Good Morning! In this newsletter, we're diving deep into the baby formula market, a sector experiencing a shake-up you won't want to miss. We're going to be covering:

• Formula for Success: How social media and savvy marketing are helping startup bobbie challenge an industry monopoly.

• Beyond the Bottle: bobbie's impressive financial milestones and ambitious growth plans.

• Feeding the Future: Exploring the huge, untapped opportunity for infant formula in the Asian market.

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The Rise of bobbie

It’s fascinating, isn’t it, how social media has completely reshaped the landscape of consumerism . I’ve seen it time and again during my years covering the markets – a single Instagram post can make or break a brand . Take, for instance, the curious case of Bobbie Baby Inc . , and its ascent in the traditionally unwavering and boring US baby formula market . But the real magic, the kind that truly catches my eye after all these years, isn't just the celebrity endorsements. It's the organic buzz, the seemingly spontaneous endorsements that transform a product into a movement, that changes a market.

And it’s those kinds of endorsements, both the paid and the seemingly unprompted, that have fueled Bobbie’s expansion in the $6.4 billion US baby formula market. This isn’t just any startup . From 2021- 2023, bobbie, which markets its formula at about $25 a can, skyrocketed to an incredible $100 million in revenue, . They’ve tapped into a vein of parental desire for something… more. They've raised a whopping $142 million from investors to date. Pretty impressive .

I find it especially compelling how bobbie has positioned itself as the alternative. Parents are taking to social media, sharing hospital checklists topped with bobbie, posting images of giggling babies banging on formula cans. It’s a testament to the power of community . In one recent month, Bobbie recorded 12,400 reshares on Instagram. Impressive engagement, to say the least .

bobbie

143K followers

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It all started, as these things often do, with a personal need. Laura Modi, Bobbie's founder and CEO, a mother herself, couldn’t stomach the ubiquitous corn syrup she found in many US formulas. She took inspiration from European formulas, like Kendamil – which, interestingly, wasn't even FDA-approved at the time and arrived stateside through a "grey import market ."

Now, after a few regulatory hurdles (a 2019 recall, for instance, linked to a labelling issue), Bobbie introduced its organic concoction in 2021. It purportedly conforms with both US and European benchmarks. It even includes the European Union’s advocated amounts of DHA, a fatty acid considered beneficial for cognitive and visual improvement in children . The outcome? Four times their initial $4 million revenue goal .

Then came the formula shortages, shaking up the scene during the pandemic … Abbott, the market leader, had to recall formula produced at its Michigan plant in February 2022 after reports of bacterial infections – representing about 20% of total US output. Shelves were empty. Panic set in .

And bobbie? Its customer base – at the time, accessible only through online subscriptions – doubled . By May 2022, they had to halt accepting new customers . Can you imagine? The waiting list swelled to 70,000! This highlighted a real vulnerability in the American formula market, dependent on very few facilities .

Now, bobbie is taking a bold step, opening its own $100 million infant formula factory in Ohio. The company is clearly aiming for a larger slice of the pie. With Abbott and Mead Johnson claiming 80% of the market, bobbie the company is looking at increasing their current estimated market share from 3.5% to 20% over the next four years . Ambitious . . . but not out of the realm of possibility .

Social media remains their crucial weapon . With 139,000 followers on Instagram, they’re significantly ahead of Similac’s 36,000 and Enfamil’s 98,000. Celebrity moms like model Ashley Graham and tennis star Naomi Osaka have joined their ranks of paid ambassadors, alongside "Queer Eye's" Tan France. And to maintain the flow of endorsed content, they utilize creators with smaller platforms.

Of course, not everyone's celebrating . The World Health Organization, in a 2022 report, expressed concern that formula producers' usage of influencers on social media weakens their attempts to support nursing . The WHO has long promoted breastfeeding as the optimal feeding method for newborns . However, the reality is that, while breastfeeding rates have increased in the US, most American babies still rely on formula for at least part of their nutrition, according to the FDA .

Also, the Asian market represents a massive and complex opportunity for baby formula companies, and it's one that a company like Bobbie, with its current momentum and positioning, could potentially consider in the long-term, albeit with significant nuance and strategic planning.

This one is intriguing, lets see how it all develops !

Headline Roundup

• BYD’s annual sales top $100bn for first time. Overtaking rival Tesla as the top electric car maker.

• Airbnb is significantly increasing its marketing spend and resuming hiring, signaling a major push to expand beyond its core short-term rental business. The company aims to reignite growth and broaden its offerings after previously cutting back during a period of slower expansion.

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DISCLAIMER: None of this is financial advice. This newsletter should be used for discussion, education, and illustrative purposes only and should not be construed as professional financial advice, solicitation, or recommendation