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Baby formula demand sends a2 revenue soaring

Business

Huge demand for infant formula in China is helping sales surge for Australasian dairy company a2 Milk.

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Chief executive Geoffrey Babidge says sales growth for a2 Platinum infant formula is exceeding expectations, with revenues quadrupling to $38 million in the four months to the end of October.

The strong growth in formula sales has prompted a2 to upgrade its full year revenue forecast to $285 million, up from previous guidance of $267 million.

Full year underlying earnings are now expected to rise to $22 million, nearly double the original forecast of $12 million.

Meanwhile, Coles has imposed tighter buying bans on baby formula amid a shortage blamed on Chinese consumers.

Fearful Chinese parents are turning to Australian-made products after a number of deadly domestic formula scares, including one contamination incident that killed six babies and made 300,000 others sick.

Last week, Coles was limiting customers to four tins each, but on Tuesday told AAP that had been reduced to two.

“As we are currently experiencing unprecedented demand for baby formula, we are limiting sales quantities to two units per customer. While this is regrettable we are trying to help make this product available for our customers that really need it,” a Coles spokesperson said.

The cap applies to all brands.

AAP has asked Woolworths if it’s also looking to reduce the eight tin cap it was enforcing last week.

The surge in demand has left many Australian mums complaining they can’t source the brands they’ve always fed their babies.

Earlier this month, reports surfaced of people stripping supermarket shelves of quality formulas, knowing they can be resold online, to Chinese buyers, for enormous profit.

Sites such as eBay have been carrying ads in both English and Mandarin, offering products that usually retail in Australia for $25 to $30 for between $150 and $190.

Two popular Aussie-made brands, a2 and Bellamy’s Organic, have ramped up production but have warned it will take time to resolve the shortage.

The Federal Government has said it will only intervene in the shortage as a last resort.

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