The Australia-based dairy processor has pinpointed countries including the US, Germany, and France as priorities for market entry. The firm announced its strategy update following the completion of a review to assess its options to accelerate growth and maximise shareholder value.
“The Company has identified a number of attractive international markets for a2 brand milk beverages,” said the A2C strategic review.
“North America and a number of markets in Europe, including Germany, France, Italy and Spain, have been prioritised as the Company’s next market entries. The entry model will differ by market and may involve a joint venture as has been done in the UK, the use of a local contract manufacturer or an investment in regional processing assets, as in Australia.”
Completion of the review comes just days after A2C signed an exclusive infant formula and milk powder distribution agreement with China State Farm Holdings Shanghai Company (CSF) – signalling its debut in China.
Product portfolio expansion
The firm has also stated its intentions to expand its portfolio of products, with an immediate focus on developing and marketing a2 brand UHT milk and yogurt.
An a2 brand UHT milk product would be targeted mainly at China, France, Germany, and Spain. While yogurt would be developed with the Australian, French, German, Spanish, British and American markets in mind.
There is also future scope to develop and market a2 brand dietary supplements, cheese, and milk powders, A2C added.
“The high-growth UHT milk and Yoghurt categories have been identified by the Company as attractive opportunities for the a2 brand. There is significant scope for A2C to enter these categories, particularly in Asia Pacific and Europe where the Company can leverage its existing infrastructure in Australia and the UK.”
Accelerating growth
A2C is also eyeing further growth in the Australian fresh milk market, where it is the fastest growing and largest brand in the Australian premium milk segment.
Its share of the Australian fresh milk market increased from 4.3% to 6.3% between September 2011 and September 2012 – dominating the lactose-free and organic fresh milk brands.
“The Australian a2 fresh milk business continues to perform strongly. Current trends and strategy suggest a milk value share of at least 10% of grocery is achievable in Australia in the medium term.”
“To support the continued growth of the business, the strategic plan envisages an investment in additional processing capability to supplement A2C’s company owned and operated facility at Smearton Grange, New South Wales.”
A2C also recently announced its decision to enter the New Zealand fresh milk market through the establishment of a wholly-owned operating subsidiary, and plans to accelerate its growth in the UK through its joint venture with Robert Wiseman Dairies.