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Current as of 27/11/14 07:40PM NZST

Christopher Adams

The Business Herald’s markets and banking reporter.

Lion relaunch a bid to slow A2 growth

Geoffrey Babidge, A2 managing director.
Geoffrey Babidge, A2 managing director.

Brewing and food giant Lion has become the second company to try to scupper the strong growth New Zealand's A2 Milk is experiencing across the Tasman.

NZX-listed A2 estimated in February that its brand, launched in Australia in 2007, had secured an 8 per cent share, by value, of that country's grocery milk market.

The company sources its milk from cows selected to produce A2 beta-casein protein, which is claimed to provide health benefits over the more common A1 variety.

However, question marks remain around the science surrounding A2.

In an attempt to combat A2's growth, Lion has relaunched its Pura milk brand in South Australia with a label that states: "Naturally contains A2 protein."

The company, owned by Japanese brewer Kirin, will roll out the new labelling in other states if the South Australian relaunch proves successful, a spokeswoman said.

Fairfax Media revealed last month that Italian multinational Parmalat - which owns the Pauls milk brand in Australia - had employed high-powered public relations agency Crosby Textor to discredit A2's science in the media.

A2 has hit back at Lion's marketing, saying it could confuse Australian consumers. "There is nothing new here from Lion," said managing director Geoffrey Babidge.

"In Australia, all regular milk has always been a combination of both A1 and A2 proteins."

Lion's spokeswoman said research conducted by the firm showed most consumers were interested in knowing more about the proteins present in milk, including if the products they bought contained A2.

"A1 and A2 are both high quality proteins that are found naturally in milk," she said.

"That's why we've developed a specialised testing method to verify that Pura milk naturally contains both A1 and A2 proteins, with our tests to date confirming that A2 protein makes up 50 to 70 per cent of these proteins."

Babidge said his firm had been studying A1 and A2 proteins "for years" and he claimed even a small amount of A1 could have a bad effect on some people. "Hence saying a product has 50 per cent A2 in it could be like saying a product is 50 per cent organic - it just doesn't work that way."

The Lion spokeswoman said the labelling was a response to "consumer interest" and was part of the firm's strategy to boost demand for branded milk.

"We stand by our on-pack claims and our testing methodology, which provides transparent facts to consumers on an issue they are interested in," she said.

A2 is not ruling out taking legal action against Lion, or making a complaint to the Australian Competition and Consumer Commission. The company has launched a radio campaign in South Australia in response to Lion's labelling.

A2 reported a 28.3 per cent lift in half-year Australian sales in February.

The company's total sales for the six months to December 31 rose 22 per cent on the previous corresponding period to $54 million.

Its shares closed at 77c last night.

The spat

• A2 has secured a big chunk of the Australian milk market, prompting rival companies to take action to slow A2's growth.

• Italian multinational Parmalat - which owns the Pauls milk brand in Australia - employed public relations agency Crosby Textor to discredit A2's science in the media.

• Now Lion has relaunched its Pura milk brand with labels that state: "Naturally contains A2 protein."

• A2 says the labelling could confuse consumers and has not ruled out taking legal action against Lion.

• ion says A1 and A2 are both "high quality" proteins and A2 makes up 50 to 70 per cent of the proteins present in Pura.

The science

• A2 sources its milk from cows selected to produce A2 beta-casein protein.

• A2 milk is claimed to provide health benefits over the more common A1 variety, including improved digestion and lower risk of heart disease.

• The science around A2 continues to be debated.

- NZ Herald

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