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RPT-Australia's Blackmores enters China's burgeoning baby formula market

Published 18/01/2016, 07:20 am
© Reuters.  RPT-Australia's Blackmores enters China's burgeoning baby formula market
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(Repeat story published on Saturday, no change to text)

By Morag MacKinnon

PERTH, Australia, Jan 16 (Reuters) - Australian vitamin success story Blackmores Ltd BKL.AX and dairy giant Bega Cheese Ltd BGA.AX have partnered to capitalise on the booming demand for infant formula in Asia and Australia's new free-trade agreement with China.

The two companies, which announced a joint venture last October, have accelerated the development and release of three infant formula products which hit the shelves of Australian pharmacies on Saturday.

Tins of the formula, which boast Bega's Tatura logo and a small picture of a kangaroo, were released online in China and Australia earlier this week.

Supplies of baby formula are drying up in Australia as savvy Chinese tourists snatch tins of the "white gold" off supermarket shelves to resell them for a profit at home, where a poisoning scandal has left consumers wary of domestic brands.

"We've just had really strong demand and request for help from Australian mums who are having challenges at the moment getting supply of their usual products," Blackmores Chief Executive Christine Holgate told Reuters on Saturday, after the products' launch.

At least 80 percent of the first month's production of 100,000 tins of formula was reserved for the Australian market, she added, with each customer limited to two tins a day and a maximum of four a week.

The Blackmores-Bega partnership offers customers in Australia and China a "cow-to-customer" guarantee of supply, Holgate said.

Australian mothers would be able to call a customer service line if they could not find the formula at their pharmacy.

"When a mum starts feeding a product to a baby the last thing she wants is for them to go out of stock," Holgate said.

While prioritising supply for the Australian market, Holgate did not downplay the opportunity the Asian export market, forecast to be worth $30 billion by 2017, represents.

One-fifth of the first month's production of three infant formula products - newborn, follow-on and toddler - went on sale via Alibaba (N:BABA) BABA.N e-commerce platform Tmall earlier this week.

The infant formula joint venture is the latest for the vitamin giant that has exported to Asia for 35 years and into China for the last three.

Booming demand from Asian customers for the company's vitamins has seen its shares surge almost 500 percent in the past 12 months, making Blackmores the darling of the Australian stock market.

"The real surge in demand happened when the free-trade zones opened up just over 12 months ago," Holgate said.

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