ATM - A2 Milk Corporation Limited

[MAC]

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 !

Another interesting point of note is that they state ATM as having a 9% market share, ATM reported they had got to 8.0% at HY14 reporting.

One would hope that reporters reporting on public relations would have sourced their facts correctly, onward, upward and on track toward, maybe ahead, of the 10% FY15 market share target.

“It’s no wonder Parmalat are getting nervous. Locally produced A2 brand has gone from zero in 2007 to 5% of Australia’s fresh milk market today. More importantly A2 now holds 9% by value of the important supermarket milk market, and is the only milk brand in the top 20 products sold by Coles and Woolworths.”

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

[iceman]

Remembered I'd read it before so searched and found a summary of a fairly recent paper published in the European Journal of Nutrition. It includes A1A2 in its study, which I assume may be of interest now with some competitors marketing milk "containing A2".
The mice didn't enjoy it as much !

http://keithwoodford.wordpress.com/2...une-reactions/

[Joshuatree]

Thanks Ice ; that is a compelling article to me ;I've been a little sceptical on A2 and its health benefits ,..until now.

[tango]

With food intolerances and allergies being all the rage I see a strong future for A2 but I have a lot of shares and I almost wish I had sold at the high and bought back in...

[airedale]

Decent volume of 11+million shares traded today without depressing the price {any further}. Maybe the bottom is in or Milford are still buying.

[Cowboy]

Originally posted by Joshuatree Thanks Ice ; that is a compelling article to me ;I've been a little sceptical on A2 and its health benefits ,..until now.

Yes, this article is most informative and somewhat comforting for those of us who have invested in this company, what with all the recent anti and pro comment on the a2 proposition and the assault on it from the Aussie competitors and their PR minions.

However, as an old advert man myself and now a man on the land, I would urge the management of the company not to be lulled into any false sense of security by benignly accepting that ‘any exposure (either pro or con) has got to be good!’

They should now be on the front foot IMHO with the facts (no fibs) but in a consumer friendly manner, not too much ‘high scientific’ fact. For the average consumer, the science is of little interest, it is how the product affects/benefits them that is what they want to know, and in plain, everyday language too. So, I would recommend that a major awareness campaign (not advertising) be undertaken, if not already, to every possible media entity (even all newspapers world wide regularly abound with articles extolling healthy food and beverage consumption etc) detailing the healthy/beneficial aspects of the a2 experience and the fact that for many, many people around the world, whose bodies cannot tolerate milk, a2 will hopefully/probably ‘solve the problem!’

Just look at how ‘topical’ and ‘everyday’ is the non-glutin option. In depth media articles, specialist recipes and specialist products are the norm and have you noticed the premium price these products command? The average fast food customer probably couldn’t care less whether their hamburger bun is ‘glutin-free’ but the thinking consumer who wants to live longer and happier, surely does want to know and is prepared to pay the premium prices for the products their bodies need! This is tailor-made a2 territory too isn’t it?

The ‘antagonists’ in Australia shouldn’t be ignored – sales, market share, reputation and profits are their drivers and they have might and deep pockets on their side so they are not to be underestimated. What we are seeing in Aussie will be no doubt replicated in a2’s other markets too I suspect and sooner rather than later!

There are a plethora of magazines everywhere that expound everything ‘healthy’ and it is to these entities that I would be telling the a2 story. If handled correctly, non paid advertising will result and be more readily accepted by media and customer alike, as ‘fact!’ I’m sure a2 is not contemplating an advertising campaign (I hope not) for it is not a skirmish they will win – they will be outspent and buried by the competition IMHO.

Patient fact and awareness backed up by any research in ‘plainspeak’ to the food/health media would be my approach.

I must say, for whatever the reason, I do find it incongruous that a2 has no presence in this country so recent articles in the NZ Herald and on 9 to noon on Radio NZ probably meant nothing to their respective audiences! Shame!

[tango]

In reality the fall back from the high's is not that great... imagine if it was similar to PEB then you would be kicking yourself for not selling high and buying back low.

I'm in it for the long haul but it clipped $20k off the value in a very short period. Hopefully it will recover soon and go to new highs.

[nextbigthing]

Quick ATM calcs

Shares on issue - approx 655 million

Required return - 7%

Current shareprice = 75c

0.75 x 0.07 x 655000000 = call it $35 mil PA profit required

YR report for period ending 31 Dec 13 has a profit of $640000, however this includes marketing costs of over $5 mil (of which over $3 mil was for new markets which eventually won't be required - and no doubt much higher than eventually required admin costs etc associated with developing the new markets) which could be knocked out to get an idea of profitability. So all other things being near enough to equal, they could easily/conservatively have turned a $5 mil profit by reducing these costs.

$35 mil required profit / $5 mil = 7 times the current situation to make the investment justified.

All the revenue (more or less) came from Australia in this report. Another words they need to replicate what has happened in Oz another six times.

Population of Australia (current market) - approx 23 mil.
Percentage of market - Approx 8%

Population of USA 318m, China 1.35 Billion, UK 63m

They've done well in Australia and I wouldn't expect them to be able to make the some in roads into China due to the obvious such as reachability and income levels etc. However I think it's fairly obvious there's probably six times the Australian situation in the US and UK alone, meaning anything sold in China balances any risk and provides upside on the 7%.

NBT

[nextbigthing]

I see they have a couple of patents due to expire over the next couple of years. I know very little about patents, does anyone know if these can be renewed?

Milfords buy in at these price levels is a fairly good endorsement of the company IMHO.

NBT

[JohnnyTheHorse]

I see they have a couple of patents due to expire over the next couple of years. I know very little about patents, does anyone know if these can be renewed?

Milfords buy in at these price levels is a fairly good endorsement of the company IMHO.

NBT

Patents cannot be renewed. From the date of filing, you get 20 years of exclusive use of your patent. In my view some of a2's patents are questionable at best and potentially wouldn't stand up to any legal challenges.