Like other dairy exporters, A2 and manufacturer Synlait Milk were facing heightened regulatory scrutiny in China and had spent a lot of time and resources putting everything in place, A2 managing director Geoff Babidge said.
“We sent a shipment in November and slowed down the shipment due for December and it will now go in March.”
Like other dairy exporters, A2 and manufacturer Synlait Milk are facing heightened regulatory scrutiny in China and have spent a lot of time and resources putting everything in place, A2 managing director Geoff Babidge says.
The new A2 Platinum brand had a long supply chain from the milk supplier in Canterbury through the processing and manufacturing system, quality monitoring, and finally shipment to the joint venture partner China State Farm (CSF), he said.
CSF had indicated it was progressing sales of the premium-priced product but it was still building a distribution network and that would take time.
There was a lot of talk about the regulatory process in China and where it was headed and there was some validity to the speculation, he said.
A2 Platinum was also being sold in Australia, where sales were positive, and in a more difficult New Zealand market, he said.
A2 Corporation did not control the A2 brand in NZ so didn’t have account relationships with grocery chains, leaving the product with limited distribution.
The group would work on this, he said.
“It’s interesting to have the sale of infant formula in NZ and Australia and good to be operating in our home market, but that isn’t the main game. It’s China and Asia generally.”
A2 made an after-tax profit of $643,000 for the six months ended December 31, on sales of $54 million, up from $554,000 on sales of $44m on the same period a year earlier.
Strong Australian fresh milk sales and operating cashflows are being used to help finance expansion into the United Kingdom (fresh milk) and China, and then possibly into the United States next year.
A2 had achieved an 8% share of the Australian fresh milk market, ahead of plan, Babidge said.
It had targeted a 10% share by the end of next year but progress so far indicated a mid-2015 milestone was now realistic, he said.
