Archive for A2 Milk

Synlait and a2 Milk Settle Infant Formula Showdown

Find out how Synlait and a2 Milk settled their infant formula dispute. What are the implications for dairy farmers and milk production? Read on.

Summary: The recent resolution between Synlait and a2 Milk has significant implications for the dairy industry, especially in infant formula manufacturing. With Synlait’s exclusive rights ending by January 2025, the production landscape might change, impacting market dynamics and corporate strategies. Despite this, Synlait will keep essential regulatory registrations and some priority arrangements with a2 Milk. Investors are optimistic, as seen in rising share prices for both companies, reflecting renewed confidence in their future.

  • Synlait Milk and a2 Milk have settled disputes over exclusive manufacturing rights.
  • Synlait’s exclusive manufacturing rights for a2 Milk’s infant formula will end on January 1, 2025.
  • Synlait will continue holding critical regulatory registrations and maintaining priority arrangements with a2 Milk.
  • Investor confidence is high, as evidenced by the rise in share prices for both Synlait and a2 Milk.
  • a2 Milk will make a one-off payment of NZ$24.75 million to Synlait as part of the settlement.
  • The settlement is conditional on Synlait’s successful equity raise and refinancing of its banking facilities.
agreement, New Zealand, Synlait Milk, shareholder, a2 Milk, manufacturing rights, newborn formula products, concerns, dairy industry, intricacies, dispute, exclusive manufacturing rights, baby formula, long-term agreement, production, cancelation notifications, contract's legality, Synlait, warnings, settlement, advantages, Chinese regulatory State Administration for Market Regulation (SAMR) registration, Dunsandel facilities, price issues, one-time payment, equity raising, refinancing, banking facilities, ceasefire, stabilizing, corporations, market reaction, Synlait shares, investor confidence, a2 Milk, stakeholders, financially, Future, completion, prerequisites, uncertain situation, watershed moment, economic relationship, dairy sector dynamics, Chinese regulatory registration, production levels, share price increases, outcome

Have you ever wondered what happens when two dairy titans collide? The recent agreement between New Zealand’s Synlait Milk and its shareholder a2 Milk for manufacturing rights for newborn formula products gives an intriguing peek into the dairy industry’s intricacies. With Synlait shares up 16.7% and a2 Milk up 0.8%, this story is more than milk foaming up. But what exactly does this deal entail for dairy farmers and the industry? Let’s get into the specifics.

When Dairy Titans Disagree: Inside the Synlait and a2 Milk Manufacturing Rights Battle

The argument between Synlait and a2 Milk revolves around a2 Milk’s exclusive manufacturing rights to baby formula. Initially, these rights were protected by a long-term agreement to increase the production of certain items. However, problems escalated when a2 Milk sent cancelation notifications in September, challenging the contract’s legality after more than seven years. Synlait acknowledged the warnings, stating that its exclusive manufacturing rights will end on January 1, 2025.

A Carefully Negotiated Truce: What the Synlait and a2 Milk Settlement Means for the Future

The present settlement contributes considerably to the problematic connection between Synlait Milk and a2 Milk. Synlait confirmed the legitimacy of a2 Milk’s cancellation notifications, which is fundamental to the settlement. This acknowledgment is significant because Synlait’s exclusive manufacturing rights for phases 1 through 3 of a2 Milk’s newborn formula expire on January 1, 2025.

Despite this, the deal provides certain advantages for Synlait. The firm maintains its Chinese regulatory State Administration for Market Regulation (SAMR) registration, which is required for production at its Dunsandel facilities. Meanwhile, a2 Milk has agreed to settle many price issues and make a one-time payment of NZ$24.75 million to Synlait.

However, Synlait’s portion of the arrangement is contingent on completing its equity raising and refinancing its banking facilities, for which a2 Milk has offered assistance. This elaborately knit deal looks to be a carefully negotiated ceasefire aimed at stabilizing the destinies of both corporations.

