Watchdog rules A2 Corp erred over milk labelling

By LIAM DANN and NZPA

A Commerce Commission ruling that biotech company A2 Corporation must change the labelling of its alternative milk has been called a "storm in a tea cup" by chief executive Andrew Clarke.

The commission announced that A2 Corp and its licensed producers had agreed to change their promotional material to remove any implication that its A2 milk excludes all the A1 betacasein proteins the company implies are less healthy.

Some A2 milk is marketed under a label "Just A2" and early advertising by A2 Corp included statements such as, "A2 milk is just like any other milk, with one exception: a variant of the milk protein betacasein has been excluded".

Fonterra complained to the commission that the milk did include A1 betacasein proteins. The commission said a test it had carried out showed a small proportion of betacasein A1 in the A2 milk sample.

Commission acting chairwoman Paula Rebstock said any statement which incorrectly implied to consumers there was no A1 betacasein in the A2 milk was likely to breach the Fair Trading Act.

"Consumers must be able to make choices about the milk they purchase, based on accurate information," she said.

Clarke said his company had always carried a disclaimer to cover the possibility that its milk could contain up to 5 per cent A1 milk.

"Our licensees contract to supply milk with no more than 5 per cent A1 - that is a safety valve we have included to allow for the odd cow that jumps the fence or for milk lines not being cleaned properly."

That reduced the perceived risk of drinking A1 by 1000 per cent over standard milk, Clarke said.

"We still recognise linkages, some of them very strong, between A1 consumption and a number of diseases," he said.

A2 Corp plans to make money out of the technology by charging about $20 for each cow taking a patented DNA test which shows whether the animal produces A1 or A2 proteins, or a mixture of both, so that the animals can be sorted for production herds.

Between 20 per cent and 45 per cent of dairy cows on both sides of the Tasman already produce A2 milk. The rest produce either pure A1 milk or a mix of A1 and A2.

Ordinary milk mixes the variations at bottling plants. A2 herds are supposed to produce just A2 milk.

The commission is continuing to investigate another complaint from Fonterra about implied claims relating to the health benefits of A2 milk.

"The New Zealand Food Safety Authority is currently researching the scientific evidence on the A1/A2 milk debate," the commission said. "Any commission action on this issue would depend on the results of the authority's review".

A2 Corp has been promoting the milk as a "less risky" alternative to the normal milk produced in New Zealand, which it claims is linked to heart disease and is "implicated" in autism and schizophrenia.

The allegations knocking ordinary milk have been strongly disputed by Fonterra.

"Fonterra welcomes the Commerce Commission decision, which vindicates our stance on the issue, and we look forward to the outcome of the commission's investigation into the claims relating to the health benefits of A2 milk," a company spokesman said.

A2 Corp recently signed a multi-million-dollar partnership deal with a large United States corporation, IdeaSphere, to sell A2 milk in over 5000 US retail health food outlets, generating minimum royalty payments in the first year of $1 million and $4 million in the second year.

In addition, A2 expects to receive $2 million over two years from the testing of more than 100,000 US dairy cows to identify those that carry the A2 betacasein milk protein.

Milk carrying the A2 protein is expected to be on shelves in US shops next year.