Infant formula and milk supplier A2 Milk says sales growth in the huge China market has been unaffected by the launch of a rival brand and that the company still holds a strong position.
Shares in A2 Milk fell more than 12 per cent last week after global giant Nestle launched an infant formula product that contains only the A2 instead of the A1 protein and A2 protein that are contained in conventional milk.
A2 Milk’s brand is built on its products containing only the A2 protein, which is said to aid digestion.
But A2 says sales in China have not slowed as a result of the new competition.
“The company continues to perform strongly in each of its key markets and in particular has not seen any change in the growth of its China business,” A2 Milk said on Tuesday.
A2 Milk said it is supported by its strong brand identity, the fact its products are sourced from Australia and New Zealand, and the vast size of China’s infant formula market, which has an estimated retail value of $US20 billion.
A2 Milk said there was a multitude of brands in China, and the recent experience of other businesses had shown that it was hard to establish new products without a strong and unique consumer proposition.
“The company is confident that the past investment in its brand has established a strong consumer franchise which will continue to strengthen as its level of investment and distribution continues to grow,” A2 Milk said.
A2 Milk said new entrants to the A2 milk sector would have to convince consumers of the benefits of milk that is free of the A1 milk protein while their traditional range of products still includes the A1 protein.
Shares in A2 Milk were 18 cents, or 1.6 per cent, lower at $11.28 at 1028 AEST.