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 News.com.au, 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 News.com.au, 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.
