BUB approved for WIC program Bubs also announced its products...

BUB approved for WIC program​

Bubs also announced its products were approved suitable by the US government-run Special Supplement Nutrition Program for Women, Infants, and Children (WIC) in 22 US states.
The US Department of Agriculture describes WIC as:
‘The Special Supplemental Nutrition Program for Women, Infants, and Children (commonly known as the WIC program) serves to safeguard the health of low-income women, infants, and children younger than 5 who are at nutritional risk.
‘As the third largest food and nutrition assistance program, WIC served about 6.2 million participants per month in fiscal year 2020, including almost half of all infants born in the United States. Federal program costs for WIC totalled $4.9 billion in fiscal year 2020.’
As of 29 June, 22 US state agencies have authorised BUB infant formula products under the WIC program, ‘including California, which had the highest total number of births of over 419,000 in 2020’.

BUB’s outlook, tariffs, and overall US market​

Bubs CEO Kristy Carr commented:
‘We are grateful for the opportunity to assist parents under the WIC Program.
‘As Bubs continues to replenish retailer shelves with up to six Bubs Infant Formula products, it is comforting that many more American parents will have the opportunity to access our clean nutrition that is and will continue to be available on shelves.’
While Bubs was pleased about the WIC announcement, it will be interesting to see how it works out financially, given the subsidies involved.
As the US Department of Agriculture noted about the WIC program (emphasis added):
‘WIC State agencies are legally required to enter into cost-containment contracts for the purchase of infant formula used in WIC.
‘After competitive bidding, WIC State agencies typically award a contract to a single manufacturer of infant formula for the exclusive right to provide its product to WIC participants.
‘In return, WIC State agencies obtain significant discounts in the form of rebates from infant formula manufacturers.
‘In fiscal 2018, infant formula rebates totalled about $1.7 billion and supported almost one in every four WIC participants.’
For Bubs, the recent US supply deal and the improving outlook of China’s market have been good news, leading to last month’s material guidance update.
The company revealed it now expects FY22 revenue to exceed $100 million, with 1H22 EBITDA to jump 100%.
When Bubs first broke the US supply deal news, in May it said it will provide ‘at least 1.25 million tins in the coming weeks and months’.
Using the $3 million per 90,000 tins as a very rough yardstick, Bubs’ expected gross revenue windfall could be at least around $42 million.