US formula shortage: Bubs Australia’s infant formula tariff free, firm works with two more retail chains

By Tingmin Koe contact

- Last updated on GMT

Bubs Australia's toddler formula products.  ©Bubs Australia
Bubs Australia's toddler formula products. ©Bubs Australia

Related tags: Bubs, Infant formula, retail channels

Bubs Australia’s infant formula sold in the US will receive tariff concessions under a trade deal, while the firm has also announced agreements with two additional retail groups to sell its products.

This will add on to the nearly 5,000 stores across 34 US states that have already stocked its products following US FDA’s approval of its products to curb the country’s formula shortage.

The two newly added chains are Meijer and HEB retail groups. The former is a supermarket chain based in Texas with 340 stores, while the latter owns 259 stores located predominantly in the Midwest, including Michigan, Illinois, Indiana, Kentucky, Ohio, and Wisconsin.

“There were over 365,000 births in Texas in 2020, compared to around 300,000 in all of Australia.

“Similar to others, the state has experienced stock shortage and is a primary focus for the distribution roll-out,” ​Bubs said in an ASX-filing on July 4.

Prior to this, Bubs has struck deals with Target, Walmart, Kroger, and Albertsons.

By mid of this month, Bubs expects 361,299 cans of its Bubs Infant Formula to be sold across 34 US states.    

Bubs Australia infant formula in Kroger
Bubs Australia's infant formula are available in US retail chain Kroger. © Kristy Carr LinkedIn 

In addition, its infant formula sold in the US will receive tariff concession under the Australia US Free Trade Agreement, following discussions between the two governments and stakeholders.

The firm received the enforcement discretion from the US FDA to import six of its infant formula products on May 27.

“In under a month, six Bubs Australia (ASX:BUB) infant formula products are on shelves in close to 5,000 stores across 34 States, with more to come,”​ Bubs Australia chairman, Dennis Lin said in a Linkedin post on June 30.

“We will next include focus on consumer education and awareness of our infant formula products. Only several weeks ago, it’s a milestone we thought must be at least 12 months away,”​ he added.

The following is a list of the US retailers and the number of stores that are selling Bubs’ infant formula.

Target

 

  • The chain has over 1,934 stores across the US
  • 30,000 Bubs Infant Formula tins to be distributed across an initial 280 stores

 

Walmart

 

  • All six Bubs Infant Formula and two Aussie Bubs Toddler Formula to be distributed to about 800 Walmart stores in about 20 states in the central and mid-west regions

 

Kroger

 

  • The chain has a total of 2,750 grocery retail stores across the 35 states
  • Examples of its retail banners ranging Bubs include Kroger supermarkets, Ralphs, Fred Meyer

 

 

Albertsons

  • Food and drug retailers with over 2,200 stores in 34 states
  • It will range Bubs’ products in around 1,700 supermarkets.
  • Examples of its retail banners ranging Bubs include Albertsons, Safeway, Jewel Osco.

 

Meijer

  • 259 stores mainly in the Midwest region

HEB

  • Texas-based supermarket chain with 340 stores

Government program

Last week, 22 US state agencies have also authorised Bubs infant formula products under a government program that provide subsidies to women, infants, and children for nutrition products.

Known as the Special Supplement Nutrition Program for Women, Infants and Children (WIC Program), it accounts for over 50 pre cent formula consumption in the country.

Behind the scenes

Lin revealed that the firm took 12 hours to put in its FDA submission and 24 days from FDA’s discretion to stock its products on shelves.

The firm expects its FY22 gross revenue to exceed AUD$100m (US$68.2m) and achieve over AUD$2.4m in underlying EBITDA, it said on July 5. 

It has also managed to raise AUD$63m to support growth opportunities, including expanding canning capability and operating expenses in the US. 

The firm first entered the US market last June with its toddler products.

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