Australian food maker Bellamy’s drops after China registration delay

Bellamy’s Australia, the maker of organic baby food, has announced it has hit a hurdle in its efforts to have its products registered for sale in China.

The company had been aiming to comply with new requirements for its products entering China, part of an attempt to right itself after a disastrous four months in which problems with its business there prompted a profit warning, a management shake-up and a two-thirds drop in its market capitalisation.

Beijing’s new requirements are such that from January 1, 2018 the company’s infant formula products that are manufactured for sale in China need to be registered with the China Food and Drug Administration.

However, Bellamy’s said in a statement today that its China-destined products from a Victoria-based canning line run by Bega, an Australian dairy products company, can no longer be registered there. Bellamy’s said it “continues to review multiple alternatives” with regard to obtaining CFDA registration for its China export products, which represented 14 per cent of total sales in the six months to December 31.

Management said while it is confident it will achieve registration of its China-destined products with the country’s food and drug watchdog, it did not anticipate this would be in place by the initial deadline of January 1.

“This delay is due to the time required to complete the CFDA registration and additional testing of up to 6 months of the company’s PRC products at an alternate canning line,” the company said.

Shares were down 7.6 per cent, making Bellamy’s the worst performer in Australia’s S&P/ASX 200 index, which was up 0.4 per cent.

Rival companies that ship their products to China were also weaker. Blackmores, the vitamin maker, was down 2.2 per cent, while a2 Milk, a baby formula maker, pared declines of as much as 2.6 per cent to be 0.4 per cent lower.

Earlier this month, a decision by Beijing to delay a rise in ecommerce import taxes provided a fillip for Australian and New Zealand-based vitamin and food stocks.