The a2 Milk Company Investor Day 2021
NZX Code: ATM
ASX Code: A2M
The a2 Milk Company Limited
www.thea2milkcompany.com
27 October 2021
NZX/ASX Market Release
The a2 Milk Company Investor Day 2021
The a2 Milk Company is today hosting its virtual Investor Day. The attached presentation will be delivered by
Managing Director and CEO, David Bortolussi, and all members of the Executive Leadership Team.
The key objectives of the Investor Day are to:
• Introduce The a2 Milk Company Executive Leadership Team;
• Provide greater understanding of the business;
• Share latest insights on key markets, categories and channels;
• Outline the Company’s ambition and revised growth strategy; and
• Provide an opportunity for Q&A.
A brief trading update is included in the Finance section.
The market landscape has experienced unprecedented change, including over the past 12 months. As a result, the
Company has had to adapt its growth strategy, reorganise to prioritise on opportunities and bolster its leadership
team to achieve its full potential.
The presentation will be webcast from 11am (NZDT) / 9am (AEST) and can be accessed via a2MC’s website:
www.thea2milkcompany.com/latest-company-news/investor-day-2021
Quotes for media
The a2 Milk Company’s Managing Director and CEO, David Bortolussi said:
• “The China infant milk formula market has experienced unprecedented change over the past 12 months
which has required us to adapt our growth strategy.”
• “Our ambition is to rebuild The a2 Milk Company into an exciting, innovative and sustainable growth
company.”
• “We have reviewed our brand positioning to ensure continued distinctiveness and to capture the full potential
of our China label and English label products in key channels.”
• “Our brand health metrics are strong in all our markets, and we will be investing more behind the brand to
increase awareness, engage with our consumers, and drive growth.”
• “We are focused on realising the full potential of our core China infant milk formula business and despite
current market headwinds we have a significant opportunity to grow share in the market.”
• “We will innovate and expand our infant milk formula product portfolio to appeal to a broader set of
consumers and to maximise our distribution potential.”
• “Outside our core business, we are considering opportunities for adjacent category growth in China, ANZ and
the USA as well as assessing opportunities in new emerging markets.”
• “Sustainability is a fundamental priority for our business. Today we have upgraded our targets to reduce our
greenhouse gas emissions to net zero for Scope 1 and 2 by 2030 and net zero for Scope 3 by 2040. We have
2
also expanded our sustainable packaging targets to all our markets while reiterating our commitments to
supporting thriving farms, enriching communities and responsible sourcing and distribution.”
• “We have a great leadership team, passionate people and a pioneering culture to drive our execution to
capture the significant growth opportunities we have going forward.”
Authorised for release by the Board of Directors
David Bortolussi
Managing Director and Chief Executive Officer
The a2 Milk Company Limited
For further information, please contact:
Investors / Analysts
David Akers
Group Head of Investor Relations and Sustainability
M +61 412 944 577
david.akers@a2milk.com
Rebecca Culbertson
Senior Analyst Investor Relations
M +61 400 955 295
rebecca.culbertson@a2milk.com
Media
Rick Willis
M +61 411 839 344
rick@networkfour.com.au
Media – New Zealand
Barry Akers
M +64 21 571 234
akers@senescallakers.co.nz
---
THE a2 MILK COMPANY LIMITED
INVESTOR DAY
27 OCTOBER 2021
A D A P T I N G
F O R G R O W T H
2 0 2 1 I N V E S T O R D A Y
2
Disclaimer
This presentation dated 27 October 2021should be read in
conjunction with, and subject to, the explanations and views in
documents previously released to the market by The a2 Milk
Company Limited (the “Company”), including the Company’s
Annual Report for the 12 months ended 30 June 2021 and
accompanying information released to the market on 26 August
2021.
This presentation is provided for general information purposes
only. The information contained in this presentation is not
intended to be relied upon as advice to investors and does not
take into account the investment objectives, financial situation or
needs of any particular investor. Investors should assess their
own individual financial circumstances and consider talking to a
financial adviser or consultant before making any investment
decision.
This presentation is not a prospectus, investment statement or
disclosure document, or an offer of shares for subscription, or
sale, in any jurisdiction.
Certain statements in this presentation constitute forward looking
statements. Such forward looking statements involve known and
unknown risks, uncertainties, assumptions and other important
factors, many of which are beyond the control of the Company
and which may cause actual results, performance or
achievements to differ materially from those expressed or implied
by such statements.
