- The A2 Milk Company reported a 91% jump in revenue in the U.S. region to NZ$66.1 million (about $43 million) this fiscal year, according to its annual results.
- The New Zealand company attributed the increase in consumer demand to expanded distribution, new packaging and a national TV advertising campaign.
- The company's overall annual earnings, which ended June 30, saw total global revenue of about $1.1 billion, a 33% increase from fiscal year 2019.
For years, the milk industry has been in decline. With fewer consumers drinking the staple and increased competition from discounted private label and milk alternatives, the industry has suffered. Major dairy companies, including Dean Foods and Borden Dairy, have filed for bankruptcy.
Amid the turmoil, many industry insiders have said that the key to bringing the category back to life is innovation. The A2 Milk Company is proving that prediction could be true.
Most milk products contain both A1 and A2 proteins, but research has found that A1 can cause stomach discomfort. A2 Milk sells dairy products that only contain the A2 protein. The company works with U.S. dairy farmers to identify cows that naturally only produce that protein type, and process their milk separately. Consumers can now buy A2 Milk at more than 20,000 stores across the United States, nearly double its retail presence last year.
The A2 Milk Company was started by a New Zealand scientist in 2000. In Australia, A2 Milk has gradually increased in popularity and is now the fastest growing major fresh milk brand in grocery stores, controlling about 11% of the market, according to its website. The company started to sell A2 Milk in the U.S. in 2015, and this latest jump in sales shows growth is on a similar track here.
"You're going to start seeing people come back to dairy — we're seeing it already," Blake Waltrip, the company's U.S. CEO, said last year.
The company said the jump in sales came from its aggressive marketing campaign. The company has heavily invested in education in the U.S. through public relations, social media, in-store shopper marketing and its national TV campaign. The company also launched coffee creamers last year, its first new product offering since coming to the U.S.
"The U.S. continues to be a strategically important market for the company, given the significant and growing premium milk segment and as a result of the significant growth in our brand awareness, this provides a platform for further product expansion over time," Geoffrey Babidge, interim CEO of A2 Milk, said on an earnings call with analysts.
At a time when the coronavirus pandemic has forced farmers to dump gallons of milk and global dairy prices are stalling, A2 Milk is seeing a revenue boost. Waltrip said in a statement the company has worked to ensure A2 Milk was available in stores and online during the pandemic, and he said the company remains "optimistic for what's to come through the remainder of 2020 and beyond."
A2 isn't the only milk company using innovation to find profit in the stalwart category. Fairlife, which Coca-Cola fully acquired this year, produces ultra-filtered milk, a higher-protein and lactose-free product that has seen significant demand in recent years. Fairlife recently expanded into ice cream.
Sales growth of companies like Fairlife and A2 Milk proves there are consumers who are interested in coming back to milk, but the beverage might not look the same as it once did. As dairy companies work to adjust to continually changing consumer demands, innovation will continue to be essential. It can be tough in a category like milk because chocolate is one of the only flavors that has really caught on, but A2's 91% sales jump shows that it is possible.