Infant formula maker Bubs Australia is to raise $38.3 million through a share sale to fund global expansion, including its new manufacturing deal with China’s Beingmate.
The announcement comes days after it sealed the deal with Beingmate to manufacture goat infant formula in China using Bubs Australian goat milk. The deal will see its acquire one of the Chinese company’s factories in Beihai and securing a State Administration for Market Regulation.
“Despite the challenges caused by the Covid-19 pandemic, FY20 gross revenue increased 32 per cent year on year to $62 million with second-half revenue advancing 28 per cent over last year’s second half gross revenue. Infant Formula continued be our key driver and the most profitable growth engine generating $30 million in revenue, up 58 per cent, driven by strong growth in domestic retailers, Junior Nutrition innovation and expansion into Vietnam. The Bubs brand portfolio of products now accounts for 60 per cent of group revenue, versus 49 per cent in FY19,” said Bubs founder and CEO Kristy Carr.
She said in a statement that China’s direct sales increased by 32 per cent year on year to $13 million helped mitigate the disruption in the daigou market. The company saw a five-fold growth in other international markets due to the launch of its infant nutrition products in Vietnam at the end of the first half of the year.
Bubs’ expansion in Australia led to almost three-fold increase in gross revenue during the fourth quarter compared to last year. The company sells eight infant formula product ranges in 700 Woolworths stores and Bubs Organic Grass-fed Cow’s Milk Formula in 482 Coles stores and 130 Big W stores.
“We expect Bubs Infant Formula to be the engine room for accelerated profitable growth across all key channels and markets. To that end, we can look to an aspirational revenue goal of $400 million and gross margin floor of 40 per cent by 2025,” added Bubs executive chairman Dennis Lin.
