A2 managing director Geoffrey Babidge. Photo supplied.
The launch of a2 milk in the United States had become a
priority for the company A2, now the United Kingdom business
was established and showing growth, managing director Geoffrey
Babidge said yesterday.
Releasing the company's results for the six months ended
December, Mr Babidge told the Otago Daily Times the board
considered the US market should now be developed.
''The company has strong intellectual property rights and
know-how in this market and consumer research confirms the
attractiveness of the A2 proposition.''
The company, which started in Dunedin in the early 2000s and
is now based in Australia, reported operating earnings of
$2.6 million, down 26% on the previous corresponding period's
Higher depreciation, lower associate earnings and a tax
credit helped lift the reported profit by 16% to $643,000.
Revenue in the period was up 22% to $54 million. The
appreciation of the New Zealand dollar to the Australian
dollar reduced revenue by about $6.4 million.
Mr Babidge said the plan for the US would involve the company
establishing its activities through a wholly owned US
subsidiary and recruiting a small management team with
As part of the development, a2-branded milk would be
showcased at a major natural foods exhibition to be held in
Asked about the demographic for a2 milk sales, Mr Babidge
said the product appealed to a wide age range but in the UK,
A2 had its milk range in 250 grocery stores in London within
the M25 motorway, an area known as an early adopter for food
''Many people who thought they were intolerant to milk are
actually intolerant to the A1 protein. A2 has appeal to
families with young children who have not been able to drink
A2 was sold in about 800 supermarkets in the UK.
Brand sales in Australia continued to grow strongly with an
increase on the pcp in Australian dollars of 28.3%. The
company increased its marketing spend in the period to $5.4
million, up from the $3.2 million and the company considered
itself to be a leader in marketing activities within the milk
market in Australia.
''These activities, together with public relations,
healthcare professional engagement and social media activity,
continue to build awareness in the A2 proposition and
The estimated market share of a2-branded fresh milk in
Australia was about 8% by value in the grocery ''channel'',
according to the latest data available.
In September last year, the company started the distribution
of a2 Platinum infant formula to grocery and pharmacy stores
in Australia and New Zealand.
Early sales in Australia were positive but sales in New
Zealand were modest given limited grocery distribution to
A second shipment of infant formula to China took place in
November following the first shipment in June last year, Mr
The company was aware of the regulation changes being made to
the sale of infant formula in China but remained focused on
quality and its supply chain.
The milk powder was produced by Synlait from milk from A2
farms close to the Canterbury-based plant.
At a glance
• Group revenue up 22% to $54 million.
• Increased market share in Australia.
• New UK business structure in place.
• First sales of infant formula to China, Australia and New
• Plans advancing for entry into the North American market.