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Growing Australian a2 Milk preference provides expansion platform – A2C

By Mark Astley , 04-Sep-2012
Last updated the 04-Sep-2012 at 16:39 GMT

A2 Corporation (A2C) - the manufacturer of a2 Milk - has reported “very encouraging” financial results for the last 12 months, citing the brand’s growing credibility with Australian consumers.

In the last twelve months, the Australia-based firm has increased its dairy beverage market share Down Under by more than 5%. Revenue for the period ended 30 June 2012 hit $62.358 ($63.9m, €50.8m) – a 48% increase on the year ended 30 June 2011.

Net profit for the period hit $4.4m ($4.5m, €3.58m) - a 108% increase on the $2.116m recorded in the same period of 2011. This has been driven by the growing preference for a2 brand milk in Australia, A2C has claimed.

Most cow milk contains two main types of beta-casein protein – A2 and A1. Originally all dairy cows produced milk containing only the A2 type of beta-casein protein. The AI beta-casein protein has been linked with digestion and health issues.

a2 brand milk comes from cows specially selected to produce A2 beta-casein protein rather than A1.

According to A2C managing director Geoffrey Babidge, the a2 brand’s growing credibility will provide a platform for the firm’s expansion plans in the UK, Ireland and China.

Strategic growth

“The Board is extremely pleased with the performance of the Company in the past year. We have demonstrated continued market leading growth supported by increasing consumer awareness of the differentiated and unique brand proposition,” said Babidge.

“Our strategic growth agenda seeks to build sustainable advantage by drawing on the increasing credibility of the a2 brand proposition and prioritising markets that have characteristics which support premium dairy product offerings.”

The firm’s strategic growth agenda focusses on three key areas of growth – building its beverage business in Australia and New Zealand, capturing niche shares of global milk and dairy product markets, and developing an infant formula business with an initial focus on China.

In November 2011, A2C announced an expansion of its operations in the UK and Ireland through a joint venture with Robert Wiseman Dairies.

Since the JV was agreed, the firm has established a core management team, commenced herd testing and selected initial suppliers. Its investment up to June 2012 totaled $743,000 ($761,000, €605,000).

The firm had originally pinpointed September 2012 for the UK and Ireland brand launch, but has been pushed back to October 2012.

Future potential

In April 2012, the firm announced a strategic agreement with Synlait Milk Limited in New Zealand to manufacture a2 brand nutritional powders, including milk powders and infant formulas for A2C.

Production of the China-destined a2 branded infant formula is set to begin from December 2012

“We continue to make excellent progress in this regard, evidenced by our forthcoming launch in the UK and anticipated entry into infant formula in China, and demonstrates the significant future potential of the business,” said Babidge.

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