Source: Australia Government – AusTrade
A leading Australian infant nutrition, organic baby food, snacks and vitamin supplements business has hit on a winning formula in its export strategy: diversification. Long before pandemics and trade disruptions, Bubs Australia was expanding across Asia with help from Austrade and its Agribusiness Expansion Initiative, as well as Investment NSW.
And it’s paid off: Bubs goat milk is nourishing babies and toddlers across Asia. Bubs Australia reports export gross revenue from markets other than China increased by 57% in the FY21 year, compared to the previous financial year.
In September 2021, Bubs Australia launched in the US, and will soon be available for sale online, in both Walmart.com and on Amazon.com, bringing its high-quality formula to more families across the world.
Six keys to success in diversifying exports
Australia’s leading producer of goat dairy products for babies and children has outlined a step-by-step approach on how best to roll out a winning export expansion strategy.
Chief Operating Officer, Fabrizio Jorge says there are 6 keys to success in diversifying exports. They are: Prioritise, Research, Pivot, Partner, Brand and Tune In.
Working with Austrade is also important. Austrade provided Bubs Australia with information on prospective markets, opportunities, product categories, sales channels, routes to market and regulations. The agency also provided crucial introductions to major distributors.
‘The engagement with Austrade has been fantastic,’ says Jorge. ‘The teams provided extensive support, helped us refine our distribution models and gave us the confidence to enter new markets.’
Diversify to maximise value
Even before COVID-19 and trade disruptions, Bubs Australia was looking beyond China, its largest export market.
‘Diversification – whether it’s new products, markets or sales channels – is embedded in our business,’ says Vivian Zurlo, Chief Marketing and Innovation Officer – Global Markets. ‘We want to maximise the value of our dairy brands by making them available in as many markets as possible.’
With Austrade and Investment NSW’s assistance and advice, the company started rolling out a strategy to expand across Southeast Asia and the Middle East.
This forward-thinking approach has paid off. Export revenue from markets other than China is increasing steadily. Bubs Australia reported in its full year, FY21 results that these markets accounted for 21% of its total revenue.
The only Australian goat milk formula in the US
In September 2021, Bubs Australia launched its Aussie Bubs™ toddler formula range in the US. Bubs Australia is the only Australian made and Australian owned goat toddler formula range in the US market.
The products will be available on Walmart.com and Amazon.com. Bubs Australia has also appointed a broker and a national network of sales agents to expand its retail distribution footprint.
Austrade provided Bubs Australia with market research and intelligence to support its US expansion. Austrade worked with the Department of Agriculture, Water and the Environment to source, interpret and meet the complex market access requirements.
Bubs Australia was interested in setting up a US subsidiary to spearhead in-country marketing. Austrade connected the company to another Australian exporter in the US market.
‘It was useful for us to speak with an exporter with market experience,’ says Jorge. ‘They shared their learnings and provided advice that helped shaped our US strategy.’
Prioritise to meet opportunities
Bubs Australia’s strategy is to tackle multiple markets at once, knowing they take different times to come to fruition. It could take 6 months to appoint a local strategic partner. It could take 12 months to get onto an e-commerce platform.
‘We prioritise depending on where we are in our journey in each market;’ says Jorge. ‘If we can move forward earlier in one market, then we shift our attention to meet the opportunity.’
Bubs Australia’s initial focus was Hong Kong and Singapore. These countries are a natural fit for premium Western brands. The company then began operations in Malaysia and Vietnam, after doing the groundwork for entry.
Research the market
Jorge says the first step to successful diversification is to understand the market.
Bubs Australia looked at information on:
- population growth
- birth rates
- number of children aged 0–12
- the availability and type of goat dairy products in-market.
Austrade and Investment NSW in Australia and Asia were instrumental in the research phase. They provided information and advice on:
- market opportunities
- product category breakdowns
- routes to market, including retailers with the largest market share
- sales channels e.g. bricks-and-mortar outlets vs. e-commerce
- regulatory environments
- whether one market could potentially serve as an entry point into other markets.
Be prepared to pivot
Jorge says things don’t always run according to plan, so exporters need to be adaptable.
In Hong Kong, Bubs Australia discovered it would be difficult to get into pharmacies and major retailers. Instead, it rolled out its products through department stores and e-commerce channels.
Similarly, it was difficult to get the company’s infant formula into Singapore’s largest supermarket chain. It turned to RedMart, Singapore’s leading online supermarket, to enter the market. RedMart has strengths in the mother and baby category.
Its first shipment to Singapore has now arrived. Bubs Australia has secured an exclusive distribution arrangement with RedMart, as a leading mother and baby e-commerce platform and destination site.
Work with partners that believe in your brand
Entering a market often requires entrusting your brand and products with new partners. Zurlo and Jorge say to take your time to find a partner that aligns with your values. They should understand the importance of building a brand over the long term.
‘They should show they understand the consumer, competitors and the category,’ adds Zurlo. ‘They should also have the ability to connect with consumers and customers. Above all, they need to believe in your unique point of difference and become a champion for your brand.’
With international travel off limits, Bubs Australia leaned on Austrade to help locate potential partners in Malaysia. The company selected a distributor in Malaysia with a solid knowledge of the infant/baby market and an established distribution network. It appointed the distributor in September 2020 and shipped its first order two months later.
Maintain control over your brand
E-commerce and digital channels play a crucial role in growing market share in different countries. Branding and marketing is far more pivotal now than five years ago.
‘The Australian team drives our global marketing activities to keep our brand story consistent across the world,’ says Zurlo. ‘Our team provides consistent brand guidelines. We work with our partners to make sure they are reflected in all our communication channels, including e-commerce and digital platforms. No matter which market or distribution channel your brand is in, it’s important to maintain the integrity of the brand proposition.’
Be attuned to new opportunities
Bubs Australia is also investigating opportunities in other South East Asia countries.
‘Bubs Australia will continue to look for opportunities in markets where nutritional formulated milk-based products are familiar and accepted,’ says Jorge. ‘But we’re also looking at markets where there is significant first-mover advantage to enter as an alternative, easier to digest, nutritional and premium dairy milk source. That’s the long-term play for us.’