Bubs taps Asian diaspora to help crack US market

Having weaned itself off the Chinese daigou market, infant formula brand Bubs is now hoping to bolster its fortunes by tapping into the Asian diaspora in the US.

Dennis Lin says Bubs will be marketing to the Asian and Hispanic communities in the US. Picture: Aaron Francis

Having weaned itself off the traditional Chinese daigou market, infant formula brand Bubs is now hoping to bolster its fortunes by tapping into the Asian diaspora in the US.

A reseller market akin to the daigous is emerging in America and Bubs chairman Dennis Lin sees that as a way of securing a slice of the US’s $US4.3bn ($6bn) infant nutrition segment.

“The question is: once you get your products on the shelf, who is going to be promoting these products? It comes down to community engagement,” Mr Lin said.

“Australia is referred to as a resale market and the daigou market is truly here in the US as well.”

It is tapping into this market where Mr Lin hopes to succeed where other Australian companies – ranging from winemaker Treasury Wine Estates to building materials giant Boral – have sometimes struggled.

Mr Lin knows he cannot compete with multinational infant ­nutrition players such as Nestle and Meade Johnson, which dominate the US market. But Bubs, which specialises in goat milk, can hold its own if it adopts a more targeted approach.

To this end, Mr Lin said the company would be marketing to America’s Asian and Hispanic communities and, if all went to plan, the US would account for 10 per cent of Bubs’ revenue within five years.

“What we learned in Australia and China was carpet bombing isn’t going to get you anywhere when your category consists of multinationals because their pocket will always be deeper than mine,” he said.

“If I look at it through ethnic groups, the Hispanic population and the Asian population are the two that understand our products very quickly. That is what we will target because there is a great Asian consumer base in the US, and as always the Hispanics (are a strong market).”

Mr Lin’s timing may be perfect. Baby formula is becoming increasingly hard to find on the shelves of many supermarkets, prompting parents to search for alternative brands. Retailers and manufacturers are both blaming each other for the shortages, as the US battles a supply crunch similar to the chaos Covid-19 has sparked across Australia’s food distribution chain.

As a result, the number of infant formula items out of stock across America’s top 10 retailers has reportedly risen to more than 20 per cent in some areas.

American parents last year spent about $US4.3bn on infant formula – a 4.5 per cent rise compared with 2020. The market is expected to hit $US5.61bn by 2027. Despite the growth, only a handful of US-based infant formula manufacturers are registered with the US’s Food and Drug Administration, and just one international company is registered.

Another advantage for Bub is that none of the registered infant formula manufacturers specialise in goat milk. Mr Lin hopes this will position Bubs as a first mover in the goat milk infant formula segment.

Bubs has received FDA approval for toddler milk products but has yet to receive the tick for infant formula.

It has recruited Bondi Partners, the firm run by former treasurer and ambassador to the US Joe Hockey, to help with the process. Bondi Partners recently generated headlines when it helped Brisbane-based biotech Ellume win $340m in funding and contracts from the US government.

Mr Lin said he was realistic, saying he did not expect Bondi Partners to replicate another Ellume with Bubs. However, he said he was relying on its expertise to navigate the complexities of US regulatory approval.

“We value the on-the-ground advice that has a level of Australian translation to it,” Mr Lin said.

“So for us it’s been really good to tap into their network and knowledge in working on the market together.”