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Wattle Health expands China reach with Shandong Wehai deal

Infant formula manufacturer Wattle Health Australia has signed an export deal with state-owned-enterprise Shandong Wehai Port International Trade Company, worth at least $34 million over the next three years.

The three-year agreement, for supply of Wattle Health’s conventional cow’s milk infant formula range, comprises a minimum order volume worth $6.6 million in the first year, $11.5 million in the second and $16.5 million in the third.

Shandong Weihai is one of north eastern China’s most significant import groups, with around 2,000 employees and operating revenue of more than ¥3.7 billion in 2016.

The company’s online sales channels include Alibaba Group, JD.com. Suning and Tmall, while bricks and mortar retail partners include Lian Qiao Group, Bei Guo Shang, as well as national supermarkets Jia Jia Yue and RT-Mart.

Shandong also has its own e-commerce industry park, comprising more than 160,000 square meters of warehousing, customs clearance, sorting and dispatching facilities, as well as a commercial shopping area.

Wattle Health chairman Lazarus Karasavvidis said the deal was an important milestone for the company, and would add to a larger supply agreement with China’s International Supplies and Distribution Company, which is expected to provide more than $100 million in revenue over a three year term.

The ISDC deal, announced in April will provide Wattle Health access to more than 2,000 retail stores across 13 Chinese provinces.

Wattle Health also distributes products in China via Ayingdao mum and baby stores, Tesco Lotus and China Duty Free.

The company recently signed an agreement with Melbourne-based e-commerce player QBID, to provide further access to the China export market.

“The guaranteed revenue this brings allows the company to plan with confidence and further expand its distribution network and product offerings,” Mr Karasavvidis said.

Wattle Health and Shandong Wehai will negotiate extension of the agreement upon expiry.