A2 Milk lifts China infant formula market share to 5.6 pct

A2 milk formed a joint venture with Fonterra to jointly market milk early this year. Photo/NZ Herald.

A2 Milk said it had increased its share of the China infant formula market to 5.6 per cent in the 12 months to September from 5.1 per cent in June, and said there had been no change to the company's outlook for the current financial year.

The alternative milk company, in an investor update, said revenue for the first three months of its financial year was consistent with company expectations, reflecting continued strong growth in infant formula - English and Chinese labels - and milk products.

In the first half hour of trade, the stock was up 95c or 9.79 per cent at $10.65, in a generally firmer market.

Retail store distribution in China increased from around 10,000 stores to 12,000 stores, with a growing rate of sales in established stores.

A2 said its cross border e-commerce sale momentum in China was building ahead of key online sales events there.

In Australia, a2 Milk branded fresh milk reached 10 per cent of the market for the 12 months to September. In New Zealand, a2 Milk formed a joint venture with Fonterra to jointly market milk early this year.

The company said it retained a leading market share position for a2 Platinum infant formula in Australia of 32 per cent.

In the United States, a2 Milk's distribution footprint increased from about 6,000 stores to 8,000, with a growing rate of sale in established key accounts.

There was continued growth in new key accounts, including Costco and Walmart.
A2 milk said brand awareness in the US continued to grow off the back of national advertising campaign.

In August, a2 Milk announced that it had lifted its net profit for the June year by 116 per cent to $195.7 million, driven by increased infant formula sales.

A2 said at the time that it anticipated further growth in revenue particularly in respect of nutritional products in Australia and New Zealand, China, and liquid milk in the United States.

It said its focus on growth initiatives in targeted emerging markets and new product development would continue.

Marketing expenditure as a percentage of sales was expected to be higher than in the 2018 year, it said at the time.

"Overhead costs are also expected to be higher than 2018, primarily due to increasing headcount for China and the Corporate office to support continued growth and organisational development," it said then.

New Zealand trade officials are keeping a close eye changes to rules that cover cross-border e-commerce trade into China, which has become an important plank for a number of companies - such as a2 Milk.

The new law, passed on August 31, creates a broad framework for e-commerce covering the domestic and cross-border trade for imports and exports.

A2 Milk said China regulatory enviroment continued to evolve "and the company continues to actively monitor China's regulatory framework".

The company said its China market share data came from market research company, Kantar.