The Bubs Australia Ltd (ASX: BUB) share price is jumping higher after the company announced approval to supply the US with infant formula.
Bubs share price goes nuts
Bubs shares have soared after securing US FDA discretion to immediately import six different types of Bubs infant formula products into the USA to help relieve shortages.
The ASX share is currently working closely with the US Department of Health and Human Services (HHS) to determine the best options for delivering products to the US as quickly as possible.
Bubs has made a commitment to the US government that it will provide at least 1.25 million tins in the coming weeks and months, which is equivalent to at least 27.5 million bottles. Those tins are across its Bubs Supreme A2 products, Bubs organic grass fed products and Bubs goat infant formula products.
The company boasted that it was one of the first to respond under the new FDA policy. It has 500,000 tins ready for immediate export to the US with the remaining 750,000 tins production already planned and scheduled for completion in the coming months.
Bubs is going to be able to leverage an established distribution footprint and brand awareness already on sale in major retailers.
The ASX share also noted that its products are manufactured in Bubs’ own FDA registered production facility, capable of tripling current 10 million tin annual capacity.
Is it taking production from elsewhere?
Bubs reassured investors that its supply to existing Australian retailers and export markets will remain unchanged, given its ability to increase current and planned production, due to strong control of vertically integrated supply chain and flexibility of its existing wholly-owned production facility.
Management comments
The Bubs CEO Kristy Carr said:
Bubs is uniquely positioned with an existing nationwide sales and distribution footprint, enabling us to stock shelves with existing and prospective partners quickly…Bubs already has the necessary customer relationships and processes to support the initiative, including supply and distribution logistics, and the appropriate insurances.
FDA recognises Australia as having equivalent food standards, and Bubs product integrity is assured through having an integrated supply chain back to the dairy source, including full traceability and tight manufacturing controls.
Final thoughts on this deal and the Bubs share price
Bubs has been through a lot of ups and downs, but this announcement is a real positive for the business. It could be a real moment of breakthrough time in the US market for the company.
It’s also a positive for Bubs to generate more of its revenue away from China so it’s not too reliant on one market. I think Bubs is looking positive, though the Bubs share price is obviously not as cheap as it was last week after a 40% jump. But, it’s still one of those higher-risk ASX growth shares.
