Cross-border retail distribution group Aumake has linked up with New Zealand’s Pure Nutrition to develop a range of A1 and A2 milk powder formula products tailored for the Chinese market.
ASX-listed Aumake said the addition of a milk powder formula range would leverage of its expanding distribution channels in Australia and China, while also providing the revenue needed to develop new products.
AuMake, which listed last October, operates a retail network aimed at daigou and Chinese tourists who purchase products on behalf of customers in mainland China, in a bid to avoid high import duties.
The milk powders will be manufactured using New Zealand milk, while Aumake said it would initially focus on the development of products which do not require approval from China’s State Administration for Market Regulation, including infant formulas with English labelling sold within Australia.
Aumake said its A1 products would be available from October this year, while its A2 range would be sold from April 2019.
Chairman Keong Chan said the products would be distributed through Aumake’s network of retail stores in Australia, as well as its at Chemsave pharmacies across Australia.
Mr Chan said Aumake had been evaluating the potential of the milk powder formula market for quite some time, prior to committing to Pure Nutrition as its preferred supplier.
Pure Nutrition, which is a joint venture between New Zealand’s second largest dairy co-operative Westland Milk Products and Hong Kong Stock Exchange-listed Ausnutritia Dairy Corporation, will manufacture the products at its purpose-built blending and canning facility in Christchurch, New Zealand.
“The through examination of the entire supply chain, existing brands and our customers’ needs revealed significant opportunities which we believe are currently unmet in this market,” Mr Chan said in a statement to the ASX.
“The flexibility offered by our supply agreement with Pure Nutrition provides us with the ability to tailor products to the specific needs of various segments and demographics within the Chinese market.
“We have identified the ageing population of China to be of significant interest with 241 million people over the age of 60, which is forecast to grow to 487 million by 2050.”
Aumake said its initial target was to sell 1.6 million units annually of milk formula products containing the A1 and A2 proteins.
The Pure Nutrition deal also includes an expansion clause to include organic and goat’s milk powder formula products in accordance with future demand.
A Pure Nutrition spokesperson said the company recognised the critical role played by Australian-based daigou and Chinese tourists in growing popularity of Australian and New Zealand-manufactured products, particularly milk formulas, in China.
“We approached Aumake as the leader in the daigou and Chinese tourist market in Australia and it became clear that there was an opportunity for us to do something different and unique to cater for the Chinese market,” the spokesperson said.
“We have significant capabilities in the supply of milk powder formula products, including the productions of A1 and A2 beta-casein protein formulas, which in the future will also include organic and goat-based milk products.”