New Zealand-based dairy company A2 has appointed an in-market Chinese distribution partner as a part of its strategy to launch its a2 brand milk powders in China.
In April 2012, the company entered into a strategic agreement with New Zealand-based milk powder manufacturer Synlait to manufacture a2 brand milk powders and infant formula at Synlait's facility in Dunsandel, New Zealand.
Having secured supply, it has now appointed China State Farm Holding Shanghai Company (CSF) as the exclusive distributor of a2 brand infant formula in China.
CSF is a wholly owned subsidiary of China National Agriculture Development, the Chinese state-owned enterprise that operates in the production of agriculture, animal husbandry and fisheries.
A2 managing director Geoffrey Babidge said having now gained both supply and distribution for a2 brand infant formula, the company is now well positioned to enter the Chinese market which will boost the company's future earnings.
The distribution agreement will be for three consecutive three-year terms with renewal subject to the achievement of specific performance objectives including distribution coverage. A joint marketing committee featuring representatives from A2 and CSF will control marketing activities for a2 brand infant formula.
A2 expects the annual sales from the business plan to grow progressively to approximately $50m in year four. The production of a2 brand infant formula will commence from December 2012, with the first sales to China to take place by June 2013.
