I agree with Werd’s points. Marla too. To add, it’s an interesting dynamic. Russia’s surprising jump to the second-largest dairy exporter to China highlights China’s continued diversification of dairy supply sources. This reflects China’s broader strategy to ensure food security and reduce reliance on Western suppliers, including the U.S. But wasn’t food security also why New Zealand dairy rose to favor in the first place? So New Zealand/a2m remains dominant. NZ image of quality is now even stronger.
Russia’s growing presence could signal potential long-term shifts in market dynamics.
However, A2M focuses on premium-branded IMF and other expanding offerings rather than commodity dairy ingredients.
We’re not targeting entry-level markets, and our reputation has been built over many years of success and safety.
So, while the increasing Russian supply could impact the market and ingredient pricing by applying downward pressure in this regard, it’s less likely to affect A2M’s solid high-end market positioning.
That said, the influx of cheaper Russian ingredients could impact A2M's strategy in several ways:
Price Competition: As Russia ramps up its dairy exports to China, it is likely to offer ingredients like milk powder and whey at lower prices than traditional suppliers such as the U.S. or New Zealand. This could eventually lead to more competitive pricing, forcing A2M to either lower prices (which is unlikely) or increase its value proposition and introduce new products to maintain market share while still holding its premium position.
Margin/Market Compression: Cheaper Russian ingredients could attract cost-focused manufacturers, leading to price reductions across the IMF sector. Odds of this though?
Consumer Perception: If Russian dairy becomes more prevalent in lower-tier cities or with lower-priced brands, consumer expectations around pricing and product quality may shift. This could challenge A2M’s premium brand positioning, especially if the broader market becomes accustomed to cheaper alternatives. Slim chance - It may become harder to justify higher prices for premium options, but this is where budget options can counter, and we could introduce new products to meet this demand. Could be a new opportunity; a2m's Premium branding on budget products would be a new market to expand into.
But bigger picture, China’s growing trade ties with Russia suggest a potential preference for Russian dairy imports in the future, and it seems the U.S. has lost its market almost overnight. But that’s their problem. Makes me laugh a little tbh. Arrogance is finally catching up.
Humble New Zealand is well-established as a premium dairy provider, with a reputation for safety and quality, long-standing relationships with China, and business partnerships that make it all the harder to disrupt. The smaller scale of New Zealand’s dairy production adds to its premium image, making it difficult to compete on quality, no matter who enters the market.
While the rise of Russian dairy in China may not pose an immediate threat to A2M’s premium business, the long-term impacts will depend on China’s import policies and consumer acceptance and NZ is friends and business partners with China. And that comes back to China's strategy of ensuring its food security. a2m is protected IMO.
While the U.S. may be out of the picture, Russia could replace lower-end imports. However, in the short term, the customers buying the lower-end products weren’t A2M’s customers to begin with. If Russia moves into higher-value segments, like branded IMF, competition could intensify. Still, I agree with Werd’s sentiment—New Zealand has an airtight reputation for safety and quality that remains hard to beat.
(20min delay)