A2 New Zealand shareholders Tuesday approved a deal that seeks to buy the 50% stake remaining in Australian company A2 Dairy Products. The deal will see Australian Stock Listed Company Freedom Nutritional Products, its partner in the Australian venture, acquire 25% stake in A2 Corp upon completion of the deal, with the choice of upping its stake later to about 27%. According to A2 Corp, it hopes the deal will give it special rights for it to produce and sale its milk products in Australia and Japan.

Scott Pannell, A2 Chief executive said the investment acquisition will  give the company a more robust financial cash-flow placing that will subsequently open up more opportunities for the its expansion into overseas markets. In Australia only, about 15 suppliers based in northern Victoria, New South Wales and southern Queensland remit 20 million litres that go into white milk sales and extra milk for yoghurt, for which it has a licensing deal with yoghurt brand, Jalna. A2 Corp hopes to increase its sales volume by 30%, a target for which it has been running a ten week marketing campaign in Melbourne.

However, reports have suggested that A2 Corp’s Australian business is keen on building its intake pegged at slightly more than 20 million litres of milk. A2 Corp said that whereas dairy cows produced A2 kind of beta casein protein only before, the practice of breeding European cows for higher yield has brought about cows that produce A1 kind of the protein and that currently, most milk in the shops are made up of the two.

When the milk was first introduced into the market back in 2003, it was marked “risk free alternative” to the prevailing standard milk produced by Fonterra that had A1 and A2 beta casein proteins. A2 Corp has claimed that most of the beta casein found in a good number of New Zealand cows is responsible for the development of heart ailments, diabetes in children and as well in autism and schizophrenia. However, food manufacturers are barred by law from such claims that seek to support their product as therapeutic unless there has been concrete evidence via scientific testing to support such claims.

According to a European Food Safety Authority review, the different types of cow’s milk were safe and no one type of milk is safer than the other. The conclusion is that a formal risk assessment into these claims is unnecessary even as A2 corp. seeks to expand its business.

21 July 2010.