Baby formula maker Bellamy’s $100 million bonanza

WHILE Aussie parents struggled to find baby formula on supermarket shelves, this popular brand was busy selling $100 million worth of the ‘white gold’.

Ebony Millis' baby Hudson is both breast-fed and drinks baby formula. Ebony uses Bellamy organic, Aussie-made formula, so says she hasn't been affected by the shortage but has noticed empty shelves for other brands when she's shopping.

WHILE Aussie parents have struggled to find baby formula on supermarket shelves, one popular brand was busy selling $100 million worth of the ‘white gold’.

That’s how much formula Tasmania-based Bellamy’s sold in the second half of 2015, thanks largely to demand in Asia for its premium organic range.

After a2 announced an 80-fold increase in profits on Wednesday, Bellamy’s has followed suit by announcing a bumper six months.

The company has posted a net profit of $13.7 million in the six months to December 31, up 325 per cent on the $3.2 million made in the corresponding period a year ago.

Revenue jumped 83 per cent to $105.1 million, in line with guidance.

Both brands are subject to can limits of two-to-four tins at supermarkets and chemists, a measure that has not stopped their shipment to China by ‘grey market’ exporters.

Bellamy’s has forecast its full year revenue will be in the range of $240 million to $260 million.

The strong half result came as the company now distributes its product to more than 700 retailers across Australia and has expanded its distribution in Asia.

The group’s organic infant formula range is sold in China, Singapore, Malaysia and Vietnam, as well as Australia.

“We continue to see strong growing demand for Bellamy’s range of organic infant foods and formula both domestically and internationally,” chief executive officer Laura McBain said. “Australia is the core of our business and our commitment to the domestic market remains unchanged.

“At the same time, the Asian region provides a number of attractive growth opportunities.” She said the group’s foothold in Singapore had deepened with Bellamy’s now trumping two major European brands.

Bellamy's chief executive Laura McBain has presided over a bumper six months.

The company launched new varieties of ready to eat pouches, including a customised range for Coles.

It also has focused on expanding its reach to pharmacies and now supplies more than 700 retailers, including Coles, Woolworths, Big W, Target, Costco, Chemist Warehouse and Terry White and Amcal. The challenge is for Bellamy’s to meet the growing demand for organic baby formula.

Ms McBain said the group had enhanced its supply chain to meet growth, including the signing of a five-year contract with Fonterra in December to produce infant formula.

It has also signed a six-year agreement with Tatura Milk Industries to supply infant formula.

Over at a2, chief executive Geoffrey Babidge has admitted struggling to keep up with demand in China while announcing an incredible 80-fold surge in profits.

a2 Platinum sales soared 340 per cent to $68.9 million ($NZ73.9 million) in the six months to December 31, pushing the company’s overall net profit to $9.4 million ($NZ10.1 million), compared with $116,000 ($NZ125,000) the year before.

“We haven’t been able to meet demand because the reality is demand exceeded our expectations,” Mr Babidge said.

The milk producer was particularly stretched in the first four months of the financial year, prompting it to ask its supplier, Synlait Milk, to boost production.

“Whether we fully meet the demand in Australia and China is yet to be seen because we haven’t had the product available to be able to meet all orders,” Mr Babidge said.

“It’s a good position to be in.”

— With Andi Yu