Saturday, April 20, 2024

A2 milk journey is only just beginning

Avatar photo
The milk category has gone relatively quiet, says Keith Woodford, but it is far from dead.
A2 remains a big component of this year’s primary index fall, its share price being down 45% since the start of the year.
Reading Time: 4 minutes

I have been involved with the A2 milk journey since 2004 when I first started writing about A1 and A2 beta-casein. In 2007 I wrote the book Devil in the Milk about A1 and A2 beta-casein and the associated milk politics. That caused quite some controversy. 

A United States edition followed in 2009, then a New Zealand update was published in 2010, and in 2018 there was a Russian language edition. 

There were also requests more recently for an edition in other languages, but I turned those down because I knew that a totally new version was required to bring things up to date.

I had planned for that to be written in 2023, but my own health issues got in the way and it is still sitting on the back burner. Time will tell.

In the meantime, my recent article on Synlait, “Where does Synlait’s future lie?” and its problems, including the disagreements between Synlait and The a2 Milk Company, has led to email correspondence with readers asking what is happening within the overarching A2 milk category? It seems to have gone quiet, they say.

Yes, it has gone relatively quiet, but it is far from dead. The supermarket where my family buys milk sells three brands of A2 milk, sourced from three different suppliers, these being Fonterra, Lewis Road and Fresha Valley. 

There is also a broad range of micro brands at regional level. There are at least three brands of A2 infant formula sold in New Zealand, and there is A2 ice cream from Appleby in both my supermarket and my fridge. 

First, some clarity on the difference between “a2 Milk” and “A2 milk”. The first of these terms with the small “a” is a trademark of The a2 Milk Company, which pioneered the concept of A2 milk in New Zealand and globally. 

In contrast, “A2 milk” with a capital “A” is a generic category of milk where all of the beta-casein is of the A2 type.    

The term “A2 milk” is a term that I and others were using long before the trademark “a2 Milk” came into existence. Accordingly, and linked also to A2 being the original natural form of beta-casein, there are no patents relating to the milk itself. Hence, there should also be no trademarks preventing any dairy company from marketing milk labelled as “A2 milk” as long as it is free of A1 beta-casein.   

However, The a2 Milk Company is very litigious and new entrants to the category get a “cease and desist” letter for using “A2 milk” to describe their products.

Small companies are typically scared to take on a company like The a2 Milk Company, which has more than $750 million in the bank, no debt, and is now back in the NZX10. Often they try to avoid the threat by using terms like “A2 protein” or “A2 infant formula”.

The a2 Milk Company still likes to throw its weight around in regard to whether those terminologies are acceptable, but it did lose two recent contests about A2 trademarks with Danone and Theland. We may not have heard the end of the trademark disputes.

The renaming of A2 Corporation to The a2 Milk Company and the registration of a2 Milk  as a trademark was a clever commercial ploy, which arguably should never have been accepted, given the confusion it creates. 

The key point to remember here is that in anything I write, the use of “A2” or “A2 milk” refers to a category of milk where all the beta-casein is of the A2 type. Any term using “a2” by itself, or at the start of a word, refers to products of The a2 Milk Company or other companies that it has licensed. For example, Fonterra’s a2-labelled milk is produced by Fonterra itself, but Fonterra pays a fee to The a2 Milk Company to use the trademark.

The a2 Milk Company, the biggest A2 marketer in the game, currently purchases all of its infant formula in a consumer-ready state from Synlait. It is currently the fifth-largest marketer across all infant-formula categories in China, not just the A2 category.

After exceptional growth between 2010 and 2018, such that The a2 Milk Company was the largest company on the New Zealand stock exchange of any type, things have definitely quietened down. There are at least four contributing reasons for this.

The first reason was that a2 Milk was hit hard by covid. It had been very entrepreneurial in its alliance with daigou, who were local Australian Chinese in Australia who themselves wished to send the product to China-based colleagues. With covid, this trade fell apart. 

The second reason is that only limited clinical research has been undertaken recently. This is in part because A2 products cannot be patented as such. So, no dairy company is willing to fund major research that other dairy companies will also benefit from. 

Also, lack of patents means that none of the pharmaceutical companies that fund development of new drugs are going to research the health implications of A1 versus A2 beta-casein.

The third reason is that most global dairy companies are in the A2 business purely for risk-management reasons. They cannot afford not to have A2 products in case the A2 message suddenly becomes dominant in the media and they are left behind.  

With the exception of The a2 Milk Company, whose business is solely related to A2 products, and similarly with several niche companies, life would be simpler for dairy companies if the issue simply went away. 

The fourth reason is that most of the health conditions linked to A1 beta-casein are chronic conditions. This means they result from long-term exposure. This makes it very difficult to do clinical trials. This is the same reason that clinical trials have never proved that smoking causes cancer, and why it took so many decades for powerful smoking-related health messages to become effective.  It makes for a long journey.

The areas where it has been easiest to conduct clinical trials relate to digestive effects, reaction time and brain fog. This is because the effects occur within minutes and hours. It is therefore feasible to measure these effects directly in humans. 

The irony is that although scientific knowledge continues to build, that information is not yet transferring efficiently to the general population. Another irony is that NZ is further down the track of dairy-herd conversion to produce milk free of A1 beta-casein than any other developed country. It could have been a winner.

A third irony is that human milk is of the A2 type, as are sheep milk, goat milk, and indeed all mammals apart from the European breeds of cattle, where an ancient mutation has caused many modern dairy cows to produce A1 beta-casein.

Good science always wins out in the long run, but it can be a long journey with many twists and turns.   

Total
0
Shares
People are also reading