'Risk-free' milk on sale amid dispute

By LIAM DANN

A2 Corporation began selling its new "risk-free" milk in supermarkets yesterday, claiming it will offer significant health advantages to consumers.

The Auckland-based biotech company will market the milk as a healthy alternative to ordinary milk, even though benefits are unproven.

The milk contains only the A2 variety of beta casein protein, while standard milk includes both A1 and A2 varieties.

Cows naturally produce one kind of milk or the other but A2 Corporation is the first company to identify which cows are which and sell the milk as a pure product.

A2 Corporation claims that beta casein A1 is linked to heart disease and childhood diabetes.

Giant dairy co-operative Fonterra has disputed that and is asking the High Court to rule on the validity of the claims. The next hearing is set down for May 15.

The A2 product hits supermarket shelves eight years after the company made its scientific breakthrough. In 1995 A2 Corporation founder and chief executive Dr Corran McLachlan helped develop a DNA test, using a hair from the cow's tail, that identified whether a cow carried the A1 or A2 protein.

"We thought we'd have it on the market by the end of 1996," McLachlan said.

Fonterra had hampered A2's efforts to get the new milk to market, McLachlan said, using an "anti-competitive clause" in the Dairy Industry Restructuring Act of 2001 to prevent farmers from supplying patented milk to anyone else.

It was ironic that Fonterra was battling A2, he said, as the two companies jointly held pending patents for the milk in the United States. "Ideally we would have liked to work with Fonterra," he said.

Farmers supplying milk to A2 Corporation have had to terminate their contracts with Fonterra or establish new herds.

But Fonterra chief technology officer Dr Chris Mallett said A2 Corporation's claims about normal milk were irresponsible.

"They may result in people removing it from their diet to the detriment of their overall health," he said.

Fonterra would not comment on the claims it had hampered development of the product.

The A2 milk is being sold through selected Progressive Enterprises supermarkets at a premium price - 10 to 15c a litre higher than regular milk. Progressive Enterprises owns the Foodtown and Woolworths supermarket chains.

The Food Safety Authority has called in former Heart Foundation medical director Boyd Swinburn to review research surrounding the A1-A2 milk debate. In the meantime, the authority is standing by an earlier statement that ordinary milk is nutritious and a beneficial part of a balanced diet.

A study of the effect of A1 and A2 casein on rabbits by Dr Julie Campbell at the University of Queensland, funded by A2, was due to be released next month, McLachlan said. He was confident that it would offer proof of A2's benefits.

A2 Corporation is already selling its milk through a limited number of Australian outlets in Byron Bay and on the Gold Coast.

Demand had been strong in Australia, McLachlan said, and the company planned to launch the milk in the US and Britain within 12 months.

A2 Corporation has a market capitalisation of about $25 million. It has been trading on the unlisted market at 19c a share.

The company planned a new round of capital raising in the next few months, McLachlan said.

Listing on the stock market was a realistic long-term goal, he added.