Goat milk infant formula maker Bubs Australia doubles revenue, turns corner in China

Goat milk infant formula manufacturer Bubs Australia’s share price rockets. See what’s behind the move.

Bubs Australia has doubled its revenue in the past 12 months, thanks to burgeoning international sales.

Goat milk infant formula company Bubs Australia has bounced back from its lowest share price level in four years, rising 39 per cent on the ASX yesterday.

The huge rise was driven by a doubling in the company’s revenue to $18.5 million in the first quarter of 2021-22 from its level 12 months earlier.

Shares rose from 36 cents at the beginning of the day’s trading to close at 50 cents.

Importantly, sales of its infant formula and adult goat milk powder in the key China market rose 156 per cent year on year.

Sales had plummeted in the Chinese market last year when the Covid-19 outbreak forced the Australian Government to close its borders, blocking “daigou” tourists and students from buying its popular goat milks brands in local retail outlets for shipment back to China.

Infant formula sales are starting to recover from international border closures. Picture: NCA NewsWire / Sarah Marshall

During the past year, Bubs Australia pivoted its Chinese business to e-commerce channels bulk shipped to bonded warehouses in China.

Bubs founder and chief executive officer Kristy Carr said the company had “largely put the disruption and challenges of Covid-19 behind us, delivering a turnaround to high growth during the quarter as we revamped our business strategy in response to the rapidly changing market dynamics”.

“Importantly, there continues to be strong consumer demand for Bubs’ quality nutritional products in all key markets with solid performance across our core business segments,” she said.

The Australia share of Bubs’ gross revenue for the three months to September 30 this year had slipped to 23 per cent from 38 per cent for the full 2020-21 financial year.

The Chinese sector accounted for 53 per cent of gross revenue for the first quarter of 2021-22, well up from its level of 44-47 per cent of the past two years.

Importantly, the switch to other international markets appears to be paying off for the new year, accounting for 24 per cent of gross revenue, a solid rise from 18 per cent in FY21.

Bubs Australia was making solid sales into Malaysia and Singapore and recently opened up channels in the US, selling through Walmart and Amazon.

“Our global expansion strategy continues to advance with business entities and representation now established in New Zealand, China and North America,” Ms Carr said.

“International gross revenue outside of China was up nearly five-fold over the same time last year, and up 35 per cent on the prior quarter.

“The first shipment of Aussie Bubs’ products arrived in the USA during the quarter and Bubs is now an official Walmart vendor, with the first online sales expected to be realised in October, 2021.”

Peter Hemphill’s family holds shares in Bubs Australia.