The Market Reacts: Investor Confidence Soars Despite Initial Concerns

While the corporate drama between Synlait and a2 Milk first raised investor concerns, the market’s reaction to the resolution speaks volumes. Synlait shares soared 16.7% to NZ$0.35, their highest level in a month, indicating significant investor confidence in the company’s future despite losing exclusive rights (Reuters). Conversely, a2 Milk saw a slight 0.8% increase to NZ$7.48, showing cautious confidence among its stakeholders. This tiny uptick implies that investors appreciate the agreement but are concerned about its long-term repercussions.

Financial Strings Attached: The Price of Synlait’s New Reality 

The settlement between Synlait and a2 Milk has significant repercussions. As part of the settlement, a2 Milk agreed to make a one-time payment of NZ$24.75 million ($14.81 million) to Synlait. While Synlait will no longer have exclusive rights to produce and supply stages 1 through 3 of a2 Milk’s newborn milk formula products beginning January 1, 2025, it is still subject to specific ongoing commitments. These include obtaining a minimum yearly amount of goods and maintaining special priority arrangements for a2 Milk. Furthermore, Synlait maintains the Chinese regulatory State Administration for Market Regulation (SAMR) registration required for its Dunsandel manufacturing operations.

Regulatory Compliance Continues to Play a Crucial Role in This Industry 

Regulatory compliance is essential in this business. Synlait’s holding of the Chinese State Administration for Market Regulation (SAMR) registration for its Dunsandel production facilities remains critical. This registration is required for any firm looking to enter the lucrative Chinese baby formula market, making it a key component of Synlait’s strategic assets.

Financially, the deal is anything from clear. Synlait’s future depends on completing its equity raising and refinancing its banking facilities. The fact that a2 Milk has agreed to support these efforts suggests a complicated financial interaction. This support is critical to Synlait’s liquidity and reputation with investors and banks. If these economic prerequisites are not satisfied, the settlement may fail, returning both parties to an uncertain situation.

The Bottom Line

The settlement between Synlait and a2 Milk represents a watershed moment in their economic relationship, potentially ushering in new dairy sector dynamics. Despite losing its exclusive manufacturing rights, Synlait maintains critical Chinese regulatory registration, allowing it to maintain significant production levels for a2 Milk.

Financially, the one-time payment and the terms attached to Synlait’s refinancing complicate matters, revealing the deep links between corporate discussions and market responses. Indeed, the share price increases for both firms demonstrate investor confidence in this outcome.

For dairy producers, this settlement may indicate a change in the industry’s power balance and the structure of competitive coalitions. Could this spark more collaborative or competitive partnerships among industrial titans? What does this imply for smaller market players?

Learn more: 

12 Things You Need to Know About A2 Milk

When a new food trend presents itself a considerable amount of the success or failure in consumer uptake relates back to the way the product was introduced to the marketplace.  Drinking milk is by no means a “new” marketing trend but with the acknowledged trend toward healthier eating and better diet choices, the entry into the marketplace of a “new and better” milk drink is making ripples in milk glasses around the world. Milk has certainly seen its share of positive and negative marketing.  Everyone relates to and has positive feelings about the “milk moustache” campaign.  But mothers worldwide deal with the issues of “lactose intolerance” and “mother’s milk versus cow’s milk”. Every dairy producer faces the arguments of natural, unnatural or pasteurized.  And even with the acceptance or more flavored milks, the health issues have not been truly answered. What does this “new” milk mean to dairy producers?

Something Exceptional? Or Exceptional Marketing?

An Australia based firm – A2 Corp. – has been selling a brand of A2 milk in New Zealand and Australia for the past 10 years and is poised to launch into the North American market. Their growing body of research suggests that A2 milk may provide the answer for the 1 in 4 Americans who suffer from lactose intolerance.  The A2 Company hypothesizes that the problem is that they are unable to digest A1, a protein most often found in milk from high producing Holstein Cows. They propose that the A2 protein which predominates in milk from Jersey, Guernsey and most Asian and African cow breeds is more easily digested.

