Following a market update to the ASX, Bellamy’s shares fell more than 40 per cent to close at $6.56 down from $12.09 on Friday morning.

At close on Tuesday Bellamy’s shares were trading at $6.42

Bellamy's Organic is one of Australia’s major organic infant formula and baby food producers, which saw a surge of popularity lead to major stock shortages in 2016.

The organic group’s chief executive Laura McBain told investors on Friday that the company’s performance had been in line with its long-term strategy, and that 2017 had always been a transitional year.

Internal expectations for high sales on Singles’ Day - China’s largest online shopping event - did not eventuate, although Ms McBain said the company had been “very happy” with its performance.

“We still see continued growth with the brand in both the Australian, South-East Asian and Chinese markets, all of those indications are strong for us and we are happy with where the market share is for us right now,” Ms McBain said on Friday.

The market update suggested that Bellamy’s had lost some market share to other brands, which Ms McBain put down to a “temporary volume dislocation” in China. Regulatory changes from January 1, 2018 could see the 2000 infant formula brands reduced to about 300.

“We’ve seen a lot of brands that are unlikely to retain their licenses … we are seeing pressure coming through from them with discounting and that has had an impact on the way some of the re-sellers are managing pricing out on the market,” Ms McBain said.

Since the announcement of the regulatory changes, Bellamy’s has also experienced a restructuring of sales channels into China.

“What we have seen in China from a market perspective is a fair bit of pressure in pricing across the e-commerce channel and we have always been looking to bring that into line with the bricks and mortar pricing as well,” Ms McBain said.

China’s biggest e-commerce retailer - JD.com - is selling Bellamy’s infant formula for 115 RMB ($22.40), cheaper than Australia’s Coles online which lists the product for $28.

Ms McBain said there had been a 24 per cent sales growth year-to-November 20 to $93 million, compared with the same period last year.