A2 air freights fresh milk to Singapore from Australia

Geoff Babidge, managing director of A2 Milk. Picture/Supplied.

A2 Milk says it has started exporting fresh milk from Australia to Singapore to test the market and hopes to eventually use the island state as a springboard into Southeast Asia.

A2's chief executive Asia Pacific, Peter Nathan, said the dual-listed alternative dairy company aimed to start off small, with the initial aim of selling 100,000 litres of its milk to Singapore supermarkets and high end stores in the first year.

"We believe that it is a launching pad into Southeast Asia, so we are air freighting fresh milk directly into the Singapore market," Nathan told the Herald.

The company, which is headed up by managing director Geoff Babidge, says its a2 beta protein milk digests differently than the more commonly available a1 beta protein milk, and has suggested that those with issues drinking ordinary cows' milk may be able to consume a2 milk.

In Australia, the company's a2 milk is the biggest selling fresh milk brand by value, with retail market share of 9.5 per cent.

Nathan said Chinese consumers formed a disproportionately large part of its Australian demographic.

Shares in the company have been a standout performer on both the Australian and New Zealand exchanges over the past year, based mostly on strong demand for its milk powder and infant formula in China.

The stock last traded at $4.78, up 13 cents from Friday's close, and another record, the stock having gained 125 per cent over the past 12 months.

In a notice to the NZX today, Australian investment bank and diversified financial services group Macquarie disclosed a 5.2 per cent stake in a2 Milk.

Nathan said that beyond Singapore, Malaysia had potential as a market, as did South Korea and Taiwan.

"We believe that there is a very good alignment with our consumers in the Singapore market, given the fact that the Chinese 'over-index' on dairy intolerance," he said.

Singapore's big expatriate community also meant there was high product recognition there, he said.

A2 Milk already airfreights a small amount of fresh milk to China, but its main exports to the People's Republic are milk powder and infant formula under the Platinum brand.

"We have strong engagement with China," he said. "Obviously our brand is hot in the China market and the Singapore market has the added dimension of having a very high disposable income."

Separately, a2 Milk's South Island supplier, NZX-listed Synlait Milk, said both companies were happy with the progress of their application to export a2 Platinum infant formula brand to China from January 1, next year, when new regulations take effect.

The China Food and Drug Administration (CFDA) announced early this month that 30 brands from 22 infant formula factories owned by 14 manufacturing companies have been approved.

The dossier application for CFDA registration for a2 Platinum infant formula was submitted by Synlait in May and has been accepted for review.

"Both companies are confident that Synlait's registration application with CFDA will progress as expected," Synlait said.

In June, A2 Milk said it expected its group revenue to hit $545m in the year to June, up $20m on a previous update.

The company is expected to report its annual result later this month.