Do ATM not supply/license all of these products? Have they not got any IP/patent protection?
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A2 is a naturally occurring milk protein. Actually - it is THE naturally occurring milk protein in humans and in the milk of many other mammals. Only the creator might be able to claim a patent for that .... but she probably waited too long with lodging the application, there are time limits, you see :):
A2 Milk used to claim to have some IP related to determining the A2 status of a herd, but there are other ways to do that as well ... and hey, one needs to do that only once - i.e. it is not a significant advantage to have a slightly cheaper or faster test.
Sorry - no moat, just hype.
I would not describe ATM as hype - I personally know of friends who could not drink milk (bloated feeling and indigestion) but are now happily drinking A2 milk.
The bigger issue to me is the competitive landscape for A2 milk - intensifying as there’s no real barrier to entry.
Jayne wanted to spend up large to entrench ATM’s first mover advantage but the board decided maintaining short term profits was more critical.
Absolutely agree. I never said anything different. There are people who's intestines disagree with the digestion of A1 protein, and for them it is a clear advantage to drink A2 milk. This was not what I referred to.
It is just, that it does not matter to these, whether the A2 milk they need comes from the A2-Milk company, any other company selling A2 milk, or from a real cow (or sheep or goat) :).
Just for the record: For some people it is of clear benefit to drink milk with only A2 protein (compared to the normal supermarket milk mix of A1/A2). However - does not matter in any shape or from for them, whether this A2 milk comes from the A2-milk company, from Danone, any other milk processor or from the Jersey cow (or the sheep or goat) of the friendly neighbor :):
Keep using that superflous analogy to comfort yourself as you watch ATM's margins shrink in the years ahead - inevitable imo as the big boys, Danone, Nestle and Feihe muscle in on the lucrative & high margin A2 milk market created by ATM. They have scale and access to a more diverse & deep supply chain than ATM - and we are already seeing them with their competitive prices (refer #20866), undercutting ATM's prices.
One of our friends has already switched over from ATM A2 ($44) to Karicare Gold Plus A2 ($26.99) for her son - an irresistible savings of nearly 40% as she puts it.
When the Daigou channel cranks up again in Australia, guess how many customers will opt for that kind of savings too?
Remember that Karicare was the go to brand when the Sanlu IF scandal broke in 2008.
Scary to think of the impact upon ATM's future margins!
One thing you are forgetting is that Chinese people are status oriented. Generally if it’s cheaper it can be seen as inferior, even if it’s not. They will generally buy more what the others are buying especially if it’s prices higher. That is a general statement of the people I have dealt with in retail. Of course post covid things might change.
A superfluous analogy would be one that was unnecessary as sufficient evidence had already been presented to prove the case. I suspect you do not mean superfluous. I don't need comforting, I am not emotionally involved either way. I have a small holding in ATM. I'd say there is fair chance you are right about the competition ramping up and that may have a negative effect at some point but I'll wait until I see the figures before I jump to react to a small amount of anecdotal evidence. Lets see where they are later in the year. Can they maintain margin and restart growth. I'd say the jury is still out on that.
I'm not sure the relatively high retail price of A2 milk and/or infant powder is relevant for an investment discussion given a) not all products compete based on price, b) not everyone buys based on price, c) price sensitive consumers are not sticky and d) I expect price would be the last thing a marketing business would use to be competitive given there are many subtle factors to consider in creating profit. Price is one of many factors but has no relevance for any investment decision I make. Although, if highly paid executives in any organisation were to compete solely based on price, that is not a business in which I would want to invest.