More China distribution for infant formula maker

More China distribution for infant formula maker

Thu, 05/04/2018 - 16:50

Wattle Health Australia has been steadily increasing its presence in China's infant formula market. Photo: WHA

Infant formula manufacturer Wattle Health Australia has secured a distribution deal with China’s International Supplies and Distribution Company, providing access to more than 2,000 retail stores across 13 Chinese provinces.

Wattle announced to the ASX today that ISDC would buy a minimum of 1.5 million units of the company’s conventional cow milk infant formula products over the next 18 months.

That supply would ramp up to 1.5 million units in the 12 months following the initial period, increasing to 2.2 million units in a third 12-month period.

The companies said new volumes would be set for subsequent 12 month periods.

ISDC has agreed to provide a bank guarantee equating to 25 per cent of production costs, to facilitate the minimum supply arrangements for each period.

The deal is complementary to WHA’s existing arrangements in mainland China, including with Ayingdao mum and baby stores, Tesco Lotus and China Duty Free.

The deal remains subject to WHA receiving approval from the China Food and Drug Administration.

WHA chairman Lazarus Karasavvidis said the agreement would enable the company to grow its footprint in China.

“Further, this agreement provides WHA minimum volume levels, which enable the company to forward plan with confidence as we look to expand our product offerings, not just in China but globally,” Mr Karasavvidis said.

The China deal follows WHA making progress on two other international distribution deals in 2018, with first orders received from India and Macau earlier this year.