Irking Big Dairy, Kiwi Specialty-Milk Maker Steps Up U.S. Push

(Bloomberg) -- Even as Americans drink less and less milk, New Zealand’s a2 Milk Co. is extending its foray into the U.S.

Its products come from cows whose milk contains only A2 proteins, instead of A1 and A2 like the majority of the world’s dairy herds. This difference, the company says, makes them well suited for consumers who want to drink milk but avoid it because it causes them digestive issues, thinking they are lactose intolerant. Not all studies support this contention, and the American dairy industry has largely dismissed it as well.

"One in four people think they have some form of lactose intolerance," Chief Executive Officer Jayne Hrdlicka said in an interview, adding that they are often mistaken. "By giving people the option to drink milk again, they’re coming back into the category."

a2 Milk says it has between 20 percent and 35 percent of specialty milk sales where it’s sold, depending on how long it’s been in the particular retailer and region. Since launching U.S. sales in California in 2015, it has expanded into other regions, selling in natural and specialty stores, as well as major chains including Walmart, Publix and Wegmans. on Tuesday, the company is announcing that its milk is now sold in Costco stores across the southeast.

In Australia, for example, the company has about 10 percent of the fresh-milk market, although per-capita consumption there is significantly higher than in the U.S. Specialty milk sales, however, have been increasing.

The American dairy industry isn’t greeting a2 Milk with open arms.

"What we’ve seen in every other market we operate in is once we start to get real consumer momentum, big dairy gets unhappy and starts to fight back," Hrdlicka said.

And yet the company and its U.S. counterparts may find common cause in fighting the growing dairy alternatives segment. “Plant-based milk, it’s not milk,” said Blake Waltrip, a2 Milk’s U.S. head. “It’s a beverage.”

To contact the reporter on this story: Deena Shanker in New York at dshanker@bloomberg.net

To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net, Millie Munshi

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