The Bubs Australia Ltd (ASX: BUB) share price is on watch after the infant formula business announced how it plans to stay in the US permanently.
There has been an infant formula shortage in the US recently, so Bubs was given special permission (and help) to send over hundreds of thousands of tins.
Bubs plans permanent US presence
The US Food and Drug Administration (FDA) has released a “clear regulatory pathway” for permanent market access for Bubs’ infant formula and seven other manufacturers that received ‘enforcement discretion’ to get products into the country.
Bubs announced today that it has lodged the ‘letter of intent’ for continued enforcement discretion for all six of its infant formula products and has committed to fully complying with applicable regulatory requirements within the timeframe stipulated.
The company noted that its infant formula range already satisifies US nutrient requirements as per the US Infant Formula Act for iron-fortified infant formula.
Bubs’ infant formula range will continue to be imported and be available on shelves for new and existing consumers in the US throughout the transition period.
This transition plan is applicable only to those that have received the enforcement discretion. The FDA intends to issue a ‘letter of acknowledgement’ in response to the letter of intent, which if appropriate, will state that the enforcement discretion will be extended under the transition plan until October 2025, as long as the manufacturer keeps making “meaningful progress” towards compliance with the transition plan.
Management comments
The Bubs founder and CEO Kristy Carr said:
“Given the overwhelming positive response that we have received from American parents, caregivers, health care professionals and retailers, we are pleased to be able to commit that Bubs Australia will remain in the United States for the long term.
This commitment and the FDA’s announcement also mean American parents who are already safely using Bubs Infant Formula products, as well as our retail partners now stocking our formula in 6,500 stores across 42 states, can remain confident in ongoing supply, without interruption, providing more choices for American families seeking safe, clean nutrition for their children.
Importantly, the FDA announcement also provides continued support for the ongoing expansion of our U.S. distribution footprint, as we look forward to launching Bubs Infant Formula products in various new retail groups in the months ahead.
Final thoughts on the Bubs share price
The business is doing the right things to do well in the US. Can it become a sizeable player? We’ll have to see. The US is a huge market, so even capturing a 1% market share would be pretty good.
The comments by the CEO are promising. Expanding its presence, and staying for the long-term, suggests that it could generate a lot of revenue from the US.