Stacking Shelves, page-1187

Thanks for your detailed reply and for the record I don't think you are being argumentative. Unfortunately a lot of HotCopper posters are only capable of viewing posts through the lens of upramper or downramper. I enjoy reading posters who can add some nuance.

I think you are raising two separate but related questions here really:

1) Can A2M justify increasing prices on its A2 Platinum range much further? - i.e. to around the level of Bellamy's Beta Genica range (as per the example in your original post) without compromising sales. I was mostly responding to this question and my answer remains definitely yes, they can. The second question is whether A2 should have a higher end offering as well and I'll come back to that later.

On the first question though, I think you are doing your argument a bit of a disservice by using the Bellamy's range as your example. A better example would be a more popular brand (Aptamil) who has an ultra high-end product (Essensis) that is organic A2 and is sources exclusively from a single origin (New Zealand). All of these factors justify a much higher price point (Stage 1 retails at $55 per tin in Coles).

By contrast, Bellamy's is not in the same league as either A2M or Aptamil in terms brand metrics like recognition or loyalty. It is not sourced exclusively from a single origin. Thanks for sharing the country of origin labelling. TBH I was surprised to see that they could get away with such vagueness - I thought they had to provide a % of where ingredients were from. It is 60% Australian ingredients for their standard formula line. They also use ingredients imported from Europe.

To me the emphasis on traceability is partly about identifying a legitimate point of sale and avoiding counterfeits, but more generally it is about eliminating doubt about the origins and quality of ingredients all the way along the supply chain, which is much easier to do when ingredients are sourced and the product is manufactured all in a single country, especially if it is New Zealand. From a SAMR stand point there is a clearer audit trail and accountability.

I also don't think Chinese ownership helps Bellamy's overcome any of these issues from a consumer perspective. I agree as per the A2M survey data that trust in Chinese infant formula has improved, but if you drill down you will see that this is driven by Feihe, which was the only major domestic producer not implicated in the 2008 melamine scandal. They have since gone on to completely dominate the domestic IF market, which tells you something about the importance of trust - it has helped Feihe, just as it helped imported IF brands. China Mengniu on the other hand was a key player in the scandal. I don't think most consumers would pay extremely close attention to the chain of ownership.

But if quality does matter, it does raise the question, why would I buy an A2 product from a Chinese owned company, manufactured in Australia, from ingredients imported from New Zealand (mostly, but sometimes from other unspecified places as well), when I can buy it from A2M which is sourced from, manufactured in, and owned by New Zealand? Especially when the company (Bellamy's) I've likely barely heard of, whereas A2M invented the category?

The other question you raise is 2) should A2M put out a more ultra premium English label product? I actually do think they should consider this, but I don' think it is necessary in order to justify the kind of pricing you are referring to for Bellamy's.

Going back to the Aptimal Essensis example, if A2M were to launch a more high-end offering, this is the price range they can probably consider ~$50-55 ish. This would be sufficiently differentiated in price from its existing A2 Platinum range even if its prices were to increase by 10-15%.

However, I think these types of products are generally not about attracting customers from other brands but rather they are about up-selling existing customers who have strong brand loyalty and higher willingness to spend. So they would only ever be a niche product but still a useful one. They are not going to lose customers without it IMO but they are potentially missing out on maximising revenue from existing customers without providing the option.