Please be cautious, page-33

Hi Barolobill,

We are currently selling Bellamys at 50 cents to $1 above woolworths prices, this also depends on stock levels at the local Woolworths, we do not have Coles nearby. We limit sales to 4 cans per customer and stock is currently not moving well though the expiry date is good. I believe Coles is selling stage 3 as a loss leader since my cost is higher than coles selling price of $23. We have a legacy account with the company prior to their ASX listing and don't have to purchase all stages at a certain ratio and can simply order what we need as replenishment.

With regards to the Asian market, we have contacts in China keeping us informed, so news over last month was that stock has been bottlenecked at Chinese customs, there are currently tens of thousands of pallets of formula from all over the world sitting in custom warehouses. eCommerce companies need to adjust pricing for product and freight and wait for consumer uptake, the rapid growth of some companies have left them cash flow poor and they're clearing stock at cost. This in turn has caused an abundance of stock in Australia and the discounting in price, eg. BAL's rrp for pharmacy is $28.50, there is no way you can sell it at that price. Another thing to keep in mind is that Aptamil, A2 and Bellamy all have extra production capacity in the pipeline as well as the appearance of new entrants who just want a piece of the pie.


We are also awaiting the 1st June policy changes, its content and implication still unknown...