First and foremost – this is not a stock recommendation.
The a2 Milk Company Limited (A2M) is a New Zealand company, listed on the Australian Stock Exchange. And that’s about where the boring stuff ends. Back in the early 2000’s it developed a genetic test for cows to determine whether or not their milk contained the A1 protein. Why? They claim that A1 is b-a-a-a-a-a-d.
A bit of science
Milk is the one food that provides all the nutrients we need to survive. Human milk is anyway. So if you’re stuck on a dessert island and can only bring one thing, your mothers boob should be it (Dinner tonight is going to be awkward, hey mum?). Anyway, cow’s milk is a close second. And one of the reasons is because it is packed with protein. Now the protein in cow’s milk is called “beta-casein” of which there are two predominant types: A1 beta-casein and A2 beta-casein, or A1 and A2 for short.
Now there is a rumour, which has neither been definitively proven nor sufficiently debunked, that the A1 protein is responsible for a whole heap of negative side effects in humans. These range from an increased risk of Type 1 Diabetes, heart disease and autism to sudden infant death syndrome. It is also thought that those self-diagnosing as lactards are actually just intolerant to the A1 protein in milk and not the lactose itself.
Given this, producing milk which contains the A2 rather than the A1 protein seems pretty attractive.
Back to A2M
So A2M developed a test which could tell whether a cow would produce milk containng the A1 or A2 protein and then patented the crap out of it. They now use this technology to test farmers cows, and those found to be A2 producing are signed up by the company to supply them with the good stuff. A2M takes this milk and then sells it to consumers as milk (yeah no sh**), milk powder, cream and infant formula.
And consumers have been lapping in up. Quite literally. Yesterday at their AGM the company said that in the first 4 months of this financial year that their sales have increase 69%. That’s a really big number guys. A really big one. And it is expected to continue. A2 Milk hits a pretty senstive spot for consumers, so even if their claims are only partially true (that the A1 protein is the devil), the outlook is likely a bright one for them. In the last year their stock price has tripled for what its worth.
Like I said at the start though, this is not a stock recommendation. But it is interesting.
So, got Milk? The a2 Milks Company does.
Anyway, that’ s 5 minutes. Hope it helped.