The Wattle Health Australia Ltd (ASX: WHA) share price has started the week strongly and is amongst the biggest movers on the market this morning.
At the time of writing the health and wellness food products company's shares are up 12% to 50 cents.
What happened?
Wattle Health's shares have rallied strongly following the announcement of a supply agreement with wholesaler and distributor Metcash Limited (ASX: MTS).
According to today's release, Wattle Health has signed an agreement to supply its GoldCare+ infant formula range across Metcash's Australian grocery store network.
This means that Wattle Health's GoldCare+ infant formula range will be made available to grocery retailers across Metcash's retail network.
Management believes the move significantly strengthens its objective of driving revenues through large distribution networks. As well as this, it believes it further increases brand awareness in the Australian market following a similar agreement signed earlier this year with baby-goods retailer Baby Mode.
Should you invest?
Whilst I think this is great news for Wattle Health and its shareholders, I feel it is too soon to make an investment in the company.
Wattle Health's products are now available to grocery retailers across Metcash's retail network, but that doesn't necessarily mean that they will be stocked by all of these retailers.
The company will still compete for shelf space with the likes of a2 Milk Company Ltd (Australia) (ASX: A2M) and Bellamy's Australia Ltd (ASX: BAL).
With these products seemingly still selling well, I feel there is a risk that retailers will choose to remain with the status quo rather than opt to bring in an untried and untested new product.
So for now I would suggest investors keep Wattle Health on their watch list.