It’s about Leaky Gut Syndrome.

As with many health food trends, evidence shows they often get the first foot hold in the alternative medicine field.  From that perspective, the leading explanation for why some people can’t tolerate A1 milk is attributed to leaky gut syndrome. The idea that loose connections in the gut, “like tears in a coffee filter, allows proteins to enter the body and run wild.  In response the body sends immune cells to fight the autoimmune invaders and the result is swelling and pain from the resulting inflammation.  These symptoms are associated with arthritis, diabetes and autism.

What’s wrong with A1?

The real fiend in A1 milk according to A2 proponents is that, when digested, A1 beta-casein releases beta-casomorphin7 (BCM7), an oploid with a morphine-like structure.  Numerous recent tests report higher-than-average levels of BCM7 in blood from people with autism and schizophrenia. Furthermore, a recent study that is currently under review in the Journal of Nutritional Biochemistry reports on cell cultures research by Richard Deth and Malav Trivedi, both in the Pharmacology Department at  Northeastern University in Boston, that shows similar high amounts of BCM7 in gut cells causes a chain reaction that creates a shortage of antioxidants in neural cells.  This is a condition that other research has tied to autism.

Where’s the SCIENCE?

As for leaky gut, this is a condition that many adults may suffer from.  However, the condition is normal in babies under a year of age, who naturally have semi-permeable intestines.  Therefore, when they’re fed typical cow-milk formula, problems arise with digestion.  “A 2009 study documented that formula-fed infants developed muscle tone and psychomotor skills more slowly than infants that were fed A2-only breast milk.  Researchers in Russia, Poland and the Czech Republic have suggested links between BCM7 in cow milk and childhood health issues.  Another more recent study implicates BCM7 in sudden infant death syndrome, reporting that some “near-miss SIDS” infants had blood serum containing more BCM7 than the blood of healthy infants of the same age.” Research is ongoing to support these claims.

Partners on the Frontier

Bob Elliott, Professor of Child Health Research at the University of Auckland opened up discussions about A1 milk and diabetes in Samoan Children.  In a 1997 study published by the International Dairy Federation, Elliott showed A1 beta-casein caused mice to develop diabetes. In 2000 he partnered with entrepreneur Howard Paterson, then regarded as the wealthiest man on New Zealand’s South Island, to found the A2 Corporation.

False and Misleading?

Those charged with responsibility for public health and safety are feeling the pressure from this new product. In 2009 the European Food Safety Authority reported that they found no link between consumption of A1 milk and health and digestive problems.  To date, much of the supporting research has come from the A2 Corp., which holds a patent for the only genetic test that can separate A1 from A2 cows. Some fear a conflict of interest arises here.  In 2004, the same year that A2 Corp. went public on the New Zealand Stock Exchange, Australia’s Queensland Health Department fined A2 marketers $15,000 for making false and misleading claims about the health benefits of its milk and, at least for New Zealand’s Food Safety Minister, the debate was resolved.

The Door is Open to Welcome New Milk

Debate over or not, the A2 Corporation moved forward to market its a2 brand milk in New Zealand and Australia, where its currently accounts for about 8 percent of dairy product sales Down Under. In 2012, A2 expanded distribution through the Tesco chain into Great Britain. Currently a two-liter bottle sells at an 18 percent premium over conventional milk. Building on consumer acceptance in these locations, A2 is poised to re-launch into the U.S. market where they feel, unlike on their previous entry, there are now enough American consumers willing to pay a premium for A2 milk. The good news appears to be that A1 is not the causative agent for diabetes, heart disease and cancer.

