Under the agreement, the range of milk powder products will be owned by AuMake, with provisions for future extension of the range to include organic and goat milk powder products.
Pure Nutrition will lend its expertise in developing and delivering packaged products to AuMake, and the range — made with locally sourced New Zealand milk — will be available exclusively through its distribution channels.
In a statement, AuMake said it had decided to partner with Pure Nutrition to develop milk powder formula products to focus on specific demographics and markets in China, so as to better meet each group's needs.
Tech expertise meets market opportunity
This formula milk range is the latest addition to AuMake's brand portfolio, amid its growing distribution network in Australia and developing sales channels in China.
AuMake, which specialises in connecting the Australian daigou market with Chinese tourists, is avoiding the need for approval from China's State Administration for Market Regulation (SAMR) for now, by developing powder formula products for the Chinese market that are not sold or officially distributed within China itself.
Pure Nutrition is a joint venture between Westland Milk Products (New Zealand's second largest dairy co-operative), and HKEX-listed Ausnutria Dairy, a top eight dairy infant nutrition company in China.
A Pure Nutrition spokesperson said in a media release: "After a period of extensive due diligence, we approached AuMake as the leader in the daigou and Chinese tourist market in Australia, and it became clear that there was an opportunity for us to do something different and unique to cater for the Chinese market.
"We have significant capabilities in the supply of milk powder formula products, including the production of A1 and A2 beta-casein protein formulas, which in the future will also include organic and goat-based milk products."
AuMake's executive chairman Keong Chan said, "AuMake has long been aware of the potential of the milk powder formula market, and conducted extensive analysis of this market prior to committing to Pure Nutrition Limited as our supplier of choice.
"The thorough examination of the entire supply chain, existing brands and our customers' needs, revealed significant opportunities which we believe are currently unmet in this market. The flexibility offered by our supply agreement with Pure Nutrition Limited provides us with the ability to tailor products to the specific needs of various segments and demographics within the Chinese market.
"We have identified the ageing population of China to be of significant interest, with 241 million people over the age of 60, which is forecast to grow to 487 million by 2051."
He added that AuMake's distribution and marketing capabilities through its Australian network, alongside its sales channels into China, made for promising growth opportunities "not initially predicated on SAMR approval".
The range of A1 products are scheduled for an October / November launch, while the A2 product range will be launched in April / May 2019).
The initial annual target volume will be a total of 1.6 million units: 1 million for the A1 range and 600,000 for the A2 range.