Nutritional products maker Wattle Health Australia (ASX: WHA) is on course to expands its commerciality in China courtesy of a collaboration agreement signed with Chinese company Nouriz Fine Food, currently backed by China Animal Husbandry Group (CAHG), a Beijing-based state-owned enterprise.
Nouriz has an extensive distribution network throughout the country and implements both online and offline channels for its range of nutritional powders including two infant formula brands imported from New Zealand.
As one of China’s leading dairy products companies Nouriz has amassed a sales force of over 500 people and distributes products to over 8,000 Mum and Baby stores throughout China.
The terms of the deal stipulate that Wattle Health and Nouriz will set up an equally split joint venture for the manufacture and sale of multiple certified Australian organic nutritional dairy products, to be supplied by Corio Bay Dairy Group and sold in China.
Wattle Health markets organic natural health and wellness products with the added caveat of being affordable to the mass market. According to Wattle Health, it operates a fully integrated organic dairy supply chain that delivers “the ultimate standard for natural nutrition”.
In July last year, Wattle Health was given the all-clear for general trade in China of its 1kg retail bag of pure Australian grass-fed milk powder. A few months before that, Wattle Health agreed on a deal with Shandong Weihai for the supply of Wattle Health’s conventional cow infant formula range.
Given China’s strong demand for Australian milk-based products, Wattle Health has been keen to extend its influence within the country while building upon its core commitment to the Australian dairy farming sector.
The company’s co-founders Martin Glenister, a proud third-generation dairy farmer, and Lazarus Karasavvidis, a global marketing expert, have repeatedly spoken about their commitment to domestic farming and embracing sustainable soil and crop management in order to generate objectively better and higher quality products.
Mr Glenister is currently taking the company’s message and cause further as director of sales throughout Southeast Asia, while Mr Karasavvidis leads Wattle’s marketing, growth and regulatory affairs in Australia.
Once upon a time in China
The rationale behind the deal is based on Chinese consumers having a strong affinity for Australian products, especially in the food and beverages industry given the high quality and production standards imposed upon Australian producers.
The country’s demographics and strong appetite for high quality food have helped it to become the world’s largest market for nutritional dairy products.
Nouriz chairman Liu Ning explained that Australia’s farmland and history of exporting high-quality dairy products was a key driver for the deal. “Chinese consumers consider dairy products from Australia to be premium due to the quality systems from farm to market,” he said.
Earlier today, both Wattle Health and Nouriz confirmed that having signed an agreement, the two companies will now progress towards the formation of an Australia-based joint-venture company and will deploy a purposed sales and marketing strategy for a new joint brand of certified Australian-made organic powder products for sale in China.
“With this agreement, we have secured an exceptional and experienced partner to market and distribute in China a range of certified organic premium milk powder products,” said Mr Lazarus Karasavvidis, executive chairman of Wattle Health Australia.
“With the Corio Bay spray drying facility on track for completion in the first half of 2020, the new joint-venture will have access to a range of high-quality organic powders for sale into the Chinese market,” said Mr Karasavvidis.
Tchetvertakov,G,Wattle Health Australia lines up organic milk market opportunity in China, viewed 06 November 2019, < https://smallcaps.com.au/wattle-health-australia-organic-milk-market-opportunity-in-china/>