Product manufacturing is often characterised as competitive and susceptible to currency and commodity price movements, multinational competitors and the adoption of alternative technologies. Companies try to reduce these risks and maintain margins by investing in their own plant and equipment, by hedging part of their delivered raw material and energy costs and by continuously improving their production and supply chain efficiency. Specifically, ATM has indicated its near-term focus is to: expand the availability of its products into different countries, including the North American markets; increase its product range, with a key emphasis on growing its infant formula sales; and continue to build its brand and consumer awareness [1].
ATM competes directly with other domestic and international dairy manufacturers with larger economies of scale and market influences such as: National Foods and Parmalat in Australia; Fonterra in New Zealand; and Müller Wiseman Dairies in the United Kingdom.
ATM has established a strong brand and vertically integrated business model with reliable channels-to-market across a diverse set of countries. It also operates in a number of different countries, giving it the opportunity to allocate its resources to countries with favourable demand drivers and exchange rates, and vice-versa. Going forward, it should continue to benefit from increased sales and economies of scale through organic growth, expanding its product range and geographic presence, optimising its operations and vertically integrating up the supply chain as well as undertaking complementary and value-accretive acquisitions. Its downside commercial risks could include: a broader economic slowdown that could affect the propensity of consumers to purchase discretionary dairy products; erosion of market share and gross margins from multinational competitors with greater economies of scale and just in time manufacturers who hold little inventory, especially in the larger and more competitive American, European and Asian markets; loss of a key customer, distributor, supplier or employee; changes to the availability, quality and delivered price of raw milk and third party supplier costs that are unhedged and cannot be passed on to customers through pricing increases; an appreciation of the NZD, which would lower the unhedged value of its exports and any foreign capital it chooses to expatriate back to New Zealand (equally, however, this could lower the NZD-equivalent cost of any packaging and distribution undertaken outside of New Zealand); greater international health and food restrictions and regulations that may increase its compliance costs or prevent it from selling certain products in some markets; the development and widespread adoption of an alternative, cost-effective technology or application by a competitor; quantitative and substantiated research that disproves the perceived health benefits of its products; restricted growth due to a lack of financing, manufacturing capacity, consumer awareness or attempting to enter multiple markets without gaining traction in any particular market; and any inheritance of undue liabilities or commercial risks through new product offerings, acquisitions and entrances into new markets.
2004: ATM was founded in 2000 by entrepreneur Howard Paterson and scientist Dr Corran McLachlan, both of whom died in 2003. ATM first entered the Australian and North American dairy markets in 2003 after appointing Dairy Marketers in Australia and Ideaspheres in the United States as its exclusive licensees for a2™ branded milk products. ATM was listed on the New Zealand Stock Exchange in 2004 (ATM.NZ). Dairy Marketers was placed into administration shortly afterwards, which led ATM to establish a new wholly owned Australian subsidiary, A2 Australia, in order to provide continuity for its Australian operations
2005: ATM sold A2 Australia to F&N Dairy Investments, a subsidiary of the Singaporean-listed Fraser and Neave. ATM also consolidated its New Zealand licensees down to Ridge Group and Fresha Valley
2006: ATM reacquired A2 Australia from F&N Dairy Investments. ATM also established A2 Milk Company in the United States as part of a restructured relationship with Ideaspheres, which was 50% owned by both parties
2007: ATM’s A2 Australia was transformed into A2 Dairy Products Australia, a 50:50 joint venture with Freedom Nutritional Products with the aim of further expanding its Australian product sales and entering the Japanese dairy market. ATM also entered the South Korean market after appointing Lotte Milk as its exclusive licensee for a2™ fresh milk products
2009: Lotte Milk, which changed its name to Purmil, withdrew a2™ milk due to the severe downturn in the Korean market
2010: ATM fully acquired A2 Dairy Products Australia after an apparently unproductive joint venture with Freedom Nutritional Products. ATM also consolidated its New Zealand licensees down to Fresha Valley
2011: ATM began construction of its first milk production facility in Smeaton Grange outside of Sydney, Australia. ATM fully acquired A2 Milk Company from Ideaspheres and it also established a 50:50 sales and marketing joint-venture for a2™ milk products with Robert Wiseman Dairies, who was subsequently acquired by the Theo Müller Group and renamed Muller Wiseman Dairies
2012: ATM commenced production at its Smeaton Grange milk processing facility. ATM also signed a strategic agreement with Synlait Milk in New Zealand to manufacture a2™ branded nutritional powders (including milk powders and infant formulas), with the aim of supplying the Asian markets
2013: ATM announced the appointment of China State Farm Holding Shanghai Company as its exclusive distributor of a2™ infant formula in Greater China, using products manufactured by Synlait Milk. ATM also restructured its sales and marketing joint-venture with Muller Wiseman Dairies, which was instead changed to a European milk processing and packaging agreement
2014: ATM secured a new Australian milk processing and packaging agreement with Brownes Food Operations. ATM also acquired the remaining 50% interest in the former sales and marketing joint-venture with Muller Wiseman Dairies
2015: ATM restructured its distribution agreement with China State Farm Holding Shanghai Company, with it taking responsibility for its in-country product distribution and China State Farm Holding Shanghai Company focusing solely on the importation and government relations aspects of its operations. During the year, ATM listed on the Australian Stock Exchange (A2M.AX) and relaunched its operations within the United States
2016: ATM continued to expand its international distribution licenses after it secured several new retail distribution agreements with Trader Joe's and Target in the United States and a number of online infant formula retailers in China
2017: ATM increased its milk powder security of supply by acquiring 8% of one of its New Zealand listed contract manufacturers, Synlait Milk
2018: ATM obtained its registration from the China Food & Drug Administration, allowing it to continue to export its infant formula to China. It also entered into a strategic relationship with the Fonterra Co-operative Group of New Zealand under which: Fonterra agreed to manufacture and supply dairy products exclusively for ATM within certain Asian and Middle Eastern markets; Fonterra secured the exclusive rights to distribute ATM's fresh milk within New Zealand; and both parties agreed to jointly evaluate and develop dairy products for the Australian, New Zealand and Chinese markets. It also entered into the South Korean market through an exclusive sales and distribution agreement with a pharmaceutical company in South Korea called Yuhan Corporation
2019: ATM extended its supply agreement with Synlait Milk for a further 5 years to secure the supply of its infant formula. It later acquired a further 8% of Synlait Milk, giving it a 'blocking stake' and ensuring further security of supply
2020: ATM entered the Canadian market after appointing Agrifoods Cooperative as its exclusive licensee for a2™ fresh milk products. The global Covid-19 pandemic forced major nations to temporarily close their borders and restrict people’s movements. This caused major disruptions to supply-chains, employment and consumer demand in almost every sector. However, ATM was deemed to be an 'essential service' provider and, for the most part, remained operational while most other businesses closed for several weeks. It also experienced an increased proportion of sales from infant formula over this period due to customers stockpiling product
2021: ATM began to vertically integrate after it began to acquire manufacturing facilities. Specifically, it entered into a strategic relationship with Kyvalley Dairy of Australia under which: ATM acquired its milk processing facility in Victoria and funded its expansion and upgrade; Kyvalley Dairy managed and leased the facility and entered into a long-term supply agreement with ATM. It also entered into negotiations to acquire a majority interest in Mataura Milk that owns and operates a milk processing facility in Southland, New Zealand