US expansion on horizon for a2 Milk
The a2 Milk Company is expanding its United States business beyond markets in California and the country’s southeast.
The company sells fresh milk in Australia, the US and the United Kingdom, and sells infant formula made from New Zealand milk in Australia and China.
It has become popular because some studies have shown that A2 milk, which mostly lacks the A1 protein, is easier to digest.
Australia and New Zealand still account for most of the company’s sales. In 2017 Australasian sales, including infant formula, gleaned revenue of $439 million compared with $88m in Asia and $21m in the US and UK.
Since entering the US market the company has focused on achieving initial sales targets before expanding, managing director Geoffrey Babidge said.
Sales had reached sufficient levels in California retail chains and the southeast of the US to embark on the expansion, he said.
There were about 60 million US consumers in the northeast who accounted for about 20 per cent of milk sales in the US.
The new targeted areas included New York, New Jersey, Pennsylvania, Connecticut, Rhode Island, New Hampshire, Massachusetts, Vermont and Maine.
The a2 Milk brand has been accepted by chains including Ahold, Shoprite, Safeway, H-Mart and Fairway Foods. As a result, a2 Milk will increase its marketing exposure from 3600 stores to about 5000 stores across the US from January 18. The expansion will be supported by increased investment in the ‘‘Love Milk Again’’ advertising campaign.
This is incorporated in the higher marketing expense forecast for the second half of 2018.
The company’s shares on the New Zealand Exchange have surged in popularity in the past year, with the price rising over 12 months from $2.50 to $8.
It is also listed on the Australian Securities Exchange, which represents about 63 per cent of its 33,033 shareholders.