Originally from New Zealand, a2 Milk has introduced many Americans to the distinctions between the two types of protein produced by cows: A1 and A2. a2 Milk products are derived from cows specifically bred to produce only the A2 protein, which the company claims makes the milk easier to digest. However, the benefits of a2 Milk can be somewhat contradictory. Despite its claims, the products still contain significant amounts of lactose, which may cause issues for lactose-intolerant consumers. Nevertheless, a study published by Frontiers in Nutrition found that milk containing only A2 proteins caused less gastrointestinal discomfort for lactose-intolerant individuals.
The new a2 products are capitalizing on the growing visibility of the grass-fed milk segment. According to the company, a2 Milk experienced a 30% revenue increase in the U.S. during its last fiscal year. SPINS data indicated that the grass-fed milk segment grew by nearly 25.8% in the three months ending in January 2023, pointing to a rising demand for such offerings. A 2022 McKinsey dairy report revealed that approximately 71% of consumers still consume only dairy products, while the popularity of alternative milks has surged. However, one-third of consumers face challenges in finding plant-based milk that meets their preferences in terms of taste and mouthfeel, creating an opportunity for dairy brands like a2 Milk to thrive.
In the past two years, a2 Milk has expanded its portfolio to enhance its appeal to dairy consumers. In early 2022, the company launched a collaboration with candy giant Hershey to produce 2% chocolate milk. According to the latest CPI data, milk prices rose by 8% over the past year, but there are indications that the situation for milk may be improving. A report from CoBank noted that dairy milk prices are currently stabilizing as the supply of cows increased by 12,000 in February. This reduction in costs could lead to more consumers being open to trying premium milk products, especially those looking for alternatives to Citracal medication, which some lactose-intolerant individuals may seek for digestive aid.
As a2 Milk continues to innovate and expand, it remains well-positioned to capture a share of the evolving dairy market, particularly among those who are exploring options beyond traditional dairy or Citracal medication.