Listed Australian infant nutrition manufacturer Bubs is issuing new shares to its Hong Kong-headquartered daigou channel partner Willis Trading, giving the company a stake just shy of 5 per cent.
The deal is subject to Willis meeting agreed product-purchasing thresholds from Bubs of $50 million in FY22, and $80 to $120 million in FY23.
Willis Trading, a wholly-owned subsidiary of Hong Kong-listed Alpha Professional Holdings, was Bubs’ single-largest customer through the last financial year and the first half of the current one. It is the lead distributor of both Bubs and CapriLac brands in the corporate daigou channel.
Bubs founder and CEO Kristy Carr said the two companies have worked closely together over several years in the daigou channel, driving high sales growth throughout, with revenues up 276 per cent year on year during the first half of the current year and now exceeding pre-Covid levels.
“The next phase of our partnership is an exceptional and innovative opportunity to deepen our engagement with the daigou channel and get closer to our end consumers in China. This strategic alliance between Bubs’ brand power and the channel’s deep understanding of Chinese consumers provides more direct identification of our target consumers and their product needs in real-time,” she said.
“Word of mouth and peer endorsement is critical in our category, and we view the daigou channel as expert community builders. Through one person, we can reach hundreds of consumers.”
Bubs executive chairman, Dennis Lin added that the daigou channel has evolved from a fragmented network in the past to become a genuine corporatised channel.
“Daigous play an integral role in assisting Australian brands in understanding and reaching Chinese consumers, whilst simultaneously enhancing brand equity. We have the utmost respect for what this entrepreneurial community have built and the contribution they have made in creating value in many leading Australian brands, including Bubs.
“This new strategic alliance is a further step in realising the synergy that can be achieved when a channel and brand work as partners hand in hand,” he said.