The Bubs Australia Ltd (ASX: BUB) share price has jumped over 6% this morning in response to a key partnership it has made.
Bubs was founded in 2006 by Kristy Carr and was listed on the ASX in January 2017. Its infant formula is based on goat milk and it also sells organic baby food. Bubs recently acquired NuLac Foods, Australia’s largest producer of goat milk products, it also guarantees exclusive supply of local goat milk from Australia’s largest herd of milking goats.
Bubs’ Big New Partnership
Bubs has entered into a strategic equity-linked alliance with Chemist Warehouse.
A binding heads of agreement has been signed with Chemist Warehouse Retail Group to create a four-year alliance for the sale and promotion of Bubs products in Chemist Warehouse stores, commencing on 1 June 2019.
There will be 28 Bubs products on Chemist Warehouse shelves nationally. It’s the largest pharmacy chain network by total sales, with over 450 franchised stores across Australia and New Zealand under the Chemist Warehouse and My Chemist names.
Bubs mentioned that Chemist Warehouse also acts as a gateway to China for Australian brands with Chinese residents and tourists transporting back health and infant nutrition products.
A limited number of Bubs products have already been sold in Chemist Warehouse for some time, but the success of online sales and the quality of the Bubs range encouraged the two partners to make this agreement.
The Bubs products will be sold on Chemist Warehouse’s domestic and Tmall online stores.
The Strategic Partnership
Chemist Warehouse is to provide sales and marketing services for a fee, linked to sales performance targets.
With the marketing fee that Bubs is paying to Chemist Warehouse, the pharmacy business is using that to invest in Bubs shares. It will be an initial 12.36 million shares and a maximum of around 37 million shares.
Bubs Founder and CEO Kristy Carr said: “We firmly believe this transaction will deliver strong growth in Bubs’ business, as well as offer significant long-term shareholder value.
“Now, with our key partners in place and a fully vertically integrated business with milk pool security and ownership of our manufacturing facility, we are set for rapid global expansion.”
This is certainly another exciting announcement by Bubs, it is proving to be one share to watch. Ms Carr said it well, the foundations are there for a good amount of growth over the coming years, although it’s definitely not guaranteed.
There is a lot of competition in the infant formula space, so the ASX growth shares revealed in the free report below could be more likely to deliver market beating returns than Bubs.
At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.