New Zealand's dairy giant a2MC looks to new decade of growth with China

The a2 Milk Company, or a2MC, will further expand its investment in the Chinese market while making more contributions to the healthy life of Chinese consumers, continuing what the company has already achieved over the last decade, said a senior executive from the New Zealand-based dairy giant.

David Bortolussi, managing director and CEO of a2MC, made the remark at a signing ceremony held in October, where a2MC renewed an exclusive import and distribution agreement with China State Farm Agribusiness Holdings Shanghai, a subsidiary of China National Agricultural Development Group, for five years.

Entering China in 2013, a2MC is the first and currently the only dairy company in the world that exclusively focuses on dairy products only containing A2-type protein. Numerous studies have shown that A2 protein won't cause digestive discomfort for some people.

In collaboration with CSFA Shanghai, a2MC has been committed to offering Chinese consumers high-quality dairy products over the past decade, said Bortolussi.

"The extension of arrangements with CSFA shows our close cooperation with Chinese partners and our shared confidence in the future," Bortolussi added.

Zhang Lei, chairman of CSFA Shanghai, said: "We are delighted and honored to continue our relationship and partnership with a company that has achieved such unique success — as the pioneer of A2 protein products in the China market with a strong brand and ultra-premium products. This renewal signals the strength of our long-term partnership, and we look forward to the future with great excitement."

A strategic partnership has also been established between a2MC and China Animal Husbandry Group. The two parties plan to develop Mataura Valley Milk, a milk company in South Island, New Zealand, into a leading provider of a2-branded dairy products and nutrition commodities in the world.

"In the past 10 years, a2MC has been supported by many Chinese State-owned enterprises including CNADC, CSFA and CAHG. Especially since 2020 when the COVID-19 pandemic began, we have worked together to fight the pandemic and tackled the challenges it posed. This is the certainty we saw in the uncertainty. Each partner brings their different strengths that enable us to execute strategic objectives. In particular, our partnerships with CNADC, CSFA and CAHG provide invaluable market insights and assistance," Bortolussi said.

This year marks the 50th anniversary of the establishment of China-New Zealand diplomatic ties, Bortolussi said, adding that a2MC's partnerships with Chinese SOEs are shining examples of the strong friendship between the two countries. And this year also marks a2MC stepping into its next decade in the China market.

As the pioneer in the A2 category, a2MC attaches great importance to science and research, and makes sustained efforts in product innovation and development, allowing more consumers to enjoy its unique digestive and other potential health benefits.

Bortolussi said that Chinese consumers' demand for A2 protein dairy products has soared during the past 10 years.

Ten years ago, the most common question of Chinese consumers was what A2 is, but now A2 goods have become a popular choice among consumers expecting high-quality and healthy products, as people's awareness has grown and the overall industry thrives, Bortolussi said.

Nielsen MBS retail measurement service says the A2-type protein infant milk formula category grew over 100 percent in mother and baby stores in the 2022 fiscal year.

The a2 Milk Company is implementing the Macro Milk Strategy in China with the aim of satisfying consumers of different ages, different groups and different needs at different consumption occasions, providing consumers with an "a2 whole family solution".

"We have created a diversified A2 product portfolio so far which consists of liquid fresh milk, infant formula, adult milk powder, and ultra-heat treatment milk, as well as milk powder for pregnant women," Bortolussi said.

During the fifth China International Import Expo that took place in November in Shanghai, a2MC announced the refresh of two product ranges of a2 Platinum infant formula and a2 Nutrition for mothers.

"The two further strengthened and perfected our Macro Milk Strategy to provide solutions for whole family," Bortolussi said.

"We will continue to invest in A2 research and expand our product range, enabling more Chinese consumers to enjoy a healthy life brought about by a2-branded products," he added.

Bortolussi said at present the demand for A2 protein dairy products in China's dairy market is also increasing. In the 2022 fiscal year, a2MC achieved double-digit growth in both revenue and earnings, with total revenue up 19.8 percent year-on-year.

Meanwhile, the a2 Zhichu infant formula, one of the best-selling products in China, recorded new highs in both its online and offline market shares.

With so many Chinese families choosing a2-branded products to provide their loved ones with high-quality nutrition, a2MC feels an enormous sense of pride, Bortolussi said.

"China remains our core export market worldwide. We are optimistic about the market prospects and will firmly follow localization strategies and expand our business," he added.

Recently, a2MC refreshed its company purpose to better reflect its unique strengths and the positive future the company wants to help create — "We pioneer the future of dairy for good." As part of a2MC's growth strategy, in the 2022 fiscal year, a2MC elevated investment in people and planet leadership to sit among its top strategic priorities, by taking direct action to lead the industry, particularly in greenhouse gas emissions reduction, farming practices and supporting communities in which a2MC operates.

In New Zealand, a2MC partnered with MVM under CAHG to replace the lignite boiler for the first time with a high-pressure electrode boiler through the full electrification of the site.

The factory will be fully electrified, with all energy sourced from renewable sources. This more direct approach to greenhouse gas emissions reduction reflects efforts to protect the environment and quality of the milk source. MVM has won several awards for its work and efforts.

In China, a2MC also participates in various public welfare activities, including partnering with Operation Smile to provide corrective surgery expenses and nutrition products to children suffering from cleft lip and palate, before and after operations; and the Dream Way to Growth campaign to improve the nutritional intake of elementary school children in remote areas.

"Standing at the starting point of the next decade, we look forward to serving the Healthy China initiative with better products and services and contributing our efforts to the health of Chinese consumers," Bortolussi said.