Bellamy’s hit hard by new Chinese infant formula restrictions
Bellamy’s Organic has been hit hard by recent changes to infant formula imports into China with its shares dropping by 40 per cent late last week.
The Tasmanian-based infant formula producer has been taking advantage of Chinese demand for international infant formula, but in a business update late last week, Bellamy’s reported it was experiencing a “temporary volume dislocation in China due to regulatory changeover”.
Despite the regulation changeover dilemma, Bellamy’s still used its business update to report that its revenue between 1 July 2016 and 20 November 2016 increased by 24 per cent on the same period in 2015, reaching AUD $93 million.
Bellamy’s said the growth reflected successful Singles Day results, a special online shopping day in China. The company also said it reflected an expanded China on-line and off-line distribution and continued underlying growth in Australia.
China import restrictions will ultimately help says Bellamy’s
Bellamy’s said that until the new Chinese regulatory registrations are completed in China, it will be impacted with those unlikely to be able to continue importing under the new regulations getting rid of their formula at discounted prices.
“The Company’s premium organic offering is well positioned for the long term opportunities in the China market, given its leading position in toddler milk in Australia,” Bellamy’s however said.
Bellamy’s stated that its opportunities in China “remains vast” with its product currently stocked in less than 5 per cent of potential distribution points in China.
Within Australia, Bellamy’s presence has grown with the amount of formula shelf space it has at Coles recently doubling. Bellamy’s organic infant food range is now available in more than 400 Coles stores across Australia.
“Initiatives put in place in the first half of the 2017 financial year to expand cereal manufacturing capacity and increase access to certified, high quality, organic cereal are expected to support solid growth in cereal sales moving into the New Year,” Bellamy’s said.
“This reinforces Bellamy’s position as the number 1 selling organic baby cereal brand in Australia.”
Bellamy’s taking off in Singapore
Bellamy’s reported that the company continues to perform well in South East Asia. It said that even though it is a small market for Bellamy’s, it is the fastest growing retail infant milk formula brand in Singapore. Within Singapore, Bellamy’s have grown more than 45 per cent in the past four months.
Other ASX-listed infant formula exporters from Australia to China
Bellamy’s is not the only infant formula importer suffering with the A2 Milk Company’s share price dropping by 12 per cent last Friday, Bega Cheeses’ by 6 per cent and Blackmores by 3 per cent.
Murray Goulburn also announced today that it intends to terminate its March 2016 framework agreement with US Mead Johnson Nutrition which was established to negotiate a strategic supply alliance for the supply of nutritional products.