In the joint venture, which is expected to be finalised in April, Bubs will supply infant formula and organic baby food products to Beingmate’s distribution network, covering 30,000 mother and baby stores.
Beingmate is one of the largest Chinese-owned enterprises in the infant and maternal nutrition industry and is listed on the Shenzhen Stock Exchange with a market cap of A$1.29bn and revenues for FY18 of A$520 million.
“Beingmate’s extensive infrastructure, local knowledge, regulatory expertise and extensive domestic distribution footprint, coupled with Bubs unique premium international offering, will have the capacity to transform our business,” Bubs founder and CEO, Kristy Carr said.
“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.”
Carr added that Beingmate’s established brand position will be a great support in introducing Bubs products to Chinese families.
Bubs Organic baby food range, is already sold in around 500 stores in China, and Bubs infant formula, is currently sold into China online and via O2O (Online-to-Offline) platforms, but the deal is expected to “fast-track” Bubs’ development of the China market and allow it to become a leading player.
“Having operated in the industry for many years, I can testify to the value that Chinese parents place on premium quality underpinned by provenance when it comes to infant nutrition,” Charles Li, Bubs COO for China said.
“I believe Bubs has an unrivalled advantage in that regard, and with the strength of Beingmate as our partner in the marketplace, I am very confident in our joint prospects for the Chinese market.”
Beingmate has 280 infant formula and baby food products in its portfolio and owns the largest number of registered infant formula brands in China, including 17 sub-brands and 51 product lines, that are registered with the State Administration for Market Regulation.
Beingmate CEO Bao Xiufei will oversee the setting up of the deal and handling the A$2.1 million financial costs it will entail.
“We believe there is a terrific opportunity for Bubs to capture a material share of the super-premium infant formula and organic infant food sectors, both of which are experiencing rapid growth in China. In particular, Chinese parents are attracted to ‘clean and green’ infant nutrition products for which Australia has an enviable reputation,” Xiufei said.
“Foundational to embarking on the journey to forming a Joint Venture, it was essential we had a good understanding of Bubs management, brand attributes, its supply capabilities and reputation for quality. 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. As well, Bubs organic baby food products, particularly cereals, are also highly regarded. We are indeed truly excited to have the opportunity to build on our domestic business by partnering with an international trusted brand like Bubs.”