While all reasonable care has been taken in relation to the
preparation of this presentation, none of the Company, its
subsidiaries, or their respective directors, officers, employees,
contractors or agents accepts responsibility for any loss or
damage resulting from the use of or reliance on this presentation
by any person.
Past performance is not indicative of future performance and no
guarantee of future returns is implied or given.
Some of the information in this presentation is based on
unaudited financial data which may be subject to change.
All values are expressed in New Zealand currency unless
otherwise stated.
All intellectual property, proprietary and other rights and interests
in this presentation are owned by the Company.
2 0 2 1 I N V E S T O R D A Y
3
Glossary of terms
2 0 2 1 I N V E S T O R D A Y
AcronymMeaning
a2MCThe a2 Milk Company Limited
ANZAustralia and New Zealand
ATLAbove the line marketing
ASPAverage selling price
AUDAustralian Dollar
AUSAustralia
B2CBusiness to consumer
BCDLower tier cities in China
BHTBrand Health Tracker
BTLBelow the line marketing
BUBusiness unit
C2CConsumer to consumer
CAHGChina Animal Husbandry Industry Co., Ltd.
CBECCross-border e-commerce
CLChina label
CNADCChina National Agriculture Development Group Corp.
COGSCost of goods sold
CRMCustomer relationship management
CSFAChina State Farm Holdings Shanghai Co., Ltd.
DCDistribution centre
DOLDomestic online channel
DTDistributor
EBITDAEarnings before interest, taxes, depreciation and
amortisation
ECE-commerce
EECAEnergy Efficiency and Conservation Authority
ELEnglish label
ERPEnterprise resource planning
AcronymMeaning
ESLExtended shelf life
FXForeign exchange
FYFinancial year
GB“Guo Biao”, national standards of China
GHGGreenhouse gas
GIDIGovernment Investment in Decarbonising
Industry
GMGross margin
HCMHuman Capital Management
HKHong Kong
HPEBHigh Pressure Electrode Boiler
IMFInfant milk formula
ITInformation Technology
KAKey accounts
Key&AUpper tier cities in China
KGKilogram
LFLLike-for-like
LKALocal key accounts
MATMoving annual total
MBSMother & baby stores
MNCMultinational corporation
MTModern trade
MVMMataura Valley Milk Company
M/SMainstream
NDNumeric distribution
NKANational key accounts
NPDNew product development
NPSNet Promoter Score
AcronymMeaning
NZDNew Zealand Dollar
NZXNew Zealand Exchange
O2OOffline to online
PPremium
POSMPoint of sales marketing
Q&AQuestions and answers
RKARegional key accounts
RMBOfficial currency of China
ROIReturn on investment
RRPRecommended retail price
RTMRoute-to-market
S1Stage 1 infant milk formula
S2Stage 2 infant milk formula
S3Stage 3 infant milk formula
S4Stage 4 infant milk formula
S&OPSales and operations planning
SAMRState Administration for Market Regulation
SGSmeaton Grange
SG&ASelling, general and administrative expenses
SPSuper premium
TPTaobao Partner
TRIFRTotal recordable injury frequency rate
UHTUltra-high-temperature treated milk
UPUltra premium
USDUnited States Dollar
WDWeighted Distribution
YoYYear on Year
4
Objectives for today
Introduce The a2 Milk Company ExecutiveLeadership Team
Provide greater understandingof our business
Share latest insights on our keymarkets, categories and channels
Outline our ambitionand revised growth strategy
Provide an opportunity for Q&A
2 0 2 1 I N V E S T O R D A Y
4
5
3
2
1
5
Business leadershipFunctional leadership
Executive leadership team introduction
2 0 2 1 I N V E S T O R D A Y
Kevin Bush
Executive General
Manager –ANZ
Xiao Li
Chief Executive –
Greater China
Yohan Senaratne
Executive General
Manager –
International
Blake Waltrip
Chief Executive –
USA
Bernard May
Chief Executive –
Mataura Valley Milk
Janelle Tong
Chief Marketing
Officer (Interim)
Shareef Khan
Chief Operations
Officer
Race Strauss
Chief Financial
Officer
Eleanor Khor
Chief Strategy
Officer
Amanda Hart
Chief People &
Culture Officer
Jaron McVicar
Chief Legal and
Sustainability Officer
& Company Secretary
David Bortolussi
Managing Director
and CEO
6
AGENDA
09.00Welcome
09.05Strategic overview
09.30Brand
09.45Sustainability
09.55People & Culture
10.00China IMF market
10.10China label
10.40 English label
11.00Adjacent growth
11.10Break
11.25ANZ
11.35USA
11.45Mataura Valley Milk
11.55Supply & Operations
12.00Finance & IT
12.10 Q&A13.00 Closing
2 0 2 1 I N V E S T O R D A Y
7
The a2 Milk Company overview
2 0 2 1 I N V E S T O R D A Y
We enrich lives by harnessing the nutritional wonders of nature –through the
naturally occurring a2 Milk
TM
difference
Portfolio of a2 Milk
TM
based products including fresh milk, UHT, ESL, IMF,
milk powder and other nutritional products
Sales primarily in New Zealand, Australia, Greater China and
North America
World class manufacturing facilities and international strategic partners in
China and New Zealand
Over 400 talented team members around the globe
Revenue of NZD$1.2 billion in FY21
8
a2MC has had an extraordinary journey which was disrupted in FY21
FY07
FY10
FY11FY12FY13
FY14
FY15FY16
FY17
FY18
FY19FY20
a2MC historical revenue (NZDm)
FY00
Company founded
FY00
Transferred listing to
NZX main board
1
a2 Milk™launches
in UK and Ireland
FY11
Manufacturing
agreement
for IMF
FY12
China distribution
agreement
for IMF with
China State Farm
FY13
a2 Milk®
launched in the US
FY15
Relationship
announced (incl.
