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New milk JV could fuel fresh milk market growth, Robert Wiseman

By Ben Bouckley , 14-Nov-2011
Last updated on 16-Nov-2011 at 14:25 GMT2011-11-16T14:25:01Z

New milk JV could fuel fresh milk market growth, Robert Wiseman

Robert Wiseman Dairies (RWD) has announced plans to invest £2m (€2.34m) via a joint venture (JV) with New Zealand firm a2 Milk, to introduce A1 beta-casein free milk onto the UK market next summer.

New Zealand-based A2 Corporation owns and commercialises intellectual property for a2Milk, and the new joint venture with RWD will see both companies assume a 50 per cent stake in the UK JV.

The agreement will see RWD use the intellectual property to process and pack milk from A2 herds on the new company’s behalf.

The trademarked milk (pictured), already available in Australia, only comes from cows selected to produce only A2 beta-casein protein, which UK processor RWD said was the “original milk protein” that all dairy cows produced prior to a natural genetic variation.

This occurred several thousands of years ago and led to the appearance of A1 beta-casein protein in dairy herds, RWD said, and the firm added that most existing fresh milk on sale in the UK contained both types of beta-casein.

RWD said that on the Australian market, consumers with self- (not medical) diagnosed milk intolerances were finding that their symptoms improved or disappeared when they drank a2 Milk, and that the brand was the fastest-growing milk brand within that market.

Growing the UK milk market

This was due to intolerance to A1 beta-casein protein rather than natural sugar lactose, RWD suggested, citing an NHS figure that only 1 in 20 consumers were lactose intolerant.

The a2 milk announcement came as RWD announced a turnover for the six months to October 1 2011 of £452.8m or €529.6m (up 1.1 per cent on 2010 H1) although operating profits fell 40.6 per cent to £12.5m (€14.6m).

A RWD spokesman told DairyReporter.com: “I think there were 2 key messages coming out of our interims. The first was that we met expectations in terms of cost management, the other is our desire to grow the milk market as a whole.”

January 2011 statistics from levy-funded organsiation DairyCo show that the average UK citizen consumed 1,568ml of fresh milk in 2009, a figure that varied little from consumption levels in 2008 and 2007.

The spokesman said that hundreds of thousands, even millions of UK consumers, avoided dairy products due to digestive discomfort, with a “range of studies” showing that up to 20 per cent find it difficult to digest problems.

But only 5 per cent of people within this group were actually lactose intolerant according to NHS estimates, he said, adding that Robert Wiseman saw a resultant opportunity, and planned to launch two a2 products next summer.

Australian volume share

The focus would initially be fresh milk, he added, but the spokesman said that RWD wasn’t ruling out further product launches across different dairy product categories.

He said the a2 Milk brand in Australia now had a market share of 2 per cent (volume), and could command a slight price premium. Transposed to the UK, the figure would mean around 100m litres of fresh milk, he added.

The £2m investment will use purely British milk, and will be processed at RWD’s facility in Droitwich. “We’re already talking to farmers who are keen to supply us,” the spokesman added.

“Quite a few people are asking us, ‘how do you know if a cow has this potential’ [to produce milk without a2 beta-casein,” he said, and explained that a2 had developed non-invasive tests to asertain this using hair from a cow’s tail or a tissue sample.

Damian McNeela, an analyst Panmure Gordon stockbrokers said in a note this morning that RWD’s interim results were in line with expectations, and blamed the firm’s profit slump on contract renegotiations with retailers last September and higher input costs.

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