Fonterra partners with The a2 Milk Company to expand reach


A2 Milk says A1 and A2 proteins affect digestion differently, and its products may benefit people who experience discomfort from drinking cow's milk.

Geoffrey Babidge, Managing Director and CEO of The a2 Milk Company, adds "The arrangement we announced this morning is about The a2 Milk Company having options to diversify sourcing, processing and manufacturing over time in light of continued growth in demand for the company's products".

a2 also said it had sealed a supply agreement with New Zealand dairy co-operative Fonterra.

A2 Milk shares have soared after the company more than doubled its first-half profit and entered into an alliance with global dairy giant Fonterra to produce new products and expand into new markets. Fonterra has been granted exclusive supply rights for certain nutritional products destined for sale in certain a2MC new priority markets in South East Asia and the Middle East.

Some A2 milk is already available in New Zealand outlets under some smaller independent brands such as Fresha Valley.

The a2 milk will have a premium farmgate price, Babidge said, though he said the detail of how this is put in place in conjunction with Fonterra in Australia and New Zealand is subject to further discussion.

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Miles Hurrell, Fonterra's chief operating officer farm source, said he would begin talks with farmers in the fortnight. But the majority of milk production around the world remains A1.

Spierings said there was still a strong future for Fonterra's existing range of products, including recent additions such as organic, low-lactose and high protein milk - and now the additional choice of A2.

And looking at A2's interim results yesterday it is no wonder In results released yesterday the dual-listed New Zealand and Australian company reported a 70% jump in total revenue to $NZ434.7 million for the six months through December.

The two companies will explore opportunities for A2 branded butter and cheese, and a jointly-owned packaging factory.

Fonterra will also have an exclusive license for the production and sale of A2-branded fresh milk in New Zealand, while a new A1 protein-free milk pool will be developed in Australia and New Zealand.

It contracts other companies including Canterbury-based Synlait to produce fresh milk, UHT, infant formula and cream.