a2 Milk Company hones in on mother-and-baby stores in China

The a2 Milk Company is redoubling its efforts to boost sales in Chinese bricks and mortar stores.

A focus on expanding sales at Chinese mother-and-baby stores was announced at The a2 Milk Company’s annual general meeting on Tuesday. Picture: AAP

THE a2 Milk Company is redoubling its efforts to boost sales in Chinese bricks-and-mortar stores.

The $8.84 billion New Zealand company shed light on its strategy to increase its presence in its most lucrative market in its FY20 outlook, released today, which also revealed first-half profit could rise as much as 30 per cent to $NZ800 million ($752 million).

It has previously flagged a figure in line with the 28.2 per cent increase recorded in the second half of FY19.

Jayne Hrdlicka. Picture: Aaron Francis

At the company’s annual general meeting in Auckland today, chief executive and managing director Jayne Hrdlicka outlined its plan to significantly expand the company’s presence in Chinese mother-and-baby stores.

“Whilst we are performing very well within the Australian reseller network (referring to daigous, or personal shoppers), this pathway into China serves only a small part of the total addressable market opportunity,” Ms Hrdlicka said.

“So in order to realise out very significant potential, we need to be able to significantly increase our ability to executive effectively in other channels, including mother and baby stores and cross-border e-commerce channels.”

Sales growth from Australian daigous selling into China was unlikely to fuel the sort of growth the company had witnessed to date, she said.

Daigous’ sales currently represent about 10 per cent of all infant product sales into China. “Delivering on sustainable long-term success requires excellence in execution across all the channels important to consumers,” she said.

Meanwhile growth in the US is expected to jump, with another 2000 stores due to stock a2 products in coming months, while existing stockists Walmart, Safeway and Sam’s Club Warehouse will sell a beefed-up range.

The revised full-year outlook follows an increased cost of goods and marketing investments, particularly in China and the US.

“While we have only just begun our journey in both Greater China and the US, the results of strategic focus and investment are starting to come through,” Ms Hrdlicka said.