A White House statement overnight said the Biden administration also announced it would use the Defence Production Act to give two companies, Abbott Nutrition and Reckitt, priority on ingredients or equipment necessary to manufacture formula.
American multinationalAbbott Laboratories closed its Michigan plantin February after four babies fell ill – two died – after having formula made in that plant.
The US Food and Drug Administration (FDA) has now permitted Abbott to resume production at its plant.
Mr Teeger said goat milk formula player Bubs was relatively better placed than larger a2 to capitalise on this opportunity over the short to medium term given it entered the $US4.3 billion ($6.1 billion) marketlast year.
The Aussie Bubs toddler formulais now selling on three of the largest online marketplaces: Walmart, Amazon and Thrive Market. Bubs has also been in talks with the FDA for its infant formula products.
Bubs shares initially rose but by lunchtime were down 1.15 per cent to 43¢ each.
The US formula market is highly concentrated, with top four players accounting for about 90 per cent of the market.
Mr Teeger said should Bubs secure just 1 per cent share, assuming regulatory approvals were obtained, it could result in a three to four times lift to the company’s full year 2023 earnings before interest, taxes, depreciation and amortisation.
Disruption in China
He raised the possibility that if US consumers began to distrust domestic brands – similar to what happened in China with the melamine scare in 2008– they could favour foreign brands.
“Should Bubs not obtain market access, then at the very least the currentpublicitymay assist Bubs with sell-through and distribution growth for its toddler formula in the US,” he said.
Looking to the world’s biggest baby formula market, China, Bubs infant formula pricing has continued to strengthen in the cross-border e-commerce channel.
But Mr Teeger flagged a key risk remained the COVID-19 disruption in keycities such as Beijing and Shanghai, which resulted in shipping lead times increasing significantly.
“Bubs’ corporate daigou partner appears to be helping the company navigate these supply chain challenges by using more ports and warehouses,” he said.
He said New Zealand port data indicated export volumes to China remained well down in April compared with a year ago, but increased compared to the month before, which indicated restrictions might be easing.
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