English label strategy

I think I can explain the current lack of a2 formula in Australia.

Historically only 5% of the English label formula sold in Australia was for domestic consumption. The rest was sent over to China. This distribution mode or Diagou was very lucrative for A2.

This caused a massive oversupply issue when covid interrupted and the Chinese and Hong Kong borders were closed. We have only truly recovered recently from this problem. This oversupply took 12 months to resolve itself with cheap discounted stock having finally left the market.


Today, looking at the major CBEC websites like TMall, jb.com, koala & ViP, a2 mngt have increased the retail prices of A2 (No1-4) by circa 10%.For instance a2-3 is selling for between 215 to 230 yuan. The corporate diagou shops now sell this product for circa 200 yuan. 6 months ago, online retailers sold this for 190 to 200 a tin and corporate diagou from 160 to 185. Thai shows you how the price has recovered to pre-covid levels.

The value of NZD to USD, Yuan and HKD has depreciated by circa 8 to 10% over the last 3 months also. This has created an opportunity to ship most stock directly to China (bypass Australia) and a take advantage of increased margins now supported by currency and an improvement in sales price as explained above. By restricting sales in Australia, it has kept the price in China strong.

This strategy may affect the short term revenue for HY22 but will allow for a massive increase in revenue for the 2nd half and beyond which is when we all should see our shares rocket up again.