The chocolate milk - set to launch in January 2022 in 59oz refrigerated cartons and 8oz shelf stable packs - "is the latest example of how we are expanding The Hershey Company in to expanded better-for-you categories," said Ernie Savo, senior director of global licensing at Hershey.
"It's an excellent co-branding opportunity that we expect to yield strong results."
While the wider dairy industry has given The a2 Milk Co a pretty lukewarm reception, said US CEO Blake Waltrip, retailers are very enthusiastic about the brand, which is one of the key drivers of growth in the fluid category* along with other functional or premium brands such as Fairlife and Maple Hill.
“I firmly believe this [A2 dairy] is going to be a very significant segment of the dairy category in the coming years,” Waltrip told FoodNavigator-USA in a recent interview.
“It's going to be a very large category and there will be room for a number of players. We’re in over 23,000 doors at this point, at every major retailer, and really the pitch to retailers is that we're growing the category, we're bringing premium margins.”
“Our loyalty is strong enough that if a consumer can't find a2 Milk, they'll come back and wait to buy their a2 Milk if it’s out of stock, they won’t just buy something else, and there's not a lot of brands that can say that… It's amazing if you think about it, because five years ago, hardly anyone [in the US] had even heard of it.”
The a2 Milk Company – which is based in New Zealand but made a big push into the US market in 2015 - has developed a genetic test to identify cows that only produce A2 beta casein protein (most milk contains A1 and A2), so their milk can be segregated and marketed as a more ‘tummy-friendly’ option.
Around 30% of cows produce just A1, and 30% just A2, with the rest producing both. However, as milk from all of these cows goes into the same pool, ‘regular’ milk typically contains A1 and A2, explains the company, which claims that A1 may be responsible for digestive discomfort experienced by milk drinkers that cannot be attributed to lactose intolerance or milk allergy (both of which can be determined via diagnostic tests).
Four human clinical trials
Four human clinical trials on A2 milk have been published in peer-reviewed journals over the past four years that lend credence to the a2Milk Co's claims that many consumers who believe they can’t tolerate lactose (milk sugar) should really be blaming their digestive discomfort on the A1 beta casein protein in milk.
While The National Dairy Council still argues that the evidence for A2 is still preliminary, consumers don’t need to read peer-reviewed journals to determine whether A2 milk works for them, said Waltrip: “All they have to do is try it and see how they feel. We’re not asking them to make a leap of faith.”
That said, what has become clear as the a2 brand has continued to grow in the US, he said, is that consumers aren’t just buying it for digestive reasons.
“We’ve done some research that shows us that a2 Milk is bringing incrementality to the category, it's bringing new and lapsed users back to milk. But one of the more interesting things we've seen is that consumers are seeing the brand as a better milk."
The fact that major retailers (Costco and Ahold) have both launched private label A2 milk products validates the category, argued Waltrip, who said their entry had not had a major impact on The a2 Milk Co.
The strongest performing premium milk brand'
*According to The a2 Milk Co's annual report, figures for the year ended June 30 were dented by the loss of certain regions of a major club channel customer. On a constant currency basis, USA net revenue increased 5.5%. However, underlying volume growth was 13%, or 26% excluding the major club channel customer, as the firm cut prices “to an affordable premium” to improve conversion and household penetration.
This resulted in a “significant percentage of key accounts increasing product facings and improving shelf position which is expected to benefit the business over time.”
In the second half, a2 Milk “grew ahead of the premium liquid milk category and was the strongest performing premium brand over the period,” claimed the company.
Clinical evidence: Four human clinical trials conducted in China, Europe and the US on a2 Milk have been published in peer-reviewed journals over the past few years, with the most recent study (2020) led by Dennis Savaiano at Purdue University, an expert in lactose intolerance.
While the study was funded by The a2 Milk Co, said US CEO Blake Waltrip, "Once we fund a study, we have to step back and stay at arm’s length."
- 2014 study, European Journal of Clinical Nutrition (41 subjects)
- 2016 study, Nutrition Journal (45 subjects – our coverage HERE)
- 2017 study, Nutrition journal (600 subjects)
- 2020 study, Nutrients (33 subjects)
Picture credit: The a2 Milk Company