I will have a milkshake with you. God it is getting boring over at the PEB Cafe.
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Quiet day today , time to go and weed some more garden. Enjoy your a2 milk shake. Thats given me an idea. Someone should start an a2 milk shake bar.
W69, I think this is a really interesting and fundamental question. I have been thinking about it in relation to the UK. In northern Europe, you have countries with herds that are largely A2. These countries are geographically very close to the UK and within the European Economic Area (not all in the EU). Who says the A2 milk sold in the UK needs to be produced in the UK ? Maybe conversion costs and issues are not as cumbersome as we tend to think.
Not sure how commercially successful that would be. A better approach, I think, would be to persuade milk shake bar operators who are already doing well to offer "ordinary" milk shakes at normal price and a2 milk shakes at a premium price - they would have to be at a significant premium to cover costs. That would get people asking "what's with this a2?". You could then hand out your info material explaining the health benefits of a2 and where it can be bought in your area.
a2MC UK already has farms in Wales and western England supplying a2 milk and I don't think supply is a problem. Remember, it's a niche product, not requiring massive quantities. And transport across the water would add big costs. The question will become more interesting when a2MC moves into the US. It's starting its sales in California, better known for i8ts wine than its dairying, and my guess would be that milk may be brought in from the midwest (eg Nebraska) which is cow country two states away. There are already a2-only farms there, and in the US it's nothing to cart milk thousands of km.
Isn't it all about the brand though? If A2 milk is going to be imported into the UK from european neighbours they certainly will not be able to use the A2 branding. So what do they do to differentiate when all the marketing has been centred around A2. "A1 free" doen't seem to ring through or variations of that because most consumers wouldn't draw the relationship between the two. All they know is that A2 is good and non A2 isn't so good. Any branding with anything to do with A2 would be a breach of copyright.
Finding it difficult therefore to see snoopys death spiral for A2 milk company Ltd should the marketing effort promoting the A2 brand in the UK and USA not gain any traction. Sure, the shareprice would be battered but I guess the company would reconsolodate back to Australia and then start paying dividends.
At least at that point there would be no debt accrued to repay. I suspect that ATM will prudently determine its effectivemness going fwd with the marketing outlay committed to developing marketing share without going into debt.
Harrie I am looking at it as a positive for a2mc. I am considering whether it may be an option for a2mc to more quickly and less costly certify and convert farms in the Nordic countries, to supply the very large UK market with fresh 100% A2 milk. All under the A2 brand of course. Just pondering why it needs to be produced in the UK
NT doesn't think that there would be a supply problem but I guess with so much natural supply of A2 milk in the nordic countries its a good supply fall back position. I suspect though as sales of A2 gain traction in the UK more farmers will be willing to convert especially if they can see a maintainance of premium price as the popularity of A2 milk consolidates and grows market share.
I was living in norway for 2 years, 2 years ago. Milk there costs between 3-4 nzd a litre. I guess their expenses are much higher as the majority of the country is under snow 8-9 months of the year. Norway may not be the best example however as sweden and finland are about 30-40% ish cheaper with less snow year round.
Heres a photo i took at my nearest Aldi 2 days ago - hard to see all the labels but basically every milk product you can see in the photo is "Farmdale" milk (the ALDI brand) except of course a2 (in the top left corner). It retails for $4.40 (60c cheaper than anywhere else). https://www.dropbox.com/s/thvqi5pm7v...06.15.jpg?dl=0
And heres an article to go with it: http://www.abc.net.au/news/2014-11-2...ction=business
Just as Costco is a great partner when taking a2 to the states, I imagine Aldi will prove an excellent partner for introducing a2 to the rest of Europe. The future looks bright!
Bought a lil at $0.64 - had to use some spare cash up before I did something stupid, I almost bought PPL with it, gosh.
