The a2 Milk Company PDF

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Short Essay on the current happenings of the a2 company...

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Founded in the year 2000 by Dr. Corran McLachlan and his business partner Howard Peterson, founded the a2 Milk Company, it primarily commercialises A1 protein free branded milk and related products in Australia, New Zealand, United Kingdom, United States, China and other Asian countries. The a2 Milk Company is in the business of producing fresh milk under the a2 milk brand and also infant formula under the a2 platinum brand. In addition to these the company also provides a2 platinum premium pregnancy milk formula, premium a2 milk powder blended with Manuka honey, a2 premium platinum stage 4 junior milk drink, whole milk powder and skim milk powder. So, what is the a2 difference? Dr Corran McLachlan, a scientist, made a discovery when undertaking higher studies at Cambridge University, he learned that ordinary cows produce milk with different beta-casein proteins type, called A1 and A2. He then devised a safe and also a very simple method in which cows that were naturally A1 protein free can be identified. Research conducted over the years shows that a lot of people who have digestive discomfort when drinking ordinary cows’ milk find the a2 milk easier to digest. That’s because the a2 milk is free from the A1 protein, and only has the a2 proteins. The company is based in Auckland, New Zealand and was formally known as the A2 Corporation Limited and changed its name to The a2 Milk Company Limited in April 2014. The company successfully went public after being listed on the ASX [A2M] on March 30th 2015. The a2 Milk Company continues to grow its financial position with outstanding financial performance earning a total revenue of $922.7m year ending 2018. That’s an increase of 68% over the prior corresponding period (pcp), the EBITDA of $283.0m, again up by 101% on pcp. EBITDA to sales margin of 30.7% up from 25.7% pcp. The Net Profit After Tax was $195.7m up by 116% on pcp. Basic Earnings Per Share (EPS) of 27.0 cents up from 12.7 cents on pcp.

The Operating Cash Flow of $231.1m up 131% on pcp. A total of 8.5% of revenue was invested in marketing, IP and Research and development. The a2 Milk Company takes pride in conducting their business in a way in the best interest of their stakeholders and to protect the environment and the communities in which they operate. This is who they are as an organisation, and what they stand for, and is part of what has made them successful so far. The a2 milk company strives to put more structure around what they do. The company works as a partner with their farmers to collectively do the right thing by the environment and their animals. The a2 Milk Company understands the importance of waste minimisation, a2 has built a comprehensive recycling and waste management system at the milk processing facility in Australia. Most of the milk is sourced from farms which are close by to the processing facilities, this allows the company to deliver a fresher product with reduced footprint. The farmers work in conjunction of a number of platforms to protect and sustain the land for future farming. For example, in Australia the company has commenced a programme to assist their farmers’ efforts. Not only that but the company recently made large amounts of payments directly to the a2 Milk farming families of their choice in order to assist in managing the impact of the drought in Australia. The a2 Company has also recently funded grants at Landcare Australia for certain projects that will assist them in enhancing the sustainability of their operations. Landcare Australia is the biggest environmental management movement in Australia, this organisation supports community owned and run initiatives which help to promote sustainable approaches to land management. Premium prices are paid to its farmers for A1 protein free milk in comparison to the market price for raw milk in the markets in which a2 operates. This premium, rewards farmers for the extra efforts they put in to supply milk the a2

way, and makes the ethical production of the A1 protein free milk an attractive economic proposition for the farmers of a2. The a2 milk company is fiercely committed to providing optimum living standards for animals involved in and impacted by a2 milk supply, this is driven by the respect the company has for the animals welfare, this impacts positively on milk production and milk quality. The a2 company takes great care in making sure quality processes are thorough to deliver a2 milk of the highest quality and are safe and compliant with market regulations and requirement. The a2 company as a code of ethics, a formal statement of the organisation’s primary values and the ethical rules it expects its employees to follow (Robbins, Bergman, Coulter, pp 165, Management 8th ed). Further, Employees should always use due care and diligence when fulfilling their role or representing the Company and should not engage in any conduct likely to bring discredit upon the Company. Despite the company’s strong financial growth and the overall promising ethical standards in each sector of the company. There are many challenges that lay ahead for the a2 Milk Company. One of the biggest challenges the company has faced since its birth is that there are no conclusive research results or studies that prove the a2 difference, which is that A1 causes indigestion and a host of other digestive issues, while a2 does not, only very small studies have been conducted, and even those need improvement. Which leaves space for rivals to attack the a2 company on its claims that a2 milk is healthier. In fact industry rivals have already been quoted saying the following in The Australian “…third story attacking A2 appeared in the Murdoch press, this time in The Australian. In that article, A2 was described as ''snake oil'' in a story, with the headline, ''Dairy rivals label A2 milk a scam''.(Hoping to kill off its competitor Parmalat goes after a2 milk, The Sydney Morning Herald, by Mark Hawthorne) Rivals wanting to discredit and kill the a2 milk company has had no affect on the company growth whatsoever, in fact the a2 milk company’s market share has been increasing internationally and

especially in China, in the infant milk formula marketed as the premium a2 platinum baby formula. According to the Financial Review “…The a2 Milk Company this week showed the power of its brand among Chinese mothers purchasing its a2 Platinum baby formula, while vitamins maker Blackmores has stumbled due to slowing sales to the continent.” (A tale of two companies a2 vs Blackmores, Carrie Lafrenz, Financial Review) and very recent news on the company in addition to this is “The a2 Milk Company this week showed the power of its brand among Chinese mothers purchasing its a2 Platinum baby formula, while vitamins maker Blackmores has stumbled due to slowing sales to the continent.” Suffice to say that while the company is working hard to overcome its challenges it is also passing consumer expectation with flying colours as stated in the Financial Review “…The consequence is that it's proven to be quite difficult for competitors to step into a1-protein free product and have the same success. What we are proving is we are less of a category and more of a brand." (A tale of two companies a2 vs Blackmores, Carrie Lafrenz, Financial Review)

Bibliography: - https://www.afr.com/business/retail/fmcg/the-a2-milk-companyv-blackmores-a-tale-of-two-companies-in-china-20190221h1bjc8 - https://subjectguides.library.westernsydney.edu.au/friendly.php? s=companyinformation - IBIS - Factiva - Morningstar - https://www.belldirect.com.au/smarter/images/uploads/bell_dire ct/pdfs/Bell_Potter_research_report_a2_Milk.pdf - https://www.weeklytimesnow.com.au/agribusiness/dairy/a2milk-companys-profit-more-than-doubles/newsstory/9d50ad491116cd334e8c59d6c8d6856e - Management text book by Robbins, Bergman, Coulter 8th Ed - https://thea2milkcompany.com/wp-content/uploads/A2MAnnual-Report-FY18.pdf - The a2 milk company website - https://www.yourmoney.com.au/watch/jayne-hrdlicka-tradingday-live/ -...