Bubs Australia inks JV deal to produce infant formula products in China

Sept 28 (Reuters) - Bubs Australia (BUB.AX) on Wednesday said that it had signed a joint venture agreement with a unit of Heilongjiang Ubeite Dairy Group (HUG) to produce Chinese-labelled infant formula products to tap into the country's A$40 billion market.

Bubs, which will own a 75% stake in the joint venture, said the Chinese-labelled goat's milk formula is expected to hit the market in the second half of fiscal year 2023.

The company currently sells its infant formula products in China through a cross-border e-commerce channel, which accounts for roughly 20% of total infant formula sales in the country.

As part of the joint venture, HUG has submitted the renewal application to State Administration for Market Supervision (SAMR) for the manufacture and sale of the products, Bubs said.

If the SAMR grants an approval, the firm will be able to sell its Chinese products in the remaining 80% of the market, Bubs said in their statement.

"We look forward to creating a safe and premium quality product that is manufactured entirely within the world's largest infant formula market," said founder and chief executive Kristy Carr.

Shares of the infant formula maker climbed as much 5.1% to record their best day in one month after the announcement.

The development comes after Bubs was one of the few brands globally to have received an approval from the United States' Food and Drug Administration to deliver infant formula across the country.

The move followed a contamination scare at a plant of one of the nation's main manufacturers, Abbott Laboratories. read more

Reporting by Tejaswi Marthi in Bengaluru; Editing by Neha Arora

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