The a2 Milk Co says it is still “uniquely positioned” to benefit from its A1 protein-free products and that the company continues to perform strongly.
The company has previously said it expected broader interest in the A1 protein-free category generally, “given positive developments in the science and the strong growth being achieved by the company”.
A2 Milk’s share price fell sharply last week after international food group Nestle confirmed that it had introduced an A2 beta casein infant formula product in China last month.
A2 Milk shares rebounded today after falling as low as $11.60, eventually closing up 7c at $12.47.
Mark Lister, head of private wealth research at Craigs Investment Partners, said the stock was still sitting on substantial gains made over the last year.
He put the weakness earlier in the day down to volatility on world markets after Wall Street’s 1.9 per cent decline over night.
“Stocks like a2 Milk are going to go up much more strongly than the market on the good days,” Lister said.
“And when you have had rough days like we saw in the US last night, it’s going to get hit harder, because it is high-risk, high-return,” he said.
In a statement today, A2 Milk said it was uniquely positioned to benefit from expansion with New Zealand and Australia-sourced milk supply for products for end sale in China and with a “comprehensive suite” of intellectual property including patents, trade marks, proprietary processes and know-how.
“The a2 Milk Co is the only company engaged in the sourcing, processing and marketing of solely A1 protein free dairy and nutritional products in global markets,” it said.
“This core principle contrasts significantly with likely new entrants who will need to consider how to communicate internally and externally the benefits of a new A1 protein free variant whilst their traditional range of products continues to include A1.”
The infant formula market in China is vast with an estimated retail value in the order of US$20 billion ($27.8b) and volume exceeding one million metric tonnes.
“The company is confident that the past investment in its brand has established a strong consumer franchise which will continue to strengthen as its level of investment and distribution continues to grow,” it said.
The Company continues to perform strongly in each of its key markets and in particular has not seen any change in the growth of its China business.
Most cows produce the A1 and A2 versions of beta-casein protein, but about 30 per cent of the world’s herd produces just the A2 variety.
A2 Milk believes that the A2 beta-casein protein milk is better for people, particularly those who have trouble digesting milk.
Last year, a2 Milk reached an out of court settlement with Australia’s Lion Dairy & Drinks over a labelling dispute.