Ann: Bellamy's & Fonterra Manufacturing Arrangement, page-39

If we do some basic maths on this deal, then Fonterra could potentially toll manufacture AU$870m worth of infant formula per annum for Bellamy's on top of the existing production on their behalf by Bega Cheese.

Calculations are as follows: 30 million kilos of infant formula (Fonterra's share of output at Darnham factory) / each infant formula is 0.9 kilos = 33m cans of infant formula. Each can of step 1 formula sells for AU$26. So 33m * AU$26 per can equals around AU$870m of revenue per annum for Bellamy's.

This analysis assumes that BAL takes up all of Fonterra's manufacturing capacity at the Darnham factory. This is unlikely, at least in the near term. But even if we assume BAL takes just 1/3, then that's around AU$300m of sales for BAL. That's on top of the AU$200-300m that Bega Cheese is toll manufacturing on their behalf currently.

That provides plenty of runway for manufacturing capacity growth for the next few years.

As BAL's CEO hinted in the article, the supply "problem" is trying to ramp up supply of organic raw materials (from Europe and Australia) at the same rate as demand is growing, rather than toll manufacturing.