a2’s secret weapon in the milk wars

THE a2 Milk Company has just posted a massive increase in revenue, and it’s largely thanks to a new product which is flying off the shelves.

A2 Milk. Supplied Picture: Supplied

THE a2 Milk Company is ramping up its investment in clinical trials to combat arguments that its health claims are unfounded.

The controversial milk company is currently suing the ABC and The Checkout for false and misleading statements over an episode of the show which rubbished a2 milk as “bulls***”.

Regular milk contains the A1 and A2 beta-casein proteins, while a2 Milk contains only the A2 protein. Supporters claim the A1 protein is actually responsible for the discomfort many attribute to lactose intolerance.

Part of the show’s criticism was of a Curtin University study in support of the health claims which was funded by a2 Milk.

Managing director Geoff Babidge said the company has just completed new clinical trials in China around milk sensitivity, with the results submitted for publication.

“We had a view that certain aspects relating to that program were potentially misleading and deceptive,” he said. “The company is [now] funding significant research and support of clinical trials around issues of dairy sensitivity.”

Asian consumers traditionally report higher levels of sensitivity to milk than western consumers, and Mr Babidge believes the China trials prove the company is uniquely positioned for growth in those markets.

It comes as the New Zealand-based milk producer posted a 40 per cent increase in revenue to $155.109 million for the year ended June 30.

Mr Babidge said the result was largely off the back of huge demand for the company’s a2 Platinum infant formula, which was the fastest-growing grocery brand in the last quarter in Australia.

Total sales for the infant formula were $41.671 million, up 445 per cent on the previous year. That was largely through sales to China, but Australian sales increased 650 per cent in the same period.

Mr Babidge said in the first two months of this financial year, infant formula sales in Australia were already an estimated $13 million.

“You can get a flavour of the growth coming through,” he said. “We continue to get substantial feedback from consumers both in China and Australia that infants appear to be able to much more comfortably digest our formula compared to other brands.”

a2 increased its share of the Australian fresh milk market to an estimated 9.3 per cent by value, with sales up 10 per cent on the previous year.

Despite the revenue boost, the company posted a full-year net loss of $2.091 million as it absorbed the costs associated with listing on the Australian Stock Exchange and employee share scheme expenses.

On the basis of FY15 performance, a2 Milk is forecasting FY16 revenue to increase by 72 per cent to $267 million, and before-tax earnings to rise a massive 150 per cent to $12 million.

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