Bellamy’s Triples Profit on Strong Demand from China

By Julian Thumm | 22 Aug 2016

Bellamy’s has posted record revenue and tripled profit on the back of strong demand from China and growth in cross-border e-commerce.

Organic baby food product manufacturer Bellamy’s Organic has more than tripled its full year net profit, growing by 326 percent to $38.3 million.

The massive growth comes off the back of soaring demand from China for Australian infant formula products. Sales to China and Hong Kong grew a whopping 331 percent to $62.1 million, driven by increased brand awareness, growth in cross-border e-commerce activity and growing reseller customer activations.

“Our deep understanding of the complex organic global supply chain, strong strategic arrangements with key suppliers and expanding distribution network places Bellamy in a unique position to continue benefiting from strong domestic and international demand,” said Bellamy’s CEO, Laura McBain.

Increased demand from China has seen the company focus on growing its multichannel distribution operations, with infant formula as the spearhead.

“We continue to experience strong growth in China across all of our distribution channels. We recognise the importance of a multichannel distribution strategy in China, and providing easy access to our products for parents regardless of their physical location,” said McBain.

“Our online flagship stores via Tmall.com — where we are in the top 10 brands for infant formula — JD.com and VIP.com have led to substantial growth in sales direct from Bellamy’s to consumers in China.”

The company indicated that it has responded swiftly to and benefited from changes to Chinese cross-border trade regulations, which have allowed the company to have more direct dealings with Daigous, or shopping agents.

“The second half of FY16 saw a number of regulatory changes announced in China, aimed at putting in place a clear framework for cross-border e-commerce channels and a broader product registration framework covering both domestic and foreign infant formula products,” said McBain.

“Having anticipated the regulatory changes, we were able to respond quickly and efficiently. We have a positive view of the regulatory changes announced and believe they will further strengthen Bellamy’s growth opportunities in China.

“The regulatory environment in which we operate in China will have a positive effect on our future growth opportunities and we will maximise these through the multichannel distribution approach that we have built.”

But it wasn’t just foreign demand driving growth. The company reported Australian sales rising by 67 percent to $178.6 million.

The company posted total revenue of $244.6 million on 95 percent year-on-year growth.

“Bellamy’s continued to generate strong growth in the Australian domestic market. Brand awareness continued to grow and we remain focused on extending our reach in pharmacy and increasing our footprint in grocery,” said McBain.

On release of the results, shares in Bellamy’s were up 7 percent, reaching as high as $14.37 on Friday.

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