Bubs to launch Australia's first grass-fed infant milk formula

Infant formula producer Bubs Australia (ASX: BUB) has announced its latest product offering, and it's a national first.

The company will produce Australia's first certified organic grass-fed infant formula in conjunction with Fonterra Australia.

Fonterra will supply Bubs with organic milk powder, sourced from New Zealand, and manufactured in Bubs' facility in Darnum, Victoria.

The new organic grass-fed formula will be available in Chemist Warehouse pharmacies in the next three months. The group also has plans to target the Chinese market via e-commerce.

To facilitate Bubs' exports to China the company is transferring its licence application for its organic cow milk formula to the new Bubs grass-fed brand. If SAMR grants approval for the transfer of the licence the company will physically distribute the product in Chinese stores.

Founder and CEO of Bubs Kristy Carr says this new product taps directly into what the market is craving.

"Super premium product offerings are the fastest growing segment of the infant formula category, and we are now able to offer two nutritional options organic and goat, to suit individual dietary needs tapping into the global consumer trend towards natural, sustainable and organic food production," says Carr.

"Bubs has already established itself as a key player in the goat dairy infant formula sector in Australia and made significant inroads into China and is now in a position to be the first to offer an Australian made certified organic grass-fed infant formula with both prebiotics and probiotics."

This new product announcement follows several key movements for the fast-growing Bubs.

The company recently acquired a Melbourne-based dairy producer Australian Deloraine Dairy for $35 million.

Deloraine is well positioned for Bubs' international ambitions, as it is one of 15 licenced canning facilities authorised by China to export into the country.

The company also confirmed today that is has formalised its proposed joint venture with Chinese owned Beingmate Baby & Child Food Co.

Under the agreement the two have agreed to form an eventual joint venture to distribute Bubs infant formula and organic baby food products in China.

The joint venture will open Bubs up to Beingmate's distribution network covering 30,000 mother and baby stores throughout China.

"We are truly excited to set out on this joint venture a true partnership in every way which will lift Bubs profile and access to the Mother and Baby store channel, which is critical to success in the broader Chinese market," says Carr.

The formalisation of the partnership with Beingmate was accompanied by signing ceremonies formalising Bubs' partnership with Alibaba's Tmall, and an equity-linked alliance with Chemist Warehouse.

Alibaba managing director for Australia and New Zealand Maggie Zhou says the alliance represents the strength of Australian products like Bubs' in China.

"We continue to see growing demand in China for high quality products from Australia," says Zhou.

"The mother and baby category continues to be one of the best performing for exports from Australia to China via Alibaba's Tmall marketplace."

The investment from Chemist Warehouse in Bubs represents the pharmacy chain's first in a listed company according to chairman and co-founder Jack Gance.

"The partnershipreflects what we see as the great potential for the Bubs brand to become a true leader in this category," says Gance.

"Chemist Warehouse can help them to realise this vision."

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Business News Australia