A2 to roll out US business to eastern seaboard

Wednesday 17th January 2018

A2 Milk Co plans to roll out its US business to nine states on the eastern seaboard, which it expects will expand its retail footprint by more than a third.

Auckland-based, Sydney-headquarter a2 is targeting 60 million Americans who account for about a fifth of milk consumption in the world's biggest economy, adding New York, New Jersey, Pennsylvania, Connecticut, Rhode Island, New Hampshire, Massachusetts, Vermont and Maine to the states it services in the US, it said in a statement. The milk marketer's a2 branded milk has been accepted by a number of retailers in the region, which will this month expand its presence to about 5,000 retail stores across the US from the previous 3,600 stores.

"Since entry into the US market, the business has been focused on achieving sales based targets prior to expanding its footprint on a region-by-region basis," managing director Geoff Babidge said. "Sales velocities are now achieving sustainable levels in California, the South East region and select natural retail chains, which supports the expansion into an additional region."

A2 has been successful in breaking into the Chinese market with its branded infant formula and has been slowly building its US business in recent years. The company has projected investing US$25 million in growing that division before generating positive earnings from the 2020 financial year.

The company's expanded US distribution will be backed by an increased marketing spend, which it said was incorporated into existing guidance. It also said it's investigating new product opportunities in the US to leverage off the growing consumer awareness of the a2 brand and bigger distribution footprint.

A2 shares last traded at $8, having soared 246 percent over the past 12 months.

(BusinessDesk)

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