Ready for Research

In building the A2 hypothesis, it becomes necessary to compare its benefits to the problems of A1 milk. In 1993 Elliott proposed that consumption of A1 milk could account for the unusually high incidence of type-1 diabetes among Samoan children growing up in New Zealand.  A colleague, Corran McLaclan, later found strong correlations between per capita consumption of A2 milk and the prevalence of diabetes and heart disease in 20 countries.  Critics explain the relationships away by other  factors such as diet, lifestyle and exposure to Vitamin D as suggested by research published by  Elliott  and  in the book written by Keith Woodford,(Devil in the Milk: Illness, Health and the Politics of A1 and A2 Milk.). The time is ripe for responsible research to resolve these issues.

Coming to A Grocery Store Near You

A2 Corporation is understandably cautious about suggesting that consuming its products is a solution to preventing serious diseases.  Their marketing emphasizes instead the digestive benefits of its fluid milk, fresh cream and infant formula products. Regardless of your current position in this “Battle of the Milks”, when it comes to the health of the next generation, we all need to take a stand. Worldwide A2 Corporation is into several years of expansion into the UK, Ireland and China.

A2 From the Farm to the Table

Along with being exposed to new dairy products, today’s consumer wants verification for what they are being sold. A2 Corp. explains that the company’s farmer-suppliers use DNA analysis of tail hair from each cow to certify she is producing A2 milk, which is kept segregated through processing.  They also report that it is now possible to convert a herd of A1-producing cows to A2- producing cows. They are working with selected dairies that are making this conversion and test-marketing A2 milk in a number of U.S. states.

A1, A2 and AI

AI companies are well aware of the A1/A2 debate and are taking steps to stay up on new developments.  Many US and Canadian AI companies keep records of the A1/A2 genetics of their genetic offerings. The development of A2 producing Holsteins is gaining momentum and breeders with long term vision are phasing out A1 cows and are confident they can maintain high production throughout the transition. At the leading edge are those who seek niche markets using the A2 dominant breeds such as Jersey, Guernsey and Normande.

The Bullvine Bottom Line

As with any other health claim, there will be early adopters and those who wait until the facts are all in.  I can’t help but ask, “When was the last time, you were absolutely certain of the nutritional science behind all the food you eat?”  Having said that, it isn’t difficult to accept the proposition that there are certain people in the population, particularly babies, who react severely to the A1 protein.  Four fifths of our family can dine delightfully on shellfish without incident.  Our baby risks anaphylactic shock from merely sniffing some on a buffet. So back to A1 and A2.  Is the market big enough for both?  Is one right?  The other one wrong?  The spotlight is on milk in a positive way. Sometimes we spend so much time defending the tradition that we miss the opportunity of bringing a whole new consumer into the dairy aisle.

 

 

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“Got Milk” is becoming “Got More”

“Drink your milk.”  Dairy farmers aren’t the only ones who have been raised with this mantra and its follow-up don’t-argue-with-me reasoning, “It’s good for you!”  There are many parenting proverbs that haven’t stood the test of time. but milk`s goodness has.

Milk has Already Got More Good Stuff

There is significant recent scientific research to prove that milk contains several disease- fighting compounds. Research is also evaluating the potential health benefits of proteins that are found in milk.

Cows are Putting More Good Stuff Into the Milk

With the proof of milks’ already healthy properties, comes the good news that scientists have learned that these properties can be increased by feeding cows specialized diets. The potential is definitely here for dairy farmers to change the way they feed their cows and thereby raise the health-enhancing properties of milk.

For example, in a recent study, Oregon State researchers were able to increase the level of omega-3 fatty acids in milk.  They also were able to decrease the amount of saturated fat.  Both these results came through feeding flaxseed to cows. This is great news for consumer health.  Less cholesterol and more omega-3 fatty acids in our human diet reduces the risk of heart disease.

What More Has Milk Got for Me?

Research trials have shown that consuming butter with elevated levels of CLA can reduce the size of cancerous tumors. CLA is Conjugated Linoleic Acid and is a naturally occurring anti-carcinogen. Researchers at several universities, including Cornell. have discovered they can increase the level of cis-9 trans-all CLA by feeding cows certain nutrients.

