Fonterra Brands is bottling regular and lite A2 milk in one and two litre packs with supply from only one Manawatu dairy farm, processed at Fonterra’s Longburn site.
The Anchor-branded A2 distribution is North Island only, with full nationwide availability from October.
Fonterra is still consulting its farmer-shareholders on their options and willingness to convert to A2-A2 cow herds and the premium supply price has not been set.
However, retail prices for A2 milk are about 50c/litre higher than for Fonterra’s existing premium milks such as calcium-enriched, full cream and added-protein and comparable to those for organic milks.
Fonterra’s organic supply forecast is $8.10/kg milksolids or just under 10c/litre more than the general milk forecast price.
The then-unexpected relationship announcement between Fonterra and the a2 Milk Company in February contained an exclusive licensing agreement for production, distribution, sale and marketing of A2 fresh milk in NZ.
In previous years A2 milk was available in fits and starts from much smaller licensed processors like Fresha Valley in Northland and Ridge Brands in Waikato.
It was originally launched with controversy by company founders Corran McLachlan and Howard Paterson, both of whom died in 2003, and the science behind A2 versus A1 milk proteins was hotly contested.
New a2 Milk chief executive Jayne Hrdlicka, a former airline executive in Australia on her first visit to NZ for the company, said her husband had introduced it to their family five years ago and they had all subsequently benefited so she is keen to lead the company.
Three scientists are employed and trials and studies are being done around the world into the apparent benefits of drinking A2 milk for some people.
“The team has accomplished a lot, founded on a genuine belief from the science that A2 is good for digestive health.”
The new Anchor bottles have the words “A2 … feel the difference” but do not make any further health benefit claims.
In mid July Hrdlicka took over from long-serving managing director Geoff Babidge, who saw the share price rise from 50c to $10 in four years and revenue increase from $150 million to $900m.
Revenue is mainly earned from liquid milk sales in Australia and A2 infant formula demand from China.
The strategic agreement with Fonterra also covers Australian A2 ingredients, nutritional milk powder products for southeast Asia and the Middle East, branded butter and cheese, liquid milk in China and a possible jointly owned packing facility.
Depending on the supply premiums set and the ease of conversion Fonterra could be seeking hundreds of A2 herds in the medium term, here and in Australia.
Hrdlicka said A2 milk will be new to many NZ consumers despite the chequered history of availability and they will be able to get it from supermarkets, cafes and dairies.
“That makes a big difference because we shop at different times and in different places and if you can’t access a brand that can be frustrating for consumers.”
Fonterra Brands acting sales director Grant Watson said further product forms of A2 will be dependent on consumer demand but flavoured milks, butter and cheese are possibilities.
“For the partnership there are many different pathways and we are exploring all of them,” Hrdlicka said.
Australasian company a2 Milk still has the field largely to itself around the world and its intellectual property protected as large volumes of alternative A2 products are not being manufactured.
Watson said Fonterra Brands is getting to understand the A2 demand while surveying farmers on their willingness to convert to A2 supply.
Part of the agreement with a2 Milk is the protein testing of cows and milk that leads to 100% verification for the consumers.
