A2C last week announced an agreement with Synlait Milk to process the a2 milk formula at its Rakaia plant. A2C relies on partners to market the product in Asia and particularly China.
Synlait Milk's general manager, nutritional, Tony McKenna, says the two farms identified should be sufficient for the start-up. With A2
driving the market side, they will wait for the signals for increased volume and potentially extra farms.
A2 milk is little known in New Zealand, but has taken off in Australia with A2C this month opening a processing plant in Sydney. It has also just announced a joint venture with Robert Wiseman in the UK.
Most dairy cows today produce A1 and A2 type beta-casein protein, but a2 milk comes from cows which naturally produce only A2. A2C promotes its product as helping digestive well-being; it says many people who have problems drinking milk find they can drink a2. The company claims people who believe they are lactose intolerant are in fact reacting to the A1 beta-casein.
Babidge says A2C is prioritising plans to market infant milk formula in China, and hopes to have a distribution partner this calendar year and to build some "meaningful" volumes in the short to medium term.
Having done the research, A2 is now intent on commercialising the opportunity. "There is sufficient evidence and a growing body of science to support the health benefits of A2 milk for certain people. We are building successfully on that."
Babidge says A2's difficulty in establishing itself in the New Zealand market results from mistakes 10 years ago when it was "adversarial to the dairy industry generally".
A number of licences were given to suppliers, but they have been bought back except for one exclusive licence to Fresha Valley, Northland.
"We are [discussing with them a reshaping of] our relationship so we can become more active in fresh milk in the New Zealand market," Babidge says.
A2C also last week announced a review with Greenhill Caliburn as principal advisor.
"The review is in response to the increasing interest being demonstrated and approaches to the company from parties to look at potential partnership," Babidge says.
