ONE of the few winners from this year's cut-throat supermarket milk price war has been cleverly marketed a2 milk, with sales going so well a factory is being built to service the brand's burgeoning market.
Australia-wide sales of the a2 product - milked from cows specifically selected for carrying the A2 milk protein gene - have jumped about 40 per cent in the past year.
Despite the vicious $1 a litre price war initiated by supermarkets using cheap house brand milk to lure in customers, the a2 brand's sales have dodged the nationwide gut punch that has hit most branded milk lines, and are still climbing.
In just four years since being launched as a national brand, a2 has enjoyed a 400pc growth in sales and now holds about 3.7 per cent of the white milk market according to its promoters.
The brand, originally developed in New Zealand, is currently packed under contract at Norco sites at Labrador on Queensland's Gold Coast and Raleigh on the NSW North Coast and Southern Processing's Kyabram factory in Victoria.
A new bottling plant will bolster existing processing capacity by about 45 million litres a year when it opens in south western Sydney in November, utilising the latest in air sterilisation technology on the processing chain to give its fresh milk product an extended shelf life of 20 days or more.
The $7.5 million factory is just 20 minutes away from a2's biggest milk supplier and Australia's biggest dairy farming business, Leppington Pastoral Company, which has been switching to a2 milk production for the past four years.
The Perich family's Leppington operation, which milks more than 2000 cows eight hourly near Bringelly, is now supplying about half its 25 million litres of annual production to a2, and continues to switch more of its herd to the niche brand.
General manager of a2 Corporation, Peter Nathan, said his company expected to sign up several other significant suppliers in areas relatively close to the new plant in the near future.
He said a2 Corporation not only paid a premium for the milk it bought, but also helped fund farmers' DNA tests to establish which cows carried the A2 gene and assisted their herd development efforts.
Only about 35 per cent of modern dairy herds typically have cows producing A2 protein milk, although up to 90pc of Guernsey cows typically carry the gene.
Mr Nathan said a2's success in the highly competitive milk market was its "unique point of difference" to other white milk lines.
Despite aggressive marketing to win supermarket shoppers over to generic branded milk, consumers had responded to the heated debate by growing more interested in brands that were obviously different to the generic white milk market.
"Quite apart from the fact that our milk carries the A2 protein, we also do not dilute our product with permeate, which is used in some house brand products," Mr Nathan said.
"Consumers see us as offering a more natural product which tastes good, while other big name milk brands are struggling to define what's different about their product from the generic supermarket lines."
Mr Nathan said the taste difference was not marketing hype, pointing to this month's gold and silver medal wins in the Royal Queensland Food and Wine Show awards for for a2's reduced fat and full cream milks, respectively.
Last year a2 Corporation teamed up with the Victorian yoghurt maker Jalna to release an a2 line to complement its pot set yoghurt range.
The brand also has a long life (UHT) milk range, packed by Sydney heat treatment packaging specialist, CBPA based at Tarren Point in Sydney.
CBPA is a joint venture business between Freedom Foods (the second largest shareholder in a2 Corporation) and the Perichs at Leppington Pastoral Company.
Freedom Foods, which also owns the So Natural, Australia's Own, Paramount and Brunswick food brands, and a cereal processing plant in the NSW Riverina, was originally a joint venture partner with the NZ-based a2 Corporation when the two teamed up to build the a2 milk brand in Australia in 2007.
The joint venture business recently changed to be completely run by a2 Corporation, which while listed on the NZ Exchange (NZAX), is now primarily managed from Australia where a2 has become the largest single stock keeping unit (SKU) milk product brand in Woolworths and Coles supermarkets.
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