Bubs Australia recorded its first profit in FY22, with earnings driven by the release of a new formula, high growth in all channels, the resurgence of the daigou market and its accelerated entry into the US market through Operation Fly Formula.
Snapshot
- Gross revenue: $104.2m, up 123%;
- Underlying earnings before interest, taxes, depreciation, and amortisation (EBIDTA): $4.8m;
- Group gross margin: up 32%;
- China gross revenue: up 166%, corporate daigou gross revenue up fivefold on FY21;
- US revenue: contributed 9% to group revenue; and
- Successful capital raise of $63m.
CEO and founder Kristy Carr said innovation and the successful launch of Bubs Supreme A2 beta-casein protein formula were key factors in what was a stellar year for the company.
While the company launched its Bubs Supreme A2 beta-casein protein formula range in Q4, it is already contributing more than quarter (26 per cent) of FY22 formula sales.
“Our domestic market share continued to grow ahead of the category to reach an all-time high,” Carr said.
The company has products in three premium infant formula growth segments – A2 beta-casein protein, Organic Grass-fed, and Easy-digest Goat. It reported 38.6 per cent domestic scan sales growth and a 4.7 market share.
“We experienced strong momentum across our China business with a re-engineered and resurgent Corporate Daigou omnichannel model,” she said.
Daigou gross revenue was up fivefold on FY21, In February, Carr said demand in the daigou channel was exceeding pre-pandemic levels.
Carr said the company’s channel strategy, delivered with channel partner AZ Global, was focused on enhancing channel engagement and campaign activation while stabilising pricing and fresh inventory levels.
In March, Bubs signed an equity share deal with its largest corporate daigou distributor, giving Hong Kong company Willis Trading a 4.82 per cent stake in the business.
And then Operation Fly Formula took off.
“In the last quarter we accelerated our access to the United States with our early acceptance into the Biden-Harris Administrations’ Operation Fly Formula initiative to assist American families during the infant formula shortage crisis,” Carr said.
All six Bubs Infant Formula products launched in the US in June under FDA enforcement discretion, with US revenue contributing 9 per cent of group revenue for FY22.
The initial deal was for 1.25 million tins, but the USA Food and Drug Administration (FDA) has committed to a permanent regulatory pathway for enforcement discretion recipients, allowing Bubs as one of only eight brands in the world to continue to import infant formula past November.
Bubs chair Dennis Lin said, “We identified the US as a strategic market two years ago, and our commitment to invest has thankfully coincided with American families’ time of need.
“This allows us to accelerate our strategic vision as well as provide support that goes to the heart of Bubs DNA.”
Bubs products are now available in more than 4000 stores across the US.
