A notable change has been occurring recently with A2 milk products now available from multiple manufacturers. That includes at least three brands of A2 infant formula available here in New Zealand. These offerings are the original a2 Platinum from The a2 Milk Company (ATM), plus relative newcomers Karicare A2 from Danone and Haven A2 linked to Zuru.
There are also now at least three A2 fresh-milk brands in New Zealand, these being Fonterra, Fresha Valley, and a strangely named “organic A3” product which, according to its owners, is also produced exclusively from A2 cows.
Internationally, there are multiple A2 brands of both A2 milk and A2 infant formula now available, particularly in Asia, to a lesser extent in the Americas, but with Europe still lagging.
Most of the big international brands now have A2 projects. Including niche marketers, there are probably more than 20 brands spread across the globe.
One of the ironies is that it all started in New Zealand with the late medical scientist Professor Sir Bob Elliott in the late 1990s. He was the person who first identified the relationship across the globe between consumption of A1 beta-casein and childhood incidence of Type-1 diabetes.
Subsequently, Corran McLachlan discovered similar relationships for heart disease. The solution was to breed cows that produced the alternative A2 beta-casein.
The reason I refer to it as an irony is that the New Zealand dairy industry has never been the major beneficiary of the A2 movement. This is despite the biggest global marketer of A2 products still being New Zealand-registered ‘The a2 Milk Company’ (ATM).
Despite the New Zealand registration, most shareholders of ATM live outside New Zealand. The accounts are recorded in New Zealand dollars, and much of the ATM milk is sourced from New Zealand, but the Head Office managers are domiciled in Australia, together with key regional teams in China and the USA. To complete the international picture, the Chair is domiciled in England.
It is also ironic that going back 20 years, New Zealand had potential for a big A2 advantage over most countries. This was because, quite by chance, New Zealand had a higher proportion of A2 cows than other Western countries.
However, the mainstream industry led by Fonterra fought the A2 movement right through until 2018, seeing it as a threat rather than an opportunity. Although Fonterra now has some A2 offerings they have yet to grasp the opportunity in a significant way. Most Fonterra farmers cannot currently obtain an A2 premium and many lack insight as to where the global A2 movement is heading.
Given that ATM has recently purchased Mataura Milk, there will be new A2 opportunities for Southland and South Otago farmers. This should also increase the market value of A2 cows as farmers seek out these animals to finish the conversion process.
Some of my readers will know that I have been involved with the A2 movement for more than 15 years, both in science and outreach capacities. But most of my A2 work these days is offshore. My interest is in the category rather than particular brands, but I do work with brand owners when brand and category interests align.
Currently, I have projects in Indonesia, Japan and Russia, albeit relying on ZOOM in this COVID-afflicted world. I also network with niche A2 marketers in other countries.
This last year has been particularly challenging for ATM. The company hit a big pothole with COVID disrupting its supply chains to China. Accordingly, ATM has fallen from being a market darling that could do no wrong to losing more than half its value in the last eight months. A year ago, the ATM capital value was more than double that of Fonterra, but now, at only $NZ6.4 billion, it sits a little below Fonterra.
Whether COVID is the only pothole for ATM is a moot point. About five years ago the company decided to focus on its own brands rather than further developing the category. At that point, they stepped back from major research funding.
Even before that, the company was managed primarily by marketers rather than scientists, but then they pivoted even further towards marketing. I think they were dazzled by their own success. They lost sight of fundamental issues relating to the need to further build the science foundations.
Among the new A2 brands, the owners fit into two broad groups. The large-scale marketers apart from ATM have existing brands to protect based on ‘ordinary milk’ that contains A1 beta-casein. Typically, these brand owners would shed no tears if the A2 movement disappeared. The reason they have A2 projects is because they recognise the risks of not being involved. It’s all about risk management.
Then there are the niche marketers who have made a big commitment to A2. These people tend to be passionate about their products related to health matters. They have no ordinary milk brands to protect.
A consequence of this situation is that most of the big companies have no wish to fund research and the niche companies cannot afford it. Human trials are very expensive and typically for even a modest trial there is no change out of at least $US500,000 and usually much more.
Although the companies are not spending money on new science, there is an increasing level of activity from science-based organisations around the globe. I see that from my own science-based A2 publications, which had low journal citation counts initially, but now have multiple citations coming through each month via ResearchGate. Unfortunately, science-based organisations are seldom good at communicating results to the public. They leave that to others.
One of the new research papers published in recent months comes from a leading American group from Purdue University led by Professor Savaiano. This work was supported by ATM. It confirms prior work coming mainly from China that people with a tendency to lactose intolerance can benefit from A2 milk despite A2 milk still containing lactose. Although some of us have been confident of this for quite some time, and we understand why this interaction occurs, it is particularly valuable in the public arena to have it confirmed from a top American group of researchers.
A key insight that currently has my attention is understanding why the opioid beta-casomorphin-7 (BCM7) released from A1 beta-casein can have such a wide range of effects on so many different organs of the body. The insight comes from bringing together research from the last 15 years identifying mu-opioid receptors in all of the brain, heart, lungs, bronchi, pancreas, kidneys, and liver. BCM7 latches to these receptors. Individual genetics then determines how that plays out in terms of inflammation and auto-immune responses.
Sometimes I get asked by farmers as to how long I think it will be before the A2 premium disappears. My response is that they are asking the wrong question. In the long term, the question is when will the A1 milk sell only at a discount. That situation may still be a long way distant, but it is coming.
The starting point of herd conversion is to focus on bulls classified as A2A2. It only takes one bull carrying the A1 variant of the gene to negate several years of progress.
*Keith Woodford was Professor of Farm Management and Agribusiness at Lincoln University for 15 years through to 2015. He is now Principal Consultant at AgriFood Systems Ltd. His previous articles on high-country issues are archived at https://keithwoodford.wordpress.com/category/the-high-country/. You can contact him directly here.