Listed goat’s milk infant formula and organic baby food producer, Bubs Australia (ASX: BUB) has entered into a four year partnership with the Chemist Warehouse retail group.
The partnership will see Bubs products sold in Australia and New Zealand through 450 pharmacies, with the retailer progressively taking a strategic shareholding in the group, and aiding Bubs sales in the important China market.
In March, @AuManufacturing reported Bubs had gained access to the China market with an agreement with Beingmake China.
Now the deal with Chemist Warehouse will see 28 Bubs products on the pharmacy chain’s shelves from June, with the retailer selling and marketing Bubs products for a fee.
The retailer will receive an initial tranche of shares in Bubs and will use the fee to purchase additional Bubs shares over three years subject to it meeting sales targets, to a maximum shareholding just shy of 50 million shares.
Bubs shares have risen 50 per cent since mid-February to close at 87 cents on Friday.
Bubs CEO, Kristy Carr said the agreement completed the company’s strategy of vertical integration from milk supply to customer with key partners in place.
Carr said: “We firmly believe this transaction will deliver strong growth in Bubs business, as well as offer significant long-term shareholder value.
“The latest powerful alignment with Chemist Warehouse means Bubs’ foundation strategy is now complete.”
Chemist Warehouse chairman, Jack Gance said the company was excited to be working closely with Bubs.
Gance said: “By investing in Bubs, we are moving from a conventional supplier-customer relationship to what we expect to be a mutually beneficial long-term partnership to bring the Bubs range to an even wider public.”
Chemist Warehouse, which also operates the My Chemist chain, sells $200 million of infant formula products annually, however the deal also provides greater access into China for Bubs.
Chemist Warehouse’s Tmall Global online store which sells into China is one of the online retail platform’s largest.
Chemist Warehouse director of operations, Mario Tascone said: “We have been watching Bubs’ progress with much interest and there is no doubt in my mind that the Bubs range of products represents high quality Australian infant nutrition that our customers are looking for.”
Bubs range of formula, organic baby food, cereals and toddler snacks are already exported to China, South-East Asia and the Middle East.
Picture: Bubs Australia
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