Bubs (ASX:BUB) share price higher on new product launch

The Bubs share price is rising on Thursday…

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The Bubs Australia Ltd (ASX: BUB) share price is on the move on Thursday.

In morning trade, the infant formula company’s shares are up 2% to 52 cents.

Why is the Bubs share price rising?

Investors have been bidding the Bubs share price higher today after the company announced yet another new product launch.

According to the release, Bubs is extending its brand portfolio into an adjacent growth category with a complementary range of cow’s milk powder products for the whole family – Bubs Family Nutrition.

Management notes that this facilitates new market access and widespread jurisdiction reach with less regulatory barriers to entry. It also taps into the global US$15.7 billion market for whole milk powder.

Bubs’ Founder and CEO, Kristy Carr, commented: “The extension of Bubs portfolio into Family Nutrition allows Bubs to tap into the US$15.7 billion global cow’s milk powder market, leveraging our extensive dairy expertise and manufacturing capabilities.”

“The established familiarity of Bubs as a trusted nutrition brand will be stretched to cater for the whole family, providing a broader opportunity to introduce consumers in the Mother and Baby segment to Bubs premium quality brand attributes. This expanding pantry presence and brand awareness will increase the shopping basket opportunity, making it the perfect complement to our ‘hero’ range of infant formula,” she added.

The release states that Bubs considers itself a “significant” player in the adult goat milk powder market in China with its CapriLac brand. Though, it is worth noting that its Adult goat dairy portfolio, which includes its Adult Goat Milk Powder business, generated revenue of just ~$4.6 million during the first quarter. So, it is still very small in the grand scheme of things.

What’s next?

Bubs revealed that it has entered into supply agreements with multiple new distribution and retail partners in key international markets. This will see opening orders shipped to China, Malaysia, Singapore, Vietnam, Pacific Islands, and East Africa in the second quarter of FY 2022.

However, it is worth noting that no details have been provided in respect to the dollar value or volume of these orders.

Bubs’ Chief Operating Officer, Fabrizio Jorge, commented: “Bubs has developed an enormous amount of dairy supply chain and manufacturing intellectual property. Coupled with Bubs trusted brand equity, developing a range of milk powder products for the whole family was a natural portfolio extension. The range includes a variety of packaging formats tailored to suit the different consumption needs for multiple international markets.”

“We expect Bubs Family Nutrition will broaden the footprint among young families and support market diversification, while strengthening the foundations of continued business growth. This portfolio expansion will have the consequent effect of increasing utilisation of our Deloraine manufacturing facility, thereby providing cost efficiencies across our entire business,” Mr Jorge added.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended BUBS AUST FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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