Bubs shares surge on NetEase Kaola deal

Bubs Australia's shares have soared after announcing its products will be accessible to 15 million customers through a partnership deal with NetEase Kaola.com.

Shares in Bubs Australia have surged after the baby food maker signed a deal with Chinese online sales portal Kaola.com.

At 1207 AEST on Monday, shares were up 10.3 per cent at 16 cents.

Bubs' infant formula and organic baby products, which are now available for sale on the e-commerce platform, will be accessible to Kaola's 15 million customer base under the agreement.

Kaola is owned by NASDAQ-listed Chinese internet group NetEase, which claims 800 milion users across online services ranging from gaming to e-commerce.

NetEase expanded into e-commerce in 2015, launching Kaola.com, which operates on a similar basis to Amazon.com.

Baby food maker Bubs is the latest in a string of companies working to meet growing Chinese demand for infant formula.

In May, a2 milk said revenue had jumped 49 per cent to $NZ388 million ($A357.5 million) in the nine months to March 31 on the back of stronger-than-expected infant formula sales in China and Australia.

In order to meet demand, a2 Milk is working with its infant formula manufacturer Synlait Milk to increase production for the remainder of the financial year.

Rival Bellamy's Australia also benefited from news of strong Chinese demand earlier this year, having been hammered in December and January after flagging a significant drop in sales in China due to new regulations.

Maternal and baby products make up Kaola's second largest product category, only just behind beauty and cosmetics, with 42 per cent of its customers having purchased baby-related products.

NetEase Kaola chief executive Zhang Lei said the products will be in great demand in the high-end and diversified Chinese market.

"Kaola is looking forward to the deeper collaboration with Bubs Australia to offer Bubs high-quality Australian-made products to our Chinese customers," Ms Lei said in a statement on Monday.


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Source: AAP


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