Fonterra embraces A2 in joint marketing agreement

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"It was a pretty significant announcement for a2 and shows their growth can move by a lot quicker than past opportunities with Synlait Milk", said Grant Williamson, a director at Hamilton Hindin Greene in Christchurch.

Fonterra has finally jumped on the A2 bandwagon as the small rival company has grown in strength over the past decade and has just announced one of its strongest profits - sending its share price to a record high.

"The partnership is meant to fast-track market growth and this creates [an] opportunity for our farmers to create additional value from their milk", said Mr Spierings.

New Zealand dairy giant Fonterra has announced a partnership with its fellow milk processor The a2 Milk Company (a2) in a deal likely to make A2 milk more widely available.

Under the new agreement, Fonterra will build a pool of farmer-suppliers in New Zealand and Australia, which will require genetic testing to identify the A2-producing cows. A similar milk pool in Australia will also be developed.

The aim is to build greater returns for both companies by growing demand locally and internationally using A2 Milk Company's increasingly popular brand strength.

The A2 milk will be processed at the Fonterra factory in Darnum on a segregated processing line separate to the rest of the production facilities.

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Mr Babidge said the deal complements an existing agreement with South Island based Synlait Milk.

Milk produced by a2MC now accounts for 10% of grocery fluid milk sales in Australia, according to the company.

He said The a2 Milk Company now manufactured fresh and powdered milk products and it was also looking to extend the range of products to cheese and butter.

Fonterra will exclusively supply A1 protein free milk products in both bulk powder form and consumer packaged form to a2MC.

A2 refers to the beta-casein proteins found in milk.

Shares in Synlait, which manufactures ingredients for A2 Milk Co.'s A2 Platinum infant formula, fell after its customer announced a "comprehensive strategic relationship" with the world's largest dairy exporter.

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