a2 Milk rolls out at Walmart: ‘It’s a real validation of our business proposition’
Speaking to FoodNavigator-USA after securing distribution at Walmart stores in Texas and the east coast, Waltrip said the company is now developing a series of new products beyond liquid milk, with the first likely to hit the US market in the next 12 months.
“We’ve transitioned over the last couple of years from being a milk company to being a dairy nutrition company, and we see significant opportunities to leverage the a2 proposition in other higher value products.”
The deal with Walmart – which approached a2 Milk after seeing the momentum it had built in the US after its 2015 launch – represented “a real validation of our business proposition,” said Waltrip.
“Retail buyers want to know whether you’ll drive new consumers into the category, whether you will incrementally drive margin, and what percentage of category growth you are delivering and we have good numbers on all of these things.
“But they also want to see you are willing to invest in bringing consumers to the store, not just with TPRs [temporary price reductions] but through advertising and marketing so they understand your brand proposition before they get to the store.
"We’ve shown we are committed to significantly increasing marketing expenditure; we’ve just kicked off national TV advertising this week,” added Waltrip, who said the product performed best when merchandized with lactose free products or other specialty milks such as fairlife.
Easier to digest?
The New Zealand-based a2 Milk Company - which has already achieved a 10% share of the Australian liquid milk market and is hoping to emulate that success in the US - has developed a genetic test to identify cows that only produce A2 beta casein protein (most milk contains A1 and A2), so their milk can be segregated and marketed as a more ‘gut-friendly’ option.
Around 30% of cows produce just A1, and 30% just A2, with the rest producing both. However, as milk from all of these cows goes into the same pool, ‘regular’ milk typically contains A1 and A2, explained Waltrip, who claimed that A1 may be responsible for digestive discomfort experienced by milk drinkers that cannot be attributed to lactose intolerance or milk allergy (both of which can be determined via diagnostic tests).
Three human clinical trials on a2 milk have been published in peer-reviewed journals over the past four years that lend credence to Waltrip’s claims that many consumers who believe they can’t tolerate lactose (milk sugar) should really be blaming their digestive discomfort on the A1 beta casein protein in milk.
NDC: ‘The scientific theory behind A2 milk is interesting but it’s still just that – a theory’
However, the National Dairy Council chief science officer Dr Greg Miller argued that the evidence is still preliminary: “The scientific theory behind A2 milk is interesting but it’s still just that – a theory.
“We feel there needs to be more science conducted because we don’t yet see sufficient support for the claims being made that A2 milk has unique benefits. A2 is another choice in the dairy case and it’s good for consumers to have options. But, the view of National Dairy Council is that A2 and regular milk provide similar health benefits and have equal nutrition.”
But consumers don’t need to read peer-reviewed journals to determine whether a2 milk works for them, argued Waltrip: “All they have to do is try it and see how they feel. We’re not asking them to make a leap of faith.”
‘The dairy industry reception to a2 milk is still lukewarm at best’
Asked what he made of the reception from the dairy industry at large to a2 Milk, he added: “The dairy industry reception to a2 milk is still lukewarm at best. There is a bit of an irrational fear by the legacy players that this is going to somehow vilify milk, when in fact it’s one of the very solutions that’s going to bring consumers back to milk.
“If you think about the incredible declines in fluid milk consumption over the past 20-some years, and the fact that the millions of dollars they’ve spent have barely slowed down the decline, we’re providing consumers with a way to come back to dairy.
“The interesting thing is that dairy farmers call us all the time wanting to be part of the a2 program because this is one of the worst times in our history for dairy farmers. Farm gate prices are at an all-time low, and farmers are going out of business every day. They are desperately looking for ways to increase consumption.
“We’ve met with DMI [Dairy Management Inc] and we’re members of IDFA [the International Dairy Foods Association] and we think we can make a real difference in the US as we’ve done in Australia.”
Full year results
The a2 Milk Company posted a 68% increase in annual revenues to NZ$922.7m in the year to June 30, 2018. EBITDA grew 101% to NZ$283m.
A2 Milk – which contains only A2 beta casein protein – is now available at more than 6,000 retailers in the US including Walmart, Wegmans, Stop & Shop, Giant Carlisle, Giant Landover, Whole Foods, Market Basket, Sprouts, Safeway, King Soopers, Target, Ralphs, Publix, ShopRite and The Fresh Market.
According to the a2 Milk Company: “A2 beta –casein protein is recognized as being the original beta-casein protein in cows [beta-casein accounts for about a third of the total milk]. That is, originally all domesticated cows produced milk containing only the A2 protein.
“However, owing to a natural genetic mutation, another milk protein - A1 beta-casein protein - appeared in Europe and spread throughout global herds via modern farming practices. Research has shown that A1 and A2 proteins digest differently. Growing scientific evidence supports that the different protein fragments produced have an impact on aspects of digestive function and support the unique benefits of a2 Milk.”
Cows that naturally produce milk rich in A2 beta casein are identified using a non-invasive DNA test which analyzes a sample hair from the tail. These cows are then separated to form A2 herds and their milk is segregated in the supply chain.
While Jersey and Guernsey milk is high in A2, a2 Milk is sourced from dairy cows that produce milk containing the A2 protein exclusively, according to the a2 Milk Company.
Clinical evidence: Three human clinical trials conducted in China and Europe on a2 Milk have been published in peer-reviewed journals over the past four years, while a larger US-based study being conducted at the Pennington Biomedical Research Center at Louisiana State University [funded by a2 Milk Co] is nearing completion, said Waltrip. “Clinical work is also being done by Dennis Savaiano at Purdue University – he’s an expert in lactose intolerance – and there’s also a New Zealand government funded study in progress.
“we have no influence over the Pennington study. Once we fund a study, we have to step back and stay at arm’s length, but my best understanding is that it may be completed some time before the end of the calendar year.”
- 2014 study, European Journal of Clinical Nutrition (41 subjects)
- 2016 study, Nutrition Journal (45 subjects – our coverage HERE)
- 2017 study, Nutrition journal (600 subjects)
“Achieving distribution with such a powerful and respected retailer like Walmart further validates the a2 Milk brand proposition in the US and marks a critical point in our company’s drive to bring consumers back to dairy by providing our products to the roughly 75 million Americans who report dairy intolerance.”
Blake Waltrip, US CEO, The a2 Milk Company
