NZ-listed A2 winner in milk-price wars

A2 milk is enjoying strong growth in Australia. Photo by Peter McIntosh.
A2 milk is enjoying strong growth in Australia. Photo by Peter McIntosh.
New Zealand-listed milk company A2 Corporation is bucking the trend as the supermarket milk-price war continues in Australia.

Yesterday, chief executive for Australia and New Zealand Peter Nathan told the Otago Daily Times A2 was the only brand which had enjoyed strong growth since the price war began.

This week, The Sydney Morning Herald reported dairy companies were moving to claw back their battered market share.

Branded milk sales had plummeted as much as 26.2% since supermarket giant Coles opened fire on Australia Day, January 26, slashing its private-label milk to $1 a litre.

A2 milk comes from cows specially selected, through a DNA test, to produce A2 beta-casein protein rather than A1.

The company was initially backed by Dunedin businessman the late Howard Paterson.

Speaking from Melbourne, Mr Nathan said the company had the only brand with a "genuine" point of difference and it was extremely happy with the response by consumers. Sales had risen 30% since the price war began.

Construction was under way on a new processing facility in southwest Sydney to meet the growing demand. The $7 million facility, which could produce up to 60 million litres of milk annually, was on schedule to start production in January.

Growth had been strong and the company intended to launch its product in the New Zealand market "in the near future", he said.

Whole-milk powder prices had declined to their lowest in more than a year amid escalating concerns global economic growth might falter and reduce demand, The New Zealand Herald reported yesterday.

Powder for October delivery fell to $US3359 ($NZ4033) a tonne, the lowest level since August 3 last year, from $US3477 two weeks earlier, according to Fonterra's latest global dairy auction.

In a report on dairy prices yesterday, Westpac economists said the decline in prices was "not such a big surprise".

"For a while now we've been expecting commodity prices to moderate in the second half of this year, based mainly on our prediction that growth in emerging market economies would slow.

"Of course, the unexpected turmoil in recent weeks adds a new dimension of uncertainty to the outlook, raising the possibility of a confidence-driven drop in prices."

 

Add a Comment