‘Daigou 2.0’: China’s infant formula demand exceeding pre-pandemic levels – Bubs

By Tingmin Koe

- Last updated on GMT

China's demand for infant formulas is exceeding pre-COVID-19 levels, said Bubs. © Getty Images
China's demand for infant formulas is exceeding pre-COVID-19 levels, said Bubs. © Getty Images
China’s corporate daigou channel is witnessing high growth momentum and demand for infant formulas is exceeding pre-COVID-19 levels, according to Australian infant formula maker Bubs.

The ASX-listed company said in its FY2022 Q2 report that gross revenue from its corporate daigou channel was up 196 per cent as compared to the same period last year.

As compared to the previous quarter, gross revenue from corporate daigou was also up 17 per cent.

The growth was led by the strong sales of its flagship Bubs Infant Formula – where sales jumped 272 percent as compared to the same period last year.

“Our response to the pandemic impact and decision to realign our China sales channels to execute ‘Bubs Daigou 2.0’ strategy has been validated.

“Working alongside our strategic channel partner, AZ Global, we focused on enhancing channel engagement and campaign activation, whilst maintaining stabilised pricing and balanced fresh inventory levels.

“This channel partnership has resulted in very strong daigou demand for both Bubs Goat and Organic Grass-fed infant formula products as well as CapriLac adult milk powder.

“We continue to actively support the corporate daigou channel, and are pleased to report revenues now exceed pre-pandemic levels,” ​Bubs founder and CEO Kristy Carr said.

Unlike sole traders or individual daigous, corporate daigou is conducted through businesses.

The personal daigou channel has been hard hit by COVID-19 related border closure and daigous have to limit their overseas travels.

In contrast, corporate daigou could depend on networks such as duty-free stores to ship their products to China.

In 2020, Bubs also said it has been working with corporate daigou to support their marketing strategies on livestreaming and social e-commerce.

On the other hand, the firm’s cross-border e-commerce (CBEC) revenue was up 53 per cent as compared to the same period last year.

Sales of Bubs infant formula via CBEC into China was up 48 per cent, while that of adult goat milk powder CapriLac was up 65 per cent.

Overall, Bubs reported a quarterly gross revenue of AUD$19.9m (US$14.7m) in FY2022 Q2, up 56 per cent as compared to the same period last year. This was also eight per cent higher than the last quarter.

Domestic market

The company is growing its domestic business as well, enjoying presence across major supermarket chains Woolworths, Coles, and Chemist Warehouse.

The brand’s market share in Australia’s total infant formula category in these three channels stands at a record high of 3.9 per cent, based on data from market research firm IRI.

Revenue from the domestic market was up 10 per cent compared to the last quarter and made up 23 per cent of the quarterly sales.

Elsewhere, the company has also entered the North American market and its toddler formula is sold online in Walmart, Amazon, and Thrive Market.

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