NZ fresh milk
licence)
FY18
FY14
IMF launched in
ANZ and China
listing
FY15
FY21
1
Listed on the NZX alternative market (NZAX) in 2004 and transferred listing to NZX main board in 2012;
2
Revenue from continuing operations only
Source: a2MC internal data
FY09FY08
Shift from
licensing to
operational;
a2 Milk™
relaunches in Aus
FY07
IP CreatorsAustralian branded fresh milk focus
China IMF and US liquid milk expansion
Adapting
for growth
Distribution
agreement with
Yuhanfor South
Korea
FY18
Company
acquires stake in
MVM with CAHG
FY22
Company
exits UK
FY20
2
2 0 2 1 I N V E S T O R D A Y
9
We have taken action to address the disruption
2 0 2 1 I N V E S T O R D A Y
Issues disrupting a2MC in FY21Key actions we have taken
•Recognised stock write-downs and deliberately
slowed down sales in 4Q21, together with other
planned initiatives, to reduce inventory levels and
rebalance English label IMF pricing across channels
•Swapped older distributor inventory with more
recent stock to improve on-shelf product freshness
•Increased brand investment with a significant
campaign in 4Q21 to drive consumer demand
•Bolstered leadership teamwith new internal and
external talent
•Reorganised our Asia-Pacific division for enhanced
focus on our key business opportunities
•Refreshed our growth strategyto realise the full
potential of our business
As a result of this disruption, a2MC experienced a
significant decline in its English label IMF sales
through both daigou/reseller and e-commerce channels
Cross-border trade was disrupted by COVID-19,
creating substantial demand/supply volatility, which
caused excess inventory, exacerbating the issue
At the same time, China infant nutrition market growth
reduced significantly from globally high rates to be flat
in value terms and to decline in volume terms, a trend
that became clear following China’s release of 2020 birth
numbers on 11 May 2021 which showed a reduction in
the birth rate
10
We have reorganised to enhance focus on our key business opportunities
2 0 2 1 I N V E S T O R D A Y
Xiao Li
Chief Executive
Greater China
Yohan Senaratne
Executive GM
International
Blake Waltrip
Chief Executive
USA
Race Strauss
CFO
Shareef Khan
COO
Eleanor Khor
CSO
Jaron McVicar
CLSO & Co. Sec
Janelle Tong
Interim CMO
David Bortolussi
Managing Director & CEO
Kevin Bush
Executive GM
ANZ
A dedicated ANZ team
allows us to consider
what other
opportunities exist
in our core business
andbeyond fresh milk
We now have a
dedicated focus on
managing our
English label
business as one
eco-system, with one
international team
With increased scale
of our China label
business, and
potential expansion
into new product
categories, China
team now focussed
on China label
Bernard May
Chief Executive
MVM
Amanda Hart
CPO
$412M$563M$169M$64MAcquired
30 July 2021
FY21
Sales
(NZD)
Former Asia-Pacific Business Unit
Global functions
supporting business
units
Note: Segment reporting based on geographic results where International sales are recorded in both the China and ANZ reporting segments
Source: a2MC internal data
11
•Assessing our route-to-market for English label IMF and capturing the full
potential of our China label IMF distribution in key channels
We have undertaken a holistic review of our growth opportunities
2 0