents at 1055 AEDT.
Bubs founder and chief executive officer Kristy Carr hailed the Chinese company’s ‘extensive infrastructure, local knowledge, regulatory expertise and extensive domestic distribution footprint’ that had the potential to transform her business.
‘Beingmate is particularly strong in driving distribution via China’s lower tier cities which are benefiting from China’s new multi-child family policy, and so there are higher expectations for addressable market growth than in the tier 1 cities where the costs to entry are high,’ Ms Carr said.
Beingmate, which is listed on the Shenzhen Stock Exchange and owns 280 infant nutrition products, said Australian products had a good reputation in China.
‘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,’ Beingmate chief executive officer Bao Xiufei said.
New Zealand dairy giant Fonterra ended its joint venture with Beingmate last year, retaking control of a manufacturing plant in Darnum, Victoria.