Undoubtedly daigou from 2015-2019 was the ultimate channel in...

Undoubtedly daigou from 2015-2019 was the ultimate channel in terms of margins. No freight costs or advertising costs, 30+ percent margins etc. However that is long gone and unlikely to return. It was also a highly risky model to begin with as at least two companies - Bellamy's and A2 - can both attest to. I don't think this has fully registered with BUB's old management and of course AZ Global have a vested interest in BUB continuing to throw money at that channel.

CBEC is simply a lower risk, lower reward channel. Pricing is similar (I think $45-$55 AUD) but the costs are much higher in terms of marketing and shipping. Hence A2's margins have more than halved despite similar levels of revenue. The advantage A2 has over BUB is that it still has much stronger brand recognition, market share and cash reserves built up through the daigou years. They can therefore grind it out to increase market share / volume, and hopefully reduce costs eventually through less need for advertising and doing more its own manufacturing.

If C2 Capital/Alibaba ends up with greater control over BUB (I don't know the full story there) then it may come with a better strategy / partnerships for CBEC. BUB holders should hope for the consortium of Carr/Lin/Nathan/Andy Zhang to be defeated since they really to represent an obstacle to the company adapting to the future IMO.

China label price point is much higher ($70-$80) but ingredients, packaging and other costs are also significantly higher too. China label regulations require the addition of certain ingreidents such as lactoferrin and DHA to mandated levels. The DHA level requirements will also be higher under the new SAMR, which I am guessing will squeeze margins further. However, the new SAMR will drastically reduce competition so potentially opens up alot more room for market share growth. As far as I know, the China label market (mostly offline mother and baby stores - MBS) doesn't overlap a great deal with the CBEC market and is much larger (Feihe is in about 100k+ stores whereas A2 is only in 25-30k).