27 Oct 2021

A2 Milk changing growth strategy after China infant formula market forces adaptions

11:52 am on 27 October 2021

The speciality dairy company A2 Milk is changing its growth strategy after a bruising 12 months.

A2 Milk chief executive David Bortolussi

A2 Milk chief executive David Bortolussi. Photo: Supplied

The company says the China infant formula market has experienced unprecedented change, forcing it to adapt.

Excess stock and a slide in sales of infant formula in the key Chinese market battered its earnings in the 2021 financial year.

In an investor day update provided this morning, the company - which saw its full year net profit plunge by 79 percent - says there is no material change to the 2022 financial year position which was outlined in August.

While it is continuing to see a slump in its China label infant formula sales, there had been a "different mix" to the business, favouring its English label infant formula, it said.

English label infant milk sales in the first quarter of the new year were down on the same period last year, but significantly up on the fourth quarter of last year.

"Our ambition is to rebuild The A2 Milk Company into an exciting, innovative and sustainable growth company.

"We have reviewed our brand positioning to ensure continued distinctiveness and to capture the full potential of our China label and English label products in key channels," chief executive David Bortolussi said.

The company's brand health metrics were strong in all markets, and it would be investing more behind the brand to increase awareness, he said.

"We are focused on realising the full potential of our core China infant milk formula business and despite current market headwinds we have a significant opportunity to grow share in the market.

"We will innovate and expand our infant milk formula product portfolio to appeal to a broader set of consumers and to maximise our distribution potential."