ATM - A2 Milk Corporation Limited

[MAC]

[belted galloway]

http://www.pura.com.au/a2protein/?state=nt

With A2's successful implementation into Australia, the big boys are starting to take action.

A2 should be thanking their competitors for the free advertising, a great way to draw customer attention to the products.

Bring on the legal action.

[MAC]

Lion are effectively adding both to the endorsement and to the promotion of the benefits of A2.

I suspect this might help Lion slow the drift to ATM a little, perhaps they may add a few converts from their A1 competitors whom overall form 90% of the market.

Though, the exposure they are adding within the market can only be good for the only company that can produce the 100% real thing. Even if all the milk companies promoted their products as “containing A2”, ATM would always have the marketing advantage.

The normalisation of A2 by A1 milk companies may even potentially open the door for ATM to go from being a novelty brand product with an associated cap on market share to, over time, becoming a main stay shelf product with greater market share potential.

Although, at the end of the day, if you want to buy A1 free milk then 50% free milk is not going to do it.

If you want to buy decaffeinated coffee in the supermarket whilst doing your weekly shop, you wouldn’t necessarily want to buy “coffee that contains decaffeination”, if you want to buy what you really want.

[iceman]

MAC I am not convinced this concerted effort by Lion and parmalat will slow A2M´s inroads into the market.

I think its great that this debate is now in mainstream and frontpage media. It increases the exposure of A2 milk and the debate about its benefits. Those that are already buying A2 milk for health reasons, whether perceived or real, will not be changing back to buy milk that only “contains” A2 protein.

That market segment that is already or is likely to be willing to buy A2 will be doing so for health benefits and will be better educated about the differences between A1 & A2 than the average person. Even if the benefit is still being debated, most people that have or suspect they have problems with A1 milk, will go with the benefit of the doubt and buy A2. Especially if it relates to their children.

It could also be argued that those that can afford to pay the extra $$$ for A2, will be more likely to do so after taking interest in this debate and studying it for themselves. Those swayed by these ads, probably never were real potential A2 customers anyway !

The good thing is that A2M is now on the big radar screens. Interesting times !

Discl.. Accumulating

[zcyong]

But the A2 sales in China is still not good so far.

[MAC]

Well Milford would certainly agree Iceman having just increased their holding to 12.2%, I've been topping up too over the last couple of weeks.

I do wonder also if all this increased competitive focus has the Australian Dairy Companies both reassessing their market positions and running the numbers on takeover possibilities also.

My DCF provides me with a valuation for ATM of $1.10 (+43%). There may not be a better time for the Australians, or, for the big US Dairy Companies too for that matter given the prospective market entry exposure.

Has anyone an up to date top 20 shareholder list at their fingertips.

[ziggy415]

if the big boys are squeeling then you can be assured A2 is hurting their sales and most consumers will see their media campaign as bully tactics but there is some large sell orders on nzx which would suggest some share holders are a little worried

[NT001]

That's all great publicity, and it's finally forcing A2M to change its sales pitch which will really annoy the big boys in Australia and also Fonterra in NZ. In the recent past, A2M has tried to avoid confrontation with the mainstream industry by merely promoting the A2 protein as being good for you as if it were some kind of healthy additive, instead of emphasising the real point which is that A1 protein is bad for you. Now the company has had to come out and say it clearly for consumers.

That will surely worry the big boys and could even trigger some takeover thoughts, but my feeling is that a lot of A2M's shares are held by people like me who are very dedicated to the cause and know this issue has got a long way to go yet. Iceman is probably right - $5 a share would be giving it away. I'd love to see who are the main holders at present, but my guess is that quite a few will have not forgotten how Fonterra and the Food Safety Authority tried to shut A2C down in the past.

Let's remember, A2 milk sales here and in Australia are just being driven by the ANECDOTAL discovery by consumers that A2 milk is easier to digest than ordinary milk with A1. That's really almost just a side-issue. A2 Corp initially didn't even know about this beneficial aspect of their product and were even reluctant to promote it because of advertising laws. But it has proved awfully useful.

Meanwhile they're still working on the far bigger issue with A1, that it is statistically associated with heart disease and diabetes. The clinical science is gradually getting closer and closer to proving A1's actual (and probable causal) connection with these diseases as well as other major health issues such as autism and even cot deaths. That's what will really scare the mainstream industry, and quite a few NZ dairy farmers who see this are quietly switching towards A2 production already.

As for A2 formula sales to China, this is probably a temporary minor blip. Once Synlait gets its new facilities certified, A2 Platinum should be all go. The real action at the moment is still in milk in NZ-Australia, rather than formula in China, but eventually formula could be huge because according tomy reading the main age-group susceptible to the longterm health risks of A1 would seem to be up till 2 years.

[MAC]

MAC I am not convinced this concerted effort by Lion and parmalat will slow A2M´s inroads into the market.

I think its great that this debate is now in mainstream and frontpage media. It increases the exposure of A2 milk and the debate about its benefits. Those that are already buying A2 milk for health reasons, whether perceived or real, will not be changing back to buy milk that only “contains” A2 protein.

That market segment that is already or is likely to be willing to buy A2 will be doing so for health benefits and will be better educated about the differences between A1 & A2 than the average person. Even if the benefit is still being debated, most people that have or suspect they have problems with A1 milk, will go with the benefit of the doubt and buy A2. Especially if it relates to their children.

It could also be argued that those that can afford to pay the extra $$$ for A2, will be more likely to do so after taking interest in this debate and studying it for themselves. Those swayed by these ads, probably never were real potential A2 customers anyway !

The good thing is that A2M is now on the big radar screens. Interesting times !

Discl.. Accumulating

Perhaps some backfire potential for Parmalat is fair, I'm erring toward agreement with you Iceman, it may well on balance become an overall net positive matter for A2 sales.

Prime time media exposure, a flourishing of the A1/A2 debate, consumers seeing through and avoiding disingenuous competitors, the A1 competition (Lion) endorsing and normalising the A2 protein proposition.

http://www.pria.com.au/priablog/is-b...sue-management

[iceman]

Perhaps some backfire potential for Parmalat is fair, I'm erring toward agreement with you Iceman, it may well on balance become an overall net positive matter for A2 sales.

Prime time media exposure, a flourishing of the A1/A2 debate, consumers seeing through and avoiding disingenuous competitors, the A1 competition (Lion) endorsing and normalising the A2 protein proposition.

http://www.pria.com.au/priablog/is-b...sue-management

Thanks for the link to this interesting article MAC.
It is a not so veiled warning to Parmalat & Crosby Textor to not make "extravagant claims or unfair comparisons ".

This is the part I really like:
"However such an approach on its own is not only questionable in terms of effectiveness, it also smacks of desperation and failure to understand that issue management demands a lot more than just media. With A2 milk now on sale in the United States and reportedly pushing into Parmalat’s home market in Europe, a negative media strategy alone is no adequate response to strong competition and very effective marketing."

Interesting times indeed !