One of A2 Corporation Ltd's major licensees in Australia has voluntarily appointed an administrator, after being convicted and fined for making misleading health claims over A2 milk.

A2 Dairy Marketers (A2DM) had claimed that A2 milk could prevent juvenile diabetes and heart disease.

In New Zealand, A2 Corp today told the Stock Exchange that A2 Dairy Marketers, registered in Queensland, was appointed as a licensee to produce and market A2 milk in January and launched A2 Milk into the Brisbane market on May 6.

A2 Corp's other main Australian licensee is Fairbrae Milk, with distribution in areas of New South Wales and Queensland.

A2 Corp said initial reports after the A2 Dairy Marketers launch were that demand for the product outstripped supply, signalling a strong and sustainable demand for A2 Milk from the Australian consumer.

But in Australia, Queensland's health director has welcomed the conviction of A2 Dairy Marketers for making misleading health claims, the ABC reports.

A2DM was fined $15,000 in Brisbane Magistrates Court last week after pleading guilty to six charges, including a charge of conduct likely to mislead. It was also prosecuted for breaches of the Food Standards Code.

The court found the company was wrong to infer A2 milk prevented childhood diabetes and heart disease.

Health director general Steve Buckland said the prosecution was the first of its type in Queensland.

Dr Buckland said the conviction should serve as a reminder that it was illegal to misrepresent health claims when selling products.

A spokeswoman for Queensland's health ministry, Sophie Dwyer, said the case should serve as a warning to other marketers that they needed evidence to back up health claims.

She says the state government was compelled to take action because A2 Dairy Marketers had inferred ordinary milk was unhealthy.

"Milk is an important food, it's part of a staple diet and it's important for growth and development, so the last thing Queensland Health wanted was concern in Queensland's parents' mind that ordinary milk was the problem," she said.

A2 Dairy Marketers said it regretted making misleading claims about the health benefits of its product. The milk is currently sold at a premium price and A2CM's director, Philip Roberts, told the ABC that having to change the advertising campaign could have a negative impact.

"Well, it gets very difficult to get our point across given the restrictions of the law so, yes, it is difficult for us to convey the benefits of A2 milk to the public," he said.

In New Zealand, A2 Corp has avoided making therapeutic claims for A2 milk. On this side of the Tasman, companies are legally barred from promoting foods as having therapeutic benefits -- such as being capable of curing illness -- unless they substantiate the claims with scientific testing and register the food as a medicine. But there are no regulations to stop them from disparaging rival products.

Digestion of the A1 variant of milk -- found in most of the milk consumed in western countries -- in the gut releases a smaller molecule called b-casomorphin, which is claimed by the A2 Corporation to be a trigger for type 1 (juvenile) diabetes and other illnesses such as heart disease, as well as being "implicated" in autism and schizophrenia.

But instead of making label claims that A2 milk will protect against heart disease, autism and some types of diabetes, the company has mounted a "knocking" campaign on this side of the Tasman, arguing that conventional milk containing A1 protein can trigger such illnesses.

A2 owns and licences intellectual property that enables the identification of cattle producing milk with A2 protein, which the company promotes as a "less risky" alternative to normal milk with either A1 casein or a mix of A1 and A2.

The allegations knocking ordinary milk have been strongly disputed by Fonterra Co-operative Group.

- NZPA