Im pretty sure that is their standard price, it didnt have the red tag they usually do for specials. Possible answer to your question..... A friend of mine works for a large food company, and Aldi ripped off one of their products - The food company threatened legal action unless Aldi removed the product, to which Aldi offered to stock their product instead. The food company thought they wouldnt be able to make their margins and sell at Aldi's prices, but as it turned out Aldi is a super efficient company that does things VERY diferently to other supermarkets (distribution, logistics, warehousing, shelf stocking practices etc) which is why their products are so cheap, rather than pounding down their suppliers prices (although im sure that probably happens a bit too). End story is, I think, a2 still makes the same margin and Aldi still makes their normal margin - consumer wins (which is why Aldi is growing so quickly) - hence the $4.39 for a tasty bottle of a2!
Will keep an eye on it however in-case it was just a special...
The mystery surrounding the identity of Equity Casa Grande, the Delaware-registered company that owns 30 million shares in ATM and is its sixth biggest shareholder with a 4.55% stake, turns out not to be such a mystery after all.
It is the investment vehicle of colourful US billionaire Sam Zell, who is a close friend and business associate of ATM’s chairman Cliff Cook. He was the guy who famously created America’s biggest property empire, Equity Group and cleverly sold it off for US$39bn just before the Global Financial Crisis, whereupon the US property market turned to mush and most of the group’s properties became worth less than the mortgage debt they carried. He also famously bought the Chicago Tribune media group which included the Los Angeles Times for US$8.2bn and then put them into bankruptcy protection a year later (the papers now survive under different ownership structures).
Zell is estimated to be worth about $5bn and his current major investment vehicle, Equity International (owned through Equity Casa Grande LCC), specialises in identifying and partnering companies outside the US, usually by investing in real estate-related opportunities. He is a co-investor in London-based LifeCare Residences, a luxury international retirement village operator set up by Cliff Cook, who had founded and then sold off NZ listed retirement village operator Metlifecare. LifeCare has retirement villages on Waiheke and in Remuera.
Zell received ATM shareholders’ approval at the shareholders’ meeting in 2008 to purchase 50 million shares. It’s interesting now to look back at what happened then, as reported by The Independent:
“It was through retirement home connections that A2 Corporation chairman and substantial shareholder Cliff Cook and his right-hand man Greg Hinton met Zell and his executives, culminating in the fund's investment in A2.
“A2 shareholders also voted on Friday in favour of a placement of 28 million shares to AMP Capital for 10c a share, (bringing its total stake in the company to 40.015 million shares, or 12.85% of A2) as well as the issue of 13.915 million shares to the Child Health Research Foundation in exchange for it agreeing to terminate an agreement it entered into with A2 in April 2004 for entitlement to a portion of future royalties. This agreement related to a jointly held patent between the two parties for processing milk from cows with only A2 beta-casein protein, free of the A1 casein linked to illnesses such as heart disease, diabetes, autism and schizophrenia.”
In July this year, Dairy Farms NZ Ltd, which is a US-NZ JV 62.8% owned by Zell, received OIO approval to buy 434.4ha of dairy farmland at Lowcliffe in Canterbury for $22.3m. Whether this is connected with the ATM-Synlait operation I don’t know.
NT001,
Clavell Capital, the Auckland based investment advisors behind A2 Milk are also behind Dairy Farms NZ, who boast Sir Henry Van Der Heyden (ex Fonterra) as an advisor to the company.
There are indeed possibilities for Dairy Farms NZ (who anticipate listing in mid 2015) to increase their*revenue by converting some of their herds to A2.
The Companies Office website is down for maintenance, but a casual examination of the Dairy Farms NZ shareholder list on the NZCO website would reveal some*interesting names...
Like lada cars
Still trying to get a real feel for the A2 financials, mainly because I struggle to get any DCF to give me anywhere near 90 cents / $1
Is this slide really meaningful (from annual results preso) - like say for Australia is the intercompany charges and license fees of $14.2m a real cost or just a lot of smoke and mirrors to confuse mere mortals like me. Upon consolidation it probably has no impact and A2 have put this disgram in to try to show how much money is made in each segment.
Reading all this stuff it appears as A2 say that 'investment for growth' was $7.5m - does that imply normalised earnings were about $7.5m pre-tax then?