Bubs Australia takes financial hit on China sales

Bubs Australia’s sales of milk formula to China have soured. See the reasons behind the fall.

Bubs Australia daigou sales from Australian supermarket shelves have dissipated this year.

THE loss of Chinese visitors to Australia as a result of the coronavirus pandemic has taken its toll on sales of Bubs Australia’s goat milk powders.

Bubs Australia founder and chief executive officer Kristy Carr said the daigou trade to China had “considerably impacted” the company’s core business, particularly in relation to adult milk powders.

Despite this, Ms Carr said Bubs Australia had developed a social media strategy to counter the slower-than-expected sale in China and was already seeing signs of reversal in sales during the past two months.

She said the company’s gross revenue for the first quarter of 2020-21 of $9.4 million was 34 per cent lower than the previous corresponding period, mostly due to disruption to daigou sales channels.

Putting the first quarter sales into perspective, Bubs Australia’s gross revenue for the full 12 months to June 30 this year was $61.7 million.

The adult goat powder sales for the first quarter the new financial year were 59 per cent lower than the previous corresponding period, representing a 37 per cent decline in gross revenue.

“To address the significant disruption to the daigou channel, caused by the sudden border closures and increased international freight costs, we are also working alongside our corporate daigou partners to continue to actively support social marketing with their customers via live-streaming and social e-commerce,” Ms Carr said.

“We have already started to see positive sales momentum return in late September through to October, and we anticipate improved performance from the daigou channel in the second quarter as we head into China’s major e-commerce shopping events.”

While China is a key export market for Bubs Australia, 65 per cent of its first quarter revenue came from the Australian market.

Goats milk infant formula sales to major Australian grocery and pharmacy outlets had increased 29 per cent from the previous corresponding period.

“Consumer scan sales in our major Australian retailers also demonstrated strong growth year-on-year, despite the very challenging conditions that prevailed in the wake of the COVID-19 global pandemic,” Ms Carr said.

“Bubs is now ranked No. 1 goat formula brand in Coles and scan sales of Bubs’ goat formula in Woolworths have increased 172 per cent in the past 13 weeks.”

Shares in Bubs Australia fell 1.5 cents to 69.5 cents on the Australian Securities Exchange today.

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Peter Hemphill’s family owns shares in Bubs Australia.