SM1, page-254

No, they are not diversifying away, at least not yet and won't be so for years and years.

The agreement with Fonterra is only for sales in the ME, SEA and others, not China and ANZ, which is practically the only markets that matters. Even then the agreement is only for liquid milk and powder with no infant formula. How much sales have a2m achieved in those markets? Probably miniscule to none. I honestly don't think that A2M even bothered investing anything there. Synlait still supply and produces 99.9 percent of all a2m canned infant formula and other milks in its major markets. It was the case in 2016, 2017, 2018, 2019 and so on...so where is the diversification. A2M practically only sells a2 platinum, the same product that is supplied and produced by Synlait. The ONLY way that A2m can grow their profit in a significant way is to increase their sales of those aforementioned a2 platinum product, more cans. The only possible way that a2m can sell more is if Synlait can increase their supply into a2m. To increase supple, Synlait need more milk supply and thus contracted farmers and subsequent processing facility, which is why Synlait built Pokeno.

It is that simple. You need to realize that the only markets that A2m has is the ANZ and China. The main growth engine for a2m is China and the corresponding prized SAMR for a2 platinum is bound to Synlait. That is not something that Fonterra can ever hope to replace in a practical way. Pokeno not vital at present and it will be a couple of years down the track if a2m intends to keep growing.