ATM - A2 Milk Corporation Limited

[Balance]

Maybe they should put the daigous on the payroll.

ATM was trying to have its cake and eat it at the same time - relying on the diagou sales while shafting them by supplying to the daigou competitors.

That is now very clearly a huge problem - how to revitalize the informal channel when the underlying profitability is now gone for the channel, courtesy of ATM!

[Nor]

Difficult business. With no international travel there are no daigou anyway I suppose.

[Getty]

Year 2040 Quiz question.

Which business was most affected by Covid in 2020/21?

Airlines, AIR?, no

Hotels, MCK?, no

Hospitality, GSH?, no

Tourism, THL?, no

Milk, ATM? BINGO!!!!

[Justin]

Year 2040 Quiz question.

Which business was most affected by Covid in 2020/21?

Airlines, AIR?, no

Hotels, MCK?, no

Hospitality, GSH?, no

Tourism, THL?, no

Milk, ATM? BINGO!!!!

App Plexure

[BlackPeter]

Difficult business. With no international travel there are no daigou anyway I suppose.

Yes and no - there are some quite sophisticated and commercial parcel based Daigou channels. They receive orders via some of the Chinese social networks (like Weibo), recommend which product to buy, have their people buying product in Australia and to a lesser degree NZ off the supermarket shelf, put the stuff into parcels and ship them to China. No international travel required.

I don't think the lack of Chinese students shuttling between the Chinese mainland and Australia / NZ is the big problem. ATM could have easily dealt with commercial Daigou traders using the parcel service - hey, they could have hired their own boats and containers to support these traders and prioritize their Platinum Daigou parcels, couldn't they?

ATM's main problem is that they never understood that their only cash cow is selling infant formula to China, and they never understood how their main marketing and sales channel to China works. All their other A2 ventures (but A2 IF) are either cash neutral at best or loss makers.

They didn't talk with the people running Daigou. They don't have them on their payroll (or their bonus list). They don't know the influencers who convince Chinas mothers to buy this or that brand of IF for their baby. Instead of getting the Daigou buyers to empty supermarket shelves they could have contacted them directly ... and even offered them a better deal. Would have been a win - win for both sides.

Most companies would treat their (one and only) cash cow with care. ATM didn't care. Lack of international travel is not their big problem - a board which might have had the right skills (or just luck?) to grow a boutique company into a dinosaur, but which is clearly inept to run a billion dollar company is.

[kizame]

Yes and no - there are some quite sophisticated and commercial parcel based Daigou channels. They receive orders via some of the Chinese social networks (like Weibo), recommend which product to buy, have their people buying product in Australia and to a lesser degree NZ off the supermarket shelf, put the stuff into parcels and ship them to China. No international travel required.

I don't think the lack of Chinese students shuttling between the Chinese mainland and Australia / NZ is the big problem. ATM could have easily dealt with commercial Daigou traders using the parcel service - hey, they could have hired their own boats and containers to support these traders and prioritize their Platinum Daigou parcels, couldn't they?

ATM's main problem is that they never understood that their only cash cow is selling infant formula to China, and they never understood how their main marketing and sales channel to China works. All their other A2 ventures (but A2 IF) are either cash neutral at best or loss makers.

They didn't talk with the people running Daigou. They don't have them on their payroll (or their bonus list). They don't know the influencers who convince Chinas mothers to buy this or that brand of IF for their baby. Instead of getting the Daigou buyers to empty supermarket shelves they could have contacted them directly ... and even offered them a better deal. Would have been a win - win for both sides.

Most companies would treat their (one and only) cash cow with care. ATM didn't care. Lack of international travel is not their big problem - a board which might have had the right skills (or just luck?) to grow a boutique company into a dinosaur, but which is clearly inept to run a billion dollar company is.

All sounds very good with hindsight, the big reality is nobody saw covid coming in the way it did. It's great to run management down when things aren't going so great, when a little while back they could do no wrong. I'm sure ATM will adapt when covid settles, and yes I would be putting the daigou on commission, lets just see how this all evolves.

[MauroNZ]

Yes and no - there are some quite sophisticated and commercial parcel based Daigou channels. They receive orders via some of the Chinese social networks (like Weibo), recommend which product to buy, have their people buying product in Australia and to a lesser degree NZ off the supermarket shelf, put the stuff into parcels and ship them to China. No international travel required.

I don't think the lack of Chinese students shuttling between the Chinese mainland and Australia / NZ is the big problem. ATM could have easily dealt with commercial Daigou traders using the parcel service - hey, they could have hired their own boats and containers to support these traders and prioritize their Platinum Daigou parcels, couldn't they?

