No squeeze on profits at dairy's success story
The A2 pitch is built on the A2 beta-casein protein which, it says, "may assist with your digestive well-being".
The protein is found in the milk of certain dairy cows. The A2 company started identifying these cows with genetic tests and milking them separately to offer consumers milk consisting of the A2 protein rather than A1.
The health claims around this protein have acted as the cornerstone of the milk's appeal and led to massive growth despite the product being priced at a significant premium to the competition.
"We would say A2 is the only brand that has genuinely differentiated positioning compared to other brands and private label," said the head of its Australian business, Peter Nathan.
The New Zealand company has grown so strongly it invested $15 million in a processing plant near Camden, south-west of Sydney, last year to meet growing demand for its dairy products.
"Milk brands that are communicating apparent health benefits, such as A2 — which have more than doubled value share in the past two years — show that shoppers will pay a premium when making product selections to suit their wants and desires," said Kosta Conomos, the head of Nielsen's retail industry group.
Mr Nathan said the company's fast growth had not been impeded by the significant marketing spend of the major milk vendors, which have gone permeate free.
"If that was the reason for our growth, that would have hit us very badly," Mr Nathan said. "Our growth has accelerated even during the time that brands have taken out permeate."
Frequently Asked Questions about this Article…
A2 Corporation is a New Zealand dairy company best known for A2 milk. According to the article, A2 has doubled its market share in dollar terms across Australian supermarkets over the past two years, growing strongly despite price cuts by major rivals.
A2 milk is marketed on the basis of the A2 beta-casein protein, which the company says may assist with digestive well-being. A2 identifies cows with the A2 gene using genetic tests and milks them separately so the product contains A2 rather than A1 protein, forming the basis of its product differentiation.
The article explains that A2's health-focused positioning has been the cornerstone of its appeal. Industry data cited by Nielsen shows milk brands communicating apparent health benefits, like A2, have more than doubled value share, indicating shoppers will pay a premium for products that match their wants and desires.
No. The head of A2's Australian business, Peter Nathan, said the company's fast growth has not been impeded by the significant marketing spend or price actions of major milk vendors. He noted growth accelerated even when other brands removed permeate from their products.
To support rising demand, A2 invested 15 million dollars in a processing plant near Camden, south-west of Sydney, last year, according to the article.
The article reports that A2's pitch centers on the A2 beta-casein protein and that the company says it may assist with digestive well-being. The piece frames these as the company's claims and as a core reason for consumer appeal, rather than presenting independent proof.
Kosta Conomos, head of Nielsen's retail industry group, is quoted saying that milk brands communicating apparent health benefits have more than doubled value share in the past two years, demonstrating that shoppers will pay a premium when product choices align with their preferences.
Based on the article, investors should note that A2 has a clearly differentiated product (A2 protein positioning), strong recent growth in Australian supermarkets, resilience to competitors' price and marketing moves, and has invested in processing capacity with a 15 million dollar plant near Camden to support demand.
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