Despite being one of the world’s most recognised milk powder brands, it’s only now that Bubs (ASX: BUB) is tapping into the cow milk powder market which is estimated to generate $20 billion in global sales annually. 

That’s because the $46.8 million in sales generated by Bubs in FY21 was primarily from their portfolio of goat dairy products developed as specialty infant formula. With the horizontal expansion into cow milk powder products, Bubs will launch a new range of Bubs Family Nutrition products that will leverage their existing manufacturing and distribution capabilities. 

“The established familiarity of Bubs® as a trusted nutrition brand will be stretched to cater for the whole family, providing a broader opportunity to introduce consumers in the Mother and Baby segment to Bubs® premium quality brand attributes,” said Bubs CEO and Founder, Kristy Carr.  

“This expanding pantry presence and brand awareness will increase the shopping basket opportunity, making it the perfect complement to our ‘hero’ range of infant formula.

“Although Bubs® Infant Nutrition range will continue to be our core margin driver, Bubs® Family Nutrition facilitates new market access points to introduce Bubs® brand to a significantly larger and growing category with less complex regulatory compliance than infant formula, expanding jurisdiction reach and catalysing value creation across the business.” 

Drawing upon their existing network of international customers, Bubs has confirmed supply agreements which will see its new Bubs Family Nutrition range shipped to China, Malaysia, Singapore, Vietnam, Pacific Islands and East Africa over the next two months. 

The products will be manufactured from Bubs existing facility in Deloraine, Tasmania which will provide cost efficiencies across the entire Bubs business. 

Cow milk powder generates an estimated $20 billion annually, of which the China market accounts for 20%. Bubs expects the product expansion will complement their existing CapriLac® products which are the leading goat milk brand on Tmall Global – the Alibaba-owned marketplace popular amongst Chinese consumers seeking international products. 

Throughout the COVID-19 pandemic, Bubs has been hit hard by international border closures and shipping delays caused by a reduction of flights which resulted in a $7.3m net loss for FY21, primarily reflecting $12.6 million in inventory write off and sale of excess bulk powder at a loss to maximise cash conversion. 

With improving market conditions and a China-based business that has avoided many of the crackdowns on imported products, Bubs reported $18.5m in revenue for the quarter ended 30 September 2021, a 96% increase on the previous corresponding quarter for an impressive rebound.