Originally Posted by
tomm
I LOVE IT , SUCH A GREAT MANAGEMENT FROM A2MILK.
Supply chain risk is also substantial. The a2 Milk Company is heavily reliant on key suppliers such as Synlait and Fonterra and Chinese distributor China State Farm (the company’s exclusive import agent in China). The company has tried to reduce supply chain risk through contractual agreements with its key suppliers, but it remains largely dependent on continuing symbiotic relationships. The a2 Milk Company also has a meaning ownership stake in Synlait, but remains a minority investor. As mentioned, the company recently entered discussions to buy Mataura Valley Milk, partially to reduce supply chain risk, and has enough financial flexibility to continue to vertically integrate, but that would be at the cost of making the company more capital intensive. Mataura Valley Milk is currently majority owned by a highly respected China state-owned enterprise – China Animal Husbandry Group which is a sister company to China State Farm