Blackmores Limited launches baby formula range: Can the shares climb higher in 2016?

Blackmores Limited (ASX: BKL) is all set to launch its new line of baby formula products which could help ease the massive shortage of such products on our supermarket shelves.

While Blackmores has traditionally focused on selling vitamin supplements, it announced its intentions to launch a new infant formula product range to the market late last year hoping to steal a share in the lucrative market.

As it stands, the market is currently dominated by Bellamy’s Australia Ltd (ASX: BAL) and A2 MILK FPO NZ (ASX: A2M) which are both struggling to keep up with the enormous demand for their products.

Consumers will hope that the addition of Blackmores to the shelves will help ease that shortage and make it easier for parents to get their hands on high-quality formula, although it is currently unclear ­how much will actually be sold in Australia.

China is of course the big opportunity, and the source of much of the demand for Bellamy’s and A2 Milk’s products as well. Many Chinese parents find it difficult to trust Chinese-based producers as a result of numerous food-related health scares in recent years, and are thus willing to pay a premium price for the peace of mind knowing that their products are made in Australia or New Zealand.

As quoted by, analysts from JPMorgan said: “We expect the company to launch and market infant formula as a product formulated and manufactured by an Australian company using only premium Australian ingredients.” They added that: “In our view, this could be a meaningful differentiating factor from most of the major infant formula products currently available on the shelf in Australia.”

Blackmores will sell newborn, follow-on and toddler formula products, all of which will be priced between $25.99 and $29.99. As highlighted by, consumers will be limited to two tins per day and a maximum of four tins per week to help cope with demand.

Blackmores’ share price has slipped back below $200 and is trading at $198.81 today, although Goldman Sachs has a price target of $220, up from a target of $195 in October 2015. As such, if the product launch is a success, there could be even more gains for Blackmores’ shareholders in 2016.

Our most comprehensive and innovative ASX investment service -- has reopened for a brief time, to accept new members. That means you've got the chance to follow along as one top investor puts $1,000,000 of The Motley Fool's own money to work...all in ASX stocks. But to get YOUR front-row seat, you must act NOW. (Please note: just 1,000 new member seats are available.) Click here to claim YOUR invite!

Motley Fool contributor Ryan Newman owns shares of Bellamy's Australia. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. You can follow Ryan on Twitter @ASXvalueinvest.

The Motley Fool Australia owns shares of Bellamy's Australia. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.