Recently, announcement of birth rate decline in China has hurt...

Recently, announcement of birth rate decline in China has hurt many brands' stock prices including Feihe, China's number 1 general trade brand. Clear strategy moving forward for major CBEC players such as Alibaba, JD etc is now offline, so MBS push is the right focus and a must, but at the same time, it's an even more competitive and capital intensive exercise. China economy has recovered somewhat but at ground zero, small MBS businesses are struggling much like retail everywhere else in the world.

Spoke recently to some daigou friends in Melbourne and Sydney who worked with the corporate daigous, and some Chemist warehouse staff, many daigous have left the industry and the country, the local pack n send stores are dwindling. Many new Chinese parents don't even know the Melamine incident of 2008, and what's worse believes that other countries have much worse spread of Covid than China and worries about contamination of foreign parcels (Ill informed but nonetheless a reality).

As for A2, the daigous have said that there are too much stock, they are still selling thru stock expiring first quarter 2022 - less than 12 month shelf life with a massive discount, with the freshest expiry date being 06/2022 for stage 3 (ie. 06/20 production). Post CNY sales are picking up at an unusually slow pace. Market price keeps on dropping, and pharmacies/supermarkets have minimised their ordering as they don't get the same discount as the corporate daigous and they now also have minimal daigou traffic to generate the sales. There is various rumours about their corporate daigou AZG facing lawsuits, also rumours of huge volumes arriving in HK this week and the usual big buyers are hodling their cashflow. People saying this year's 618 sales festival is going to be a big IF giveaway, A2 not alone in this, many brands are even worse off, eg. BUBS, Oli6 (ASX:NUC), Bellamys even Danone Nutricia. One positive is that A2 adult milk powder and the UHT milk SKUs are selling well into Vietnam and surrounding regions, though infant formula is still lagging in these countries.

Just sharing with everyone here what i learnt recently speaking to people in the industry. As always, DYOR. A2M was a significant part of my portfolio at one stage, I loved the product, the brand and to this day still buy A2 milk from the supermarket fridge though it is getting a bit expensive.LOL. However there is no doubt that market dynamics have changed, and it will be a hard road ahead for the company.