ATM's main problem is that they never understood that their only cash cow is selling infant formula to China, and they never understood how their main marketing and sales channel to China works. All their other A2 ventures (but A2 IF) are either cash neutral at best or loss makers.

They didn't talk with the people running Daigou. They don't have them on their payroll (or their bonus list). They don't know the influencers who convince Chinas mothers to buy this or that brand of IF for their baby. Instead of getting the Daigou buyers to empty supermarket shelves they could have contacted them directly ... and even offered them a better deal. Would have been a win - win for both sides.

Most companies would treat their (one and only) cash cow with care. ATM didn't care. Lack of international travel is not their big problem - a board which might have had the right skills (or just luck?) to grow a boutique company into a dinosaur, but which is clearly inept to run a billion dollar company is.

Thanks BP for the post. I'm not very knowledgeable about this company and lately reading the updates it seems to me they have no idea how to improve the current situation, like pressing all the buttons of any control board to 'see what happens'.

After reading your post I wonder then if all these years was just luck? I mean I read the Mainfreight book story and they clearly managed to overcome a lot of obstacles but ATM gives me the feeling they can't.

Thanks again.

[Lease]

Yes and no - there are some quite sophisticated and commercial parcel based Daigou channels. They receive orders via some of the Chinese social networks (like Weibo), recommend which product to buy, have their people buying product in Australia and to a lesser degree NZ off the supermarket shelf, put the stuff into parcels and ship them to China. No international travel required.

I don't think the lack of Chinese students shuttling between the Chinese mainland and Australia / NZ is the big problem. ATM could have easily dealt with commercial Daigou traders using the parcel service - hey, they could have hired their own boats and containers to support these traders and prioritize their Platinum Daigou parcels, couldn't they?

ATM's main problem is that they never understood that their only cash cow is selling infant formula to China, and they never understood how their main marketing and sales channel to China works. All their other A2 ventures (but A2 IF) are either cash neutral at best or loss makers.

They didn't talk with the people running Daigou. They don't have them on their payroll (or their bonus list). They don't know the influencers who convince Chinas mothers to buy this or that brand of IF for their baby. Instead of getting the Daigou buyers to empty supermarket shelves they could have contacted them directly ... and even offered them a better deal. Would have been a win - win for both sides.

Most companies would treat their (one and only) cash cow with care. ATM didn't care. Lack of international travel is not their big problem - a board which might have had the right skills (or just luck?) to grow a boutique company into a dinosaur, but which is clearly inept to run a billion dollar company is.

Daigou is not as you described. A2M is right the main part of Daigou is students and travellers. Long-term residents, like us, have day job or business to do. We don't have time and energy to do daigou which is not an easy business. Chinese consumers are very fussy. I know several Chinese migrants used to do daigou. One of them told me customers in China want to see her live the whole process, from home drive to supermarket, take A2 IF from shelf, go to distribution to put IF in parcel, etc. Chinese customers want to see every step to ensure the products they buy are real.

So we reside here and we don't want to do such hard job. But travellers come and buy IF for their family and friends, and students may have more time to do daigou and earn extra money.

Actually A2M is not the only one to blame Covid has huge impact on daigou. Other dairy companies have similar experience.

[LaserEyeKiwi]

Most large food suppliers internationally have done incredibly well over the last year as consumers have had little else to spend money on other than grocery food (& items for the home). Does covid really carry all the blame for ATM implosion or is the reality actually that it is colossal failure by management?

[BlackPeter]

All sounds very good with hindsight, the big reality is nobody saw covid coming in the way it did. It's great to run management down when things aren't going so great, when a little while back they could do no wrong. I'm sure ATM will adapt when covid settles, and yes I would be putting the daigou on commission, lets just see how this all evolves.

You are right - easy to state things with 20/20 hindsight, and nobody I am aware of predicted Covid. Actually - that's not quite right. Read in a quiet weekend "The Fourth Turning" - the authors (two historians - William Strauss and Neile Howe) mentioned (already in the 1990ies) that one of the possible triggers for the by them in the early 21st century predicted fourth turning might be a world wide epidemic. Interesting (and worthwhile) reading.

But back to the ATM board and the Daigou channel: Their dependence on and their lack of understanding of the Daigou channel was well known and commented on, just go back through this thread and check for yourself. Not trying to improve visibility and control on the sales channel which pays the lions share of their salaries and board fees clearly points to an inept board sleeping at the helm - hey, they don't even seem to read this thread ;.