Other news from this area reports that a2 brand milk comes from cows specially selected to produce A2 beta-casein protein rather than A1. Most cow milk contains both types of beta-casein protein – A2 and A1. The A1 beta-casein protein has been linked with digestion and health issues so having more A2 is a plus.

A2 Corporation, the manufacturer of a2 brand milk products, targets three areas of growth: building its beverage business in Australia and New Zealand, capturing niche shares of global milk and dairy product markets and developing an infant formula business with an initial focus on China.  In April 2012, they announced a strategic agreement with Synlait Milk Limited in New Zealand to manufacture a2 brand nutritional powders, including milk powders and infant formulas for A2C.  According to A2C managing director Geoffrey Babidge, the a2 brand’s growing credibility will provide a platform for the firm’s expansion plans in the UK, Ireland and China. In December 2012 production of the China-destined a2 branded infant formula was set to begin.

Milk has Got to Have More Taste!

When a food has earned the label “good for us”, we sometimes choose not to eat or drink it claiming it doesn’t register on our taste scale.  Since the 1970s milk consumption has been declining and certainly consumer taste preferences are part of that statistic.  In the U.S. the volume of total liquid dairy is declining. Consumption of white milk is forecast to decline by 6.5% between 2011 and 2015.  But then comes the “good taste” news.  Consumption of flavored milk is growing and expected to increase to 9.5% by 2015. Flavored milk, the second most widely consumed Liquid Dairy Product (LDP) after white milk, is forecast to increase globally by a compound annual growth rate (CAGR) of 4.1% between 2012 and 2015, rising from 17.0 billion liters to 19.2 billion liters.

The World Wants More Flavors

In the past five years, 2009 to 2013, four emerging countries – Brazil, China, India and Indonesia – are driving the increased demand for flavored milk. While developing countries accounted for 66% of flavored milk consumption, this is forecast to rise to 69% by 2015.

Research shows that China, South Asia and Southeast Asia drink more than half the world`s flavored milk. In fact, just six Asian countries – China, India, Indonesia, Malaysia, the Philippines and Thailand – consume 47% of the world`s flavored milk.  This highlights that emerging economies are the growth engines of the dairy industry.

North America`s Got Apple Pie Milk and More

While not leading the consumption of flavored milk, North America is certainly not out of this tasteful picture.  Just in time for birthday celebrations on Independence Day Shatto Milk Co. of Osborn, Mo., stocked store shelves with apple pie-flavored milk to celebrate its own 10th anniversary.  Other flavors this flavorful company produces include cherry chocolate and mint chocolate milk. According to Dennis Jonsson, President and CEO of Tetra Pak Group “For consumers unwilling to compromise on taste, health or convenience, flavored milk is proving to be an increasingly popular alternative to other beverages.”

Flavored Milk’s Got More with Less Packaging

Cartons have become the established packaging format for flavored milk, according to Tetra Pak.  They accounted for 62% RTD (ready to drink) flavored milk packaging in 2012, up from 57% in 2009, and are expected to rise to above 64% in 2015. Portion packs are expected to reach 81% of RTD flavored milk consumption.

Milk’s Got More Added Value

Whether you`re attracted to milk for its high nutrition, health benefits or good taste, milk products today can meet a huge range of  needs.  It starts with the desire for nutritious and healthy food.  Developing countries are turning to nutrient-rich milk products.  In prosperous urbanized areas of the world the fast pace of modern life demands tasty, flavored milk in convenient packaging. Consumers are eager to try new and unusual food and drinks. New varieties of milk products will most definitely increase milk consumption.  Additionally, these “designer” dairy products could sell for premium prices.

The Bullvine Bottom Line

Kudos to dairy producers, the scientific community and marketing wizards.  The production of milk with so many “Got-More” features means we are improving the health of the consumer and the health of the dairy industry simultaneously! Now that’s more like it!  So “Drink your milk!  It’s good for you!”

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