Fake Revenue Growth Adjustment
Quote:
Originally Posted by
MAC
The revenue growth from the three opened markets UK, China and US, are all at the very bottom of the curve, and in a couple of years those intercompany charges will seem much much less as a percentage of gross.
I hope when you guys are making your growth forecats in other markets you are taking out the inflated fake growth that was achieved in Australia due to the supermarket milk price wars.
I notice that ATM quote their achievements by measuring their market share in terms of gross market value. If the price of an ordinary one litre of milk goes from $2 to $1 and sales remain constant then the gross value of those sales in the market halves. If the price of A2 milk representing say 2% of market share by volume does not change, that means:
1/ The gross market value of retail milk sales approximately halves.
2/ By value, the gross market share of A2 milk will double, with no increase in A2 volume.
3/ That in turn means that A2 will roughly double their market share percentage, by selling exactly the same amount of milk.
Since this milk price war between Coles and Woolies started early in CY2011 just as A2 was getting established, I believe that A2s growth by volume is probably only about half the market share growth by value.
That means that if A2 goes into a new market which doesn't start a milk price war when they appear on the scene, the market share gains with time are likely to be only half what has been seen in Australia, all things being equal. In other markets we know that all things are not equal because there is no duopoloy which guarantees that once A2 milk was established that the single other player had to follow suit. It therefore seems logical that annual growth in other new overseas markets is likely to be only half that seen in Australia. But all you growth gurus are already aware of that, so have built it into your growth modelling - right?
SNOOPY