Bubs Australia (ASX: BUB) has partnered with one of China’s leading domestic infant nutrition companies Beingmate China.
The companies have entered a non-binding memorandum of understanding which paves the way for Bubs’ infant formula and organic baby food to be promoted and distributed in China.
According to Bubs, a definitive joint venture is expected to be enacted within the next month.
With a market cap of RMB6.115 billion (A$1.29 billion), Beingmate is one of China’s largest infant and maternal nutrition companies.
Under the proposed partnership, Beingmate will distribute Bubs’ infant formula and organic baby food through its 30,000 stores in China.
Bubs’ baby food range is already sold across 500 stores in China and its infant formula is sold into China via several cross-border e-commerce and online-to-offline platforms.
Meanwhile, Beingmate’s owns China’s largest number of infant formula brands with a suite of 280 formula and baby food products.
Additionally, Beingmate was the first infant nutrition company to attain certification under China’s new registration system.
“Beingmate’s extensive infrastructure, local knowledge, regulatory expertise and extensive domestic distribution footprint, coupled with Bubs unique premium international offering, will have the capacity to transform our business,” Bubs founder and chief executive officer Kristy Carr said.
“Beingmate is particularly strong in driving distribution via China’s lower tier cities, which are benefiting from China’s new multi-child family policy, and so there are higher expectations for addressable market growth than in the tier one cities where the costs to entry are high,” Mrs Carr added.
Meanwhile, Beingmate chief executive officer Bao Xiufei said there was a “terrific opportunity” for Bubs to lock-in a material share of China’s super-premium infant formula and organic food markets.
“Chinese parents are attracted to clean and green infant nutrition products for which Australia has an enviable reputation,” Mr Bao said.
Mrs Carr added that Beingmate and Bubs share values and commitment to best-practice when sourcing and manufacturing infant products.
This morning’s news sent Bubs’ share price soaring more than 17% to reach $0.705 mid-morning.