Sales of a2 brand fresh milk in Australia increased 28.3% in the six months to December 31, the New Zealand-listed company says in its half-year report. It says a2 is the fastest growing dairy brand in the grocery sector in Australia, with market share of 8%.
Managing director Geoffrey Babidge says “the continuing strong performance of the Australian business together with the momentum… in the United Kingdom and infant formula were the highlights of the first half.”
North America will be the next priority, he says. A2 will work through a wholly owned US subsidiary and recruit a small management team with market experience. a2 brand milk will be displayed at a natural foods exhibition in California this month.
The first sales of a2 Platinum infant formula to consumers took place in China in November. It was also launched in Australia and New Zealand.
Working with Canterbury processor Synlait, the company has set up its a2 Platinum supply chain – receiving A2 milk from farms, producing a2 milk powder, blending and packaging the finished product and delivering to customers. It has its own quality assurance processes along the supply chain, Babidge says.
“The regulatory environment for infant formula in China continues to evolve given the Government’s aim to improve product quality and bring confidence back to the industry.
“These changes are focused on regulating participants operating in the domestic market and registering manufacturers exporting into China. The company will continue to monitor and respond to developments.”
A2 on January 1 completed its acquisition of the UK joint venture, buying out Muller Wiseman Dairies (MWD) and setting up a supply and contract-pack agreement with that company.
A2 plans to develop a global brand and brand marks, pursue patents and do R&D.
Plans are said to be progressing for UHT milk products into Asia.
The unaudited group profit after tax for the six months ended December 31, 2013 was $643,000.
This included:
Sales of $54 million, an increase of 22% over the same period last year
EBITDA before share of associate earnings of $2.5 million ($3.4 million)
Higher marketing costs of $3.1m – a2 Platinum infant formula in China, Australia and NZ .
