Blackmores Bega Chinese infant formula venture already paying off

Posted by AFN Staff Writers on 29th August 2016

Blackmores and Bega Cheese have reported early success with a business partnership selling infant formula into China.

Discussing the venture, Blackmores said in its 2016 financial year profits announcement that the partnership has already achieved AUD $9 million in sales.

Blackmores and Bega Cheese declared the plans to start producing infant formula together in late October 2015.

Both Blackmores and Bega Cheese achieved strong results for the 2016 financial year. Blackmores increased its net profit after tax by 115 per cent on its 2015 financial year results whilst Bega Cheese achieved profit after tax of $AUD 28.8 million, an increase of 132 per cent on its 2015 financial year.

China driving up Blackmores’ profits

Blackmores reached sales of AUD $717 million in its 2016 financial year, an increase of 52 per cent on the prior 12 months.

Chief Executive Officer of Blackmores, Christine Holgate, said consumer demand for its products enabled the company to double its production capacity over the year.

“Importantly, we were able to maintain our commitment to unrivalled quality standards by further extending into our supply chain whilst productivity and efficiency was boosted,” Holgate said.

Within Australia alone, Blackmores increased its sales by 56 per cent on the previous year, reaching AUD $495 million. Blackmores attributed this increase not only to local demand, but demand from Chinese tourists and exporters to China.

Within Asia, Blackmores achieved sales of AUD $129 million, a 54 per cent increase on the previous year.

Asian e-commerce strategy helps Blackmores achieve overseas success

“Asia sales were blostered by in-country sales in China of AUD $48 million (up 536 per cent), Holgate said.

“The expansion of free trade zones and our ability to serve e-commerce customers through our bonded warehouse in China have enabled us to benefit from the opportunities in China,” she said.

Bega Cheese has faith in long-term strategy

Reporting on its 2016 financial year results, Bega Cheese said its profits were a demonstration of the strength of its long-term strategy.

The company however noted global oversupply in milk, softening demand in china, Russian sanctions and a highly competitive Australian market created a challenging operating environment.

“We achieved growth in our nutritionals platform and our international food service and consumer goods platform,” said chief Executive Officer, Aidan Coleman.

CEO to retire

Bega Cheese used the release of its financial results to announce that Coleman would be retiring from his position as CEO in January 2017. Coleman has been with Began Cheese since March 2011.

Bega Cheese said it is “well advanced” in the recruitment process to replace Coleman.