Media release from A2M, page-21

I haven't chimed in on this whole Nestle Atwo situation yet - so here is my two cents. Firstly, while many think first mover is the place to be, many others think second and third movers are in the prime position begin distributing product on the back of the market education and market penetration of the first mover. In a2's case, the growth has been phenomenal and spreading globally at an amazing rate (with ever increasing free cashflow to boot) therefore I think they will largely manage to keep the first mover advantage working in their favour and hopefully leverage off it into new markets at the same pace they have been. Nestle's advertising will help the spread and understanding of the A2 proposition, whilst a2 hopefully maintains the premium brand positioning.

Now reading between the lines of Geoff B's comments regarding companies like Nestle managing conflicting products i.e. A1 vs A2, I think what he is saying really is not that it is hard to market two different products, but rather that 'A1 is poison and we are spending tens of millions of dollars on research to prove it'. When the science becomes common knowledge / fact these large companies will have a product portfolio comprising of 90% A1 and 10% A2 or even 50 / 50 for arguments sake - but whatever the split, when the science comes to life massive companies will not be able to scale up the A2 production to fill the void fast enough to be competitive. They will also have to deal with the backlash of customers who have been consuming their poison for generations while the company remained quiet (think tobacco).

In the event that none of my above opinions actually ever eventuate (which would be the ideal case for Nestle), one bonus we will always maintain is that consumers around the world will all know that when they see our purple a2 logo on all types of products (fresh milk, cheese, IF, pregnancy formula, chocolate, ice cream, yoghurt, flavoured milk, protein powder, whole milk powder, UHT milk etc etc) - they will know in 100% confidence that they are getting without a doubt 100% A2 protein only. This is powerful because most consumers are too lazy to look at the ingredients and disclaimers on a product, and often will stick with the brand that works for them - even if it is the most expensive. Brand loyalty is a massive asset, and while many dairy giants are sitting on their hands - we are building fans on every corner of the globe.

So right now I don't actually see Nestle's Atwo product being so much a market share play but rather the beginnings of the company trying to build the 'know how' and ins and outs of A2 product production and marketing - in preparation for the very real possibility that they are going to need to scale up quickly, while trying tip toe around a2's ever increasing and complex patent family (that they will be "defending vigorously").

My Gingerish takeaway? Bring it Nestle!