A2 Milk battling copycat brands
a2 Milk has sparked a conga-line of copycats trying to emulate its success in the infant formula market.
Trans-Tasman dairy brand a2 Milk has sparked a conga-line of copycats across the infant formula market, with Bellamy’s Organic the latest company to join the new white gold rush.
Bellamy’s has joined Nestle, Karicare, Cow & Gate, Junlebao and Mead Johnson in launching its own “A2” infant formula range, which is not related to a2 Milk.
The move is a signal that competition is heating up in the infant formula market as manufacturers and brands looks to access more lucrative revenue streams.
And Bellamy’s is charging top dollar. It is hoping its organic range will be enough to charge a 19 per cent premium over a2 Milk’s popular Platinum brand, the demand for which has soared during the coronavirus lockdown.
Bellamy’s product is only available through Chemist Warehouse, with a recommended retail price of $38 compared to a2’s product, which costs about $32 and is available at most supermarkets and pharmacies.
A2 Milk has vigorously defended the use of its trademark, suing Japan-owned food and beverage giant Lion to over the rights to use the term A2 Milk on its labels. Lion rebranded its Pura milk products in 2014, saying its “naturally contains A2” after tests revealed it contained 50-70 per cent of its beta protein content, with the A1 protein comprising the remainder.
The two companies later settled out of court in 2017.
But The Australian understands Bellamy’s, as well as other new entrants to the A2 segment, has not been infringing any trademarks because it is using capital “A” compared with a2 Milk’s lower case “a”.
Despite Nestle and Karicare launching their own A2 product ranges in the past 18 months, they have struggled to achieve traction Supermarket data seen by The Australian indicates they have only been able to secure a market share of 0.2 per cent and 0.1 per cent respectively in the three months to March 31.
Limited supply
Industry sources also say Bellamy’s is facing limited supply for organic A2 milk, given most cow herds contain both the A1 and A2 proteins and the lengthy conversion process required to gain organic certification and isolate the A2 protein.
“The launch of Bellamy’s Organic A2 formula is the latest data point showing competition within the A2-protein infant formula niche is increasing; with a number of new entrants into the category both domestically and in China over the past year,” Citi analyst Sam Teeger wrote in a note to investors.
Mr Teeger said the launch of Hong Kong-based Wyeth’s Illuma Atwo largely unaffected a2 Milk’s China sales, it wasn’t competing in the eCommerce/daigou space, which has delivered the trans-Tasman dairy company riches.
“Recent A2-protein formula launches are increasingly taking place on e-commerce, and in our view currently present a larger threat to a2,” he said.