Bubs (ASX:BUB) share price on watch amid A2 product launch

Bubs will be one to watch on Tuesday…

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Key points

  • Bubs is coming after A2 Milk with its own A2-protein infant formula launch.
  • Products will be launched into Coles supermarkets in May.
  • Bubs also announced its first purchase order for the daigou channel.

The Bubs Australia Ltd (ASX: BUB) share price will be one to watch on Tuesday.

This follows the release of an announcement out of the infant formula company this morning.

Why is the Bubs share price on watch?

All eyes will be on the Bubs share price today after the company announced that it will be taking on A2 Milk Company Ltd (ASX: A2M) with its own A2 protein-based infant formula product.

According to the release, the company is launching Bubs Supreme infant formula and toddler milk with natural A2 beta-casein protein.

This allows the company to access the global A2 beta-casein protein milk market, valued at US$1.23 billion and estimated to reach US$2.6 billion in global market size by 2026. Furthermore, it highlights that it will leverage on the category growth and consumer trend towards premiumisation in China, where the A2 beta-casein protein segment is growing strongly.

Bubs Founder and CEO, Kristy Carr, said: “Innovation is inherent in Bubs’ culture and a key driver behind our high growth strategy. With the launch of Bubs Supreme A2 beta-casein protein range in our most profitable business segment, we are now able to cater to a more significant share of the addressable infant formula and toddler milk market, thereby strengthening our position in the total category to build widespread recognition of Bubs as a brand synonymous with clean, high quality infant nutrition.”

The release notes that the Bubs Supreme formula range will be on shelf in 500 Coles Group Ltd (ASX: COL) supermarkets from May. This expands the shelf presence of existing product lines, including Bubs easy-digest goat milk formula and Bubs Organic grass-fed cow’s milk formula already sold in Coles stores nationally.

Management believes the addition of Bubs Supreme A2 beta-casein protein milk formula will broaden its brand appeal to a new domestic market segment.

Sales order

Also potentially boosting the Bubs share price today is news that its recently announced deal with Willis Trading has led to an opening purchase order valued at $32.9 million.

These products will be delivered in Q4 FY 2022 and Q1 FY 2023 and distributed to the daigou channel.

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 owns and has recommended COLESGROUP DEF SET. The Motley Fool Australia has recommended A2 Milk and 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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