Imagine we have ten infant formula purveyors: five international ones, which include A2 milk; and five Chinese domestic ones. Imagine all of them offering premium brands to their customers. That overall picture is an accurate reflection of what is happening the infant formula market right now, in China. The market dynamic has changed compared to when A2M had only just started becoming popular. Back then there were only mostly cheap products. Now every brand offers premium products. Massive difference.
Now we know for sure that the total number of customers for infant formula, in China, has contracted dramatically, and will continue to do so based on human history. So then we have contraction in the total maximum number of customers as well as increasingly fierce competition.
Whatever moat that A2M had has been eroded and will continue to be so unless the company enact very clear startegies to halt the rot.
The comoany had been complacent and had relied on the daigous for its marketing and distribution. The company has done nothing to future-proof its business and it's shareholders are now paying for it.
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