The cash register could soon be ringing for Wattle Health Australia (ASX: WHA) after the nutritional products maker said it had received approval for general trade in China of its 1kg retail bag of pure Australian grass-fed milk powder.
Wattle said it expects the additional stock-keeping units (SKUs) to further increase its brand awareness in the highly lucrative Chinese market and generate additional sales across the company’s extensive distribution network in the country.
The move will also assist in sales of Wattle’s infant formula range in China, once the company has obtained approval from the State Administration for Market Regulation (SAMR).
As part of its Chinese charm offensive, Wattle has brought its products to the International Children Baby and Maternity Products Industry Expo (CBME) taking place in Shanghai over the course of this week.
Wattle sent a team to the show and plans to create a distinctive custom-built exhibition stand presenting its entire product suite for both general trade and cross-border e-commerce sales.
The event will also feature Wattle’s partners Shandong Weihai Port International Co., Quality Brands International Direct (QBID) and International Supplies & Distribution Co. (ISDC).
Earlier this year, Wattle agreed on a deal with Shandong Weihai for the supply of Wattle’s conventional cow infant formula range. Shandong is a large products distributor based in north-eastern China with an operating revenue of around RMB3.7 billion (A$760 million) per year.
The firm also operates its own state-of-the-art “cross-border e-commerce industry park” comprising over 160,000 square metres.
The two companies announced a non-exclusive term sheet which sees Shandong committing to progressively escalating order volumes for the next three years.
Shandong has agreed to buy a minimum of A$6.6 million in the first 12 months, then A$11.5 million in year two and around A$16.5 million in the final year.
Wattle has also dipped its toe into India via a 12-month deal with Vasudevan and Sons Exim Private (VSEP) for the supply of Wattle’s natural baby food range.
Showing off infant formula
The CBME attracts in excess of 88,000 trade buyers and an estimated 1,500 sessions of “business matching meetings” with buyers and business partners from large department stores, supermarkets, online retailers, chain stores and key distributors from China.
“The addition of additional SKUs available for general trade sale in China will further expand brand awareness and more importantly revenue. This is a continuation of our China market strategy and ongoing commitment to making healthy, pure 100% Australian-made products available to our China consumer and supporting our extensive distribution partners,” said Lazarus Karasavvidis, executive chairman of Wattle.
The news of gradual commercial progress in China helped to lift Wattle shares up to A$1.105 per share, around 6% higher during this morning’s trading session.