Tuesday, May 11, 2021

A2 milk sales slump

A2 milk sales have slumped, inventories have built up and the company is now concentrating on reducing its inventories.

The COVID-19 pandemic reduced exports to China where a2 milk is popular as an infant formula.

The company said its profit margins have been cut in half since February and said the Chinese market “remains challenging”.

It said fewer tourists and international students shipped its products to China, known as the daigou trade. 

“In the interests of the long-term health of the a2 brand and the medium-term trading outlook of the business, more aggressive actions to address excess inventory will be taken,” the company said.

A2’s infant formula has a two-year shelf life from manufacture and slower sales meant it has older stock in the market, some of which is dated July last year, are being scrapped. It will be between eight and nine million tins.

A2 milk is produced by cows with genetics that replace a1 protein with a2 protein which is believed to be easier to digest and suitable for people with lactose intolerance.