Under an agreement announced last week, Synlait Milk will source A2 Milk from accredited Canterbury dairy farms and manufacture a2 brand infant nutritional powders at its facility in Rakaia.
A2 Corporation plans to market the a2 infant formulas in the potentially huge markets of China and South East Asia.
McKenna says Synlait has sourced two farms for A2 milk production, one of its own and another it has identified through A2's patented technology.
He is confident Synlait has the volume with those two farms for the start-up phase in the next dairy season. With A2 driving the market side they will wait for the signals for increased volume and potentially extra farms.
The A2 gene occurs naturally and McKenna says probably about 20-30% of Canterbury cows have the gene.
"It follows typical genetics – the cows we need don't have an A1 gene, they just have A2. You do have cows that are mixed, but we can't use that."
If demand increases for the a2 nutritional powders, Synlait would move into A2 breeding to make sure of the purity of its product.
Curiously, the majority of sires being used for New Zealand dairy herds now are coincidentally A2, says McKenna. "I am not sure why that is, but that is the situation."
A2 managing director Geoffrey Babidge says an agreement with a reputable supplier of nutritional powders is a key step in its plan to launch a2 brand infant formula products in high growth Asian markets, in particular China.
It is estimated the retail market for infant formula in China and South East Asia is US$6 billion and US$3 billion respectively. The market in China is forecast to grow at an average rate of 12% over the next decade, he says.
A2 Corporation also last week announced a strategic review of its options to accelerate growth and maximise shareholder value.
A2C chairman, Cliff Cook said: "The company has achieved outstanding success recently and is gaining significant momentum from the successful commercialisation of its brands in Australia and increasing awareness
of A2 milk in other markets.
"As a result, the company has numerous growth avenues available to it, both in geographic and product expansion."
