Media Updates, page-15438

Haha, I tried to give up elaborating when I forgot the password to my old account - priadr. "Talk-Less" is supposed to remind me to shut up.
I just wanted to know how you and others interpreted it, backed it up or shot it down, because I already know what I think.
I think it's legit. I value scepticism and questioning if it is intermediary pumping, but not in this case.

I think it is very significant, one way or another. I already know People line up for this stuff in China from the videos and the hiring patterns of salespeople. Evidence I gave up posting was too repetitive.

I wonder, does this release bottleneck our sales? Does it increase our premium reputation and increase daigou sales? Does it slow us down, even if we have a roaring growth to date for 2025?

Context is contained in the original post. That's all I have, too, so correct me and educate me, but here are my thoughts...

My "source" is a seller on WeChat, reposting information from Anhui Fengbei Deep Supply Chain Management Co., Ltd., a privately held logistics and supply chain company based in Hefei, Anhui Province, China, founded in June 2024. The company’s scope includes domestic and international supply chain management, sales and trade agency services, and distribution of pre-packaged goods, including infant formula and health foods.

From what I understand from the translation and the source account, this communication was circulated directly to local store clients within Fengbei’s regional retail network. While it’s not an official A2 Milk press release, it explicitly references A2’s FY25 and product lines, suggesting a formal channel partnership, not third-party or grey-market inventory.

(I think it's interesting to note the following from the screenshot, roughly *THE ANNOUNCEMENT STATES NATIONAL QUOTA RESTRICTIONS ACROSS

ALL DISTRIBUTORS FOR STAGE 1 AND STAGE 2 UNTIL EARLY OCTOBER 2025.* That is ALL DISTRIBUTORS, and not just whoever AF is.) (and Why Stages 1 and 2, and why not Gen?)

I had to look this up. FYI. Final-mile delivery (also called last-mile delivery) refers to the last step in the supply chain — the movement of goods from a distribution hub (like a warehouse or local depot) to the final destination, which is usually a retail store, pharmacy, or end consumer.

SO, in the case of infant formula like a2 Zhichu in China, this means:

Getting the product from a regional distributor (e.g. Anhui Fengbei) to individual mother-and-baby stores or local retailers.

Ensuring timely delivery, correct stock quantities, and often compliance with local pricing and promotional policies.

The “final mile” is crucial because it’s where product visibility, shelf presence, and actual consumer access happen — and where disruptions (like quota cuts or pricing violations) can directly impact sales and brand perception.

Fengbei is best understood as a regional distribution and logistics partner of The a2 Milk Company in China, managing final-mile delivery and local retail execution for A2’s China-label Zhichu infant formula.

This product is SAMR-registered (China’s State Administration for Market Regulation) and sold through domestic mother-and-baby stores and Chinese e-commerce platforms, not via cross-border or daigou channels.

Fengbei’s responsibilities include:

Quota allocation to retailers in Anhui (and possibly surrounding provinces)Enforcing price compliance and channel disciplineCoordinating the physical delivery of A2 Milk’s Zhichu stock

This affiliation aligns with A2 Milk’s broader China strategy: to deepen localised execution through regional partners, rather than relying solely on daigou or cross-border e-commerce.

You’re likely correct about the audience — the tone and structure of the message suggest it was directed at retail outlets and store operators within Fengbei’s managed region (Anhui Province). The emphasis on quota restrictions, pricing compliance, and product staging supports the idea that this was operational guidance for in-market retail accounts.

There’s no direct mention of China State Farm or COFCO, but it’s plausible Fengbei operates as a downstream partner or subcontractor within the broader licensed supply framework that governs SAMR-compliant infant formula distribution.

The messaging reflects genuine product demand pressure — the notice references national quota enforcement by A2 from May through October 2025, and cites pricing violations by some retailers as the reason for tighter local restrictions.

While it’s possible Fengbei is also using this to assert pricing discipline or motivate sell-in, the alignment with A2’s FY25 timeline and quota coordination makes it unlikely this is just spin. Instead, it provides a rare on-the-ground view of channel stress and A2’s attempt to preserve brand equity in China’s competitive domestic formula market.

So, wondering: With quota restrictions limiting the official supply of a2 Zhichu formula in China, there’s a real possibility of increased daigou activity. Local consumers facing on-shelf shortages may turn to parallel channels, especially as demand concentrates around Stages 1 and 2. This supply tension could, in turn, validate A2’s case for deeper China-based investment, whether in manufacturing, blending, or packaging. It may also feed directly into the narrative behind the company’s proposed $350 million capital deployment, currently under discussion.

and...
Why does the release say other stores in their province messed around, so their quota has been reduced? Why does a2m punish for others' misdeeds? Why does this hurt distribution?

The release suggests retailers across the province (not just the individual store receiving the message) engaged in malicious low pricing — undercutting the minimum resale price set by A2/Fengbei. This triggered a province-wide reduction in allocations from the regional distributor.

Why punish everyone?

• Enforcement signal: It’s a collective deterrent — punishing the broader retail base sends a warning that price undercutting won’t be tolerated, even if the violators aren’t individually named.

• Lack of traceability or leverage: Fengbei may lack the ability or will to penalise only the exact offenders (or can’t afford the political fallout), so it applies a blanket reduction to tighten control.

• Pressure tactic: It encourages peer enforcement among stores — if your neighbour’s discounting affects your allocation, you’re more likely to pressure them to stay in line.

How this hurts distribution:

• Retail trust is eroded: Compliant stores may feel unfairly penalised, reducing morale and weakening trust in the brand/distributor relationship.

• Stock gaps appear: Lower quotas mean reduced on-shelf presence, creating gaps competitors can exploit.

• Channel leakage: When official channels tighten, demand leaks to daigou, C2C platforms, or grey imports, reducing pricing power and official sales volume.

So ironically, an attempt to protect pricing integrity might damage distribution strength and push sales outside the formal ecosystem — which is exactly the kind of risk A2’s local expansion strategy seeks to solve.