BUB is a vertically integrated manufacturer of branded dairy products that it sells online and direct to supermarkets and pharmacies and through selected third-party distributors in Australia, China, North America and other parts of Asia. It also has a range of infant food and vitamin products.
BUB formulates and sells Bubs branded goat's milk infant formula, Bub’s Organic branded baby food and CapriLac and Deloraine branded goat's milk powder. BUB sources ingredients and goat's milk from suppliers in Australia and New Zealand that it processes and packs at its Australian Deloraine Dairy facility and under contract with Tatura Milk Industries, Uphamgo Australia and other regional providers. Most of its products are sold through supermarkets and pharmacies and online and through third-party distributors in Australia, China, North America and other countries.
Product manufacturing is often characterised as competitive and susceptible to currency and commodity price movements, multinational competitors and the adoption of alternative technologies. Companies try to reduce these risks and maintain margins by investing in their own plant and equipment, by hedging part of their delivered raw material and energy costs and by continuously improving their production and supply chain efficiency. Specifically, now that BUB is a vertically integrated manufacturer of goat's milk infant formula and products it has indicated its near-term focus is to: optimise production efficiency and improve operating margins; continue to strengthen its distribution channels, especially in Australia; gain registration for its products from the State Administration of Market Regulation of China for its products to be more widely available for sale in China and expand into other countries such as Malaysia and the Middle East .
BUB competes directly with other domestic and international infant formula and packaged food producers that are also trying to attract customers through various pricing, quality and other customer propositions. Some of its larger competitors are Nuchev, Bellamys Australia and Rafferty’s Garden of Australia, Heinz of the United States, Nestlé of Switzerland, Danone of France and The A2 Milk Company of New Zealand.
BUB has established a reputable brand with reliable channels-to-market in Australia. It also exports to an increasing number of countries, giving it the opportunity to distribute more of its products to countries with favourable demand drivers and exchange rates, and vice-versa. Going forward, it should continue to benefit from increased sales and economies of scale through organic growth, expanding its product range and geographic presence, optimising its operations and vertically integrating up the supply chain as well as undertaking complementary and value-accretive acquisitions. Its downside commercial risks could include: a broader economic slowdown that could affect the propensity of consumers to purchase discretionary infant formula and other organic foods; continued erosion of market share and gross margins from multinational competitors with greater economies of scale and just in time manufacturers who hold little inventory, especially in the larger and more competitive Asian markets; loss of a key customer, distributor, supplier or employee; changes to the availability, quality and delivered price of raw ingredients and third-party supplier costs that are unhedged and cannot be passed on to customers through pricing increases; an appreciation of the AUD, which would lower the unhedged value of its exports and any foreign capital it chooses to expatriate back to Australia (equally, however, this could lower the AUD-equivalent cost of any distribution undertaken outside of Australia); greater international health and food restrictions and regulations that may increase its compliance costs or prevent it from selling certain products in some markets; and any inheritance of undue liabilities or commercial risks through new product offerings, acquisitions and entrances into new markets.
2017: Bubs Australia was founded in 2006 by Kristy Carr and Liesa Dailly as an Australian organic baby food company. It initially focused on baby food before expanding into goat milk infant formula. Bubs Australia undertook a reverse takeover of an Australian listed company called Hillcrest Litigation Services, which it renamed Bubs Australia (BUB.AX) in 2017. The proceeds were used to increase its production and expand its sales and distribution in China.
2018: BUB increased its security of supply by acquiring NuLac Foods of Australia. NuLac Foods held an exclusive goat milk supply agreement, an adult goat milk powder brand called CapriLac, a flavoured milk brand called Coach House Dairy and 50% of a goat milk powder processing facility in Uphamgo, Australia. BUB also established cooperation agreements with several Chinese online platforms, including jd.com and Qianjiawanpu.
2019: BUB established a strategic partnership and manufacturing agreement with Bega Cheese and it secured a goat milk supply contract with Central Dairy Goats of New Zealand. It signed a supply and manufacturing agreement with Fonterra of Australia to launch its first organic cow milk infant formula. It also established a 49:51 joint venture called Bubs Brand Management Shanghai with Beingmate, a Chinese listed baby formula manufacturer, to market and distribute BUB's products in China. It acquired one of its Australian contract manufacturers, Deloraine, that included a licence to export to China, and established a marketing and distribution partnership with an Australian pharmacy chain called the Chemist Warehouse
2020: BUB entered into a distribution agreement with Viet Nam TVV Service to sell its products in Vietnam. The global Covid-19 pandemic forced major nations to temporarily close their borders and restrict people’s movements. This caused major disruptions to supply-chains, employment and consumer demand in almost every sector. However, BUB was deemed to be an 'essential service' provider and, for the most part, remained operational while most other businesses closed for several weeks
2021: BUB entered into an equity linked marketing and distribution agreement with The Chemist Warehouse in Australia as well as an equity linked sales and distribution partnership with Willis Trading a daigou channel distributor in China.
2022: Following infant formula supply issues within North America, BUB gained fast track approval to export and distribute its infant formula to North America retailers to help fill the void in the market
BUB was first listed on the Australian Stock Exchange on 03 January 2017 through a reverse takeover of Hillcrest Litigation Services. It had 437.9 million shares on issue at the end of the 2018 financial year that were owned by a mix of approximately 14,900 retail and institutional investors.
The BUB Board collectively owned less than 57.6 million shares at the end of last year. The Board currently comprises:
- Dennis Lin has been an Independent Chairman since December 2016. Dennis comes from an accounting background. He is also a Director of BDO, Buderim Group and Ecargo Holdings;
- Kristy Carr has been the Managing Director since December 2016 and the Chief Executive Officer since September 2018. Kristy is a co-founder of BUB;
- Matthew Reynolds has been the Independent Director since December 2016. Matthew is also a Partner at HWL Ebsworth Lawyers and a Director of Axsess Today; and
- Johannes Gommans has been an Independent Director since December 2017.
Kristy Carr has been the Chief Executive Officer since September 2018 and the Managing Director since BUB was founded in December 2016. Kristy comes from a marketing background and is a co-founder of BUB.