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Infant dairy formula company Bubs (ASX: BUB) is about to broaden its horizons to a wider demographic in China, with plans to target adults as potential consumers with a new range of goat dairy products.
The company has today announced a strategic agreement with Alibaba Centralised Import Procurement (CIP) in China to launch a new premium adult goat dairy brand 'Deloraine', named after the group it acquired for around $35 million in April.
Bubs and Alibaba CIP expect to ship RMB50 million (AUD$10 million) worth of adult goat dairy products such as Deloraine and CapriLac in year one, but overall the total market is estimated to be worth RMB10 billion (AUD$2 billion).
The announcement coincides with today's signing of a master distribution agreement between the two parties at the China International Import Expo (CIIE) in Shanghai.
As part of the deal, the products produced in Victoria will be promoted and distributed by Alibaba CIP and its appointed distributor The Land, covering a wide range of online, offline and cross-border channels through the Alibaba ecosystem.
"This collaboration with Alibaba CIP is a very meaningful and exciting development for Bubs. There is a huge and growing market for premium adult goat-based dairy products," says Bubs founder and CEO Kristy Carr.
"Now, with the experience of marketing our current adult product, Caprilac® we are confident in launching an expanded Deloraine® adult goat dairy range in conjunction with Alibaba CIP that will cater to the premium end of the segment with science based functional benefits, including being a high source of calcium, containing naturally A2 goat protein, EGF (Epidermal Growth Factor), and Tryptophan - which aids sleep.
"Clearly the Alibaba CIP program and related platforms have unique reach into the China adult nutrition market some 700 million active users."
Carr highlights Bubs is Australia's only vertically integrated producer of goat milk formula and is therefore uniquely positioned to offer Alibaba's platform-wide customers "the comfort that we have complete control of the supply chain right back to the farm gate".
Bubs executive chairman Dennis Lin says it has long been a privilege to work in partnership with Alibaba across its infant nutrition products.
"The opportunity to now develop the market for our adult goat dairy range through this Master Distribution Agreement is another step in the growing acceptance of the maturity of our business.
BUB shares were up 1.85 per cent at $1.10 at midday AEDT.
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