What: The share prices of Bellamy's Australia Ltd (ASX: BAL) and A2 MILK FPO NZ (ASX: A2M) have been slammed today, falling 4% and 4.8%, respectively, before midday.
Indeed, it appears the two dairy products companies have been caught up in the S&P/ASX 200's (Index: ^AXJO) (ASX: XJO) selloff following fresh concerns out of China.
So what: The Bellamy's and A2 Milk share prices have crushed the ASX 200's return over the past six months. For comparison, the A2 share price is up 170%, the Bellamy's share price is 200% higher, but the ASX 200 is down 6% since July.
Demand for the 'white gold' baby formula products produced by the a2 Milk Company and Bellamy's is in high-demand throughout Australia and Asia. And investors are jumping on their shares.
In fact, anecdotal evidence suggests consumers are buying tins of formula by the trolley load at local retailers. Then, they sell it to Asian consumers on internet auction sites like eBay at a massive markup to retail prices.
China's seemingly insatiable demand for quality infant formula, and 'green' products more broadly, is expected to grow rapidly as the country's middle-class population grows rapidly, and Australia is uniquely placed to benefit from this long-term trend.
Specifically, reputable companies like Bellamy's, the a2 Milk Company, Blackmores Limited (ASX: BKL) and some agricultural companies are forecast to ride this long-term tailwind to great effect.
Buy, Hold or Sell?
Share market investors should always conduct rigorous due diligence on any investment prior to buying. Indeed, at today's prices, I think investors should be extra careful buying shares in either Bellamy's or A2. However, as a Bellamy's investor at much lower prices than today's, I'm certainly not rushing out to sell my shareholding. I already sold some of my family's investment — only to watch it double in price.
