BELLAMY'S FINDS EXPORTING BABY FORMULA INTO CHINA IS NO CHILD'S PLAY

BELLAMY'S FINDS EXPORTING BABY FORMULA INTO CHINA IS NO CHILD'S PLAY

BELLAMY'S (ASX: BAL) shares have suffered a 40 per cent drop in value today after the company hit a regulatory hurdle exporting its baby formula into China.

Although the company's unaudited revenue for the period between 1 July 2016 to 20 November 2016 is up 24 per cent compared to the same period the previous year, at $93 million, its momentum has been tempered by "temporary volume dislocation" in China.

This is due to "regulatory changeover" and the "flow-on effects of restructuring the route-to-market in China", which impacted from the first quarter of FY17.

The final document requirements for the China Food and Drug Administration product registration have now been released and Bellamy's is working to satisfy the requirements.

"Bellamy's is well progressed with the preparation of its documentation. With the period for registration extended to 31 December 2017, sales will continue under the current regime until the end of next year."

Revenue for the first half of FY17 is expected to be around $120 million, which is below expectations, and under the current regime, the second half is expected to be in a similar range.

Bellamy's maintains that the potential for its products in China is "vast".

"Bellamy's is currently stocked in less than 5 per cent of the potential distribution points in China. The company's team is extending its online presence as well as broadening its offline, bricks and mortar presence," the company says in a statement to the ASX today.

Getting Australian baby formula into China, and then selling it, is proving harder than many Australian companies have anticipated.

Both Blackmores (ASX: BKL) and Murray Goulburn (ASX:MGC) paid for their over confidence when their baby formulas failed to break into the competitive Chinese market.

Now Bellamy's is suffering a similar fate, although at least this company's baby formula is in demand, unlike the competing offerings from Blackmores and Murray Goulburn.

Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support

Looking for a credit or charge card that’s built for your business? Try American Express
Partner Content
A good credit card should work for you, not against you, and let you and your business ...
American Express
Advertisement

Related Stories

Bottoms up: Sydney cold brew coffee liqueur brand Mr Black acquired by beverage giant Diageo

Bottoms up: Sydney cold brew coffee liqueur brand Mr Black acquired by beverage giant Diageo

Fast-growing coffee liqueur brand Mr Black is joining a portfo...

Fitness First parent divests franchise division of Jetts Fitness via management buyout

Fitness First parent divests franchise division of Jetts Fitness via management buyout

Jetts Fitness Australia CEO Elaine Jobson has led the acquisition o...

Universal Store buys Byron Bay fashion brand THRILLS for $50m

Universal Store buys Byron Bay fashion brand THRILLS for $50m

After working alongside Universal Store (ASX: UNI) for nine years, ...

Apollo’s merger with THL a step closer after agreeing to sell 80pc of fleet to Jucy

Apollo’s merger with THL a step closer after agreeing to sell 80pc of fleet to Jucy

Apollo Tourism & Leisure (ASX: ATL) and Tourism Holdings (NZX: ...