The Bubs Australia Ltd (ASX: BUB) share price is rising like cream on Friday. At the time of writing, shares in the infant formula manufacturer are trading for 44 cents each – up by a whopping 17.33%.
The company comes into focus after announcing this morning it is entering the US market for dairy-based powder formula.
Let's take a closer look at today's news.
Why the Bubs share price is surging
In a statement to the ASX, Bubs Australia said from September 2021, the world's largest retailer, Walmart Inc (NYSE: WMT), will begin to stock and sell its products under the brand name 'Aussie Bubs' on its website. As well, the product will be sold in the US by Amazon.com Inc. (NASDAQ: AMZN).
The company claims the US formula market is worth a total of US$5.1 billion. On top of this, Bubs says it will be the "only Australian Goat Milk Formula product on the USA market." If that's the case, then this helps explain today's meteoric rise in the Bubs share price.
To facilitate the launch of Aussie Bubs, Bubs Australia will establish a US-based subsidiary. The company said it will "spearhead in-country marketing and [be] based in health-conscious Northern California."
Management commentary
Bubs CEO Kristy Carr said:
We are delighted to announce this important milestone in our continued implementation of our export diversification strategy, as we look for key global markets in which to expand our now award-winning Clean Label formulations.
Bubs executive chair Dennis Lin added:
As Australia's largest producer of goat dairy products built on our unique vertically integrated business model and deep understanding of the speciality goat dairy supply chain, we are well placed to take advantage of continuing opportunities to expand our global footprint for the Bubs range.
Bubs share price snapshot
Over the past 12 months, the Bubs share price has decreased by around 55%. Australia's international border closures, due to the COVID-19 pandemic, severely affected the company. The daigou market formed an important part of the business' performance, with Bubs suffering when the channel shut down.
Bubs Australia has a market capitalisation of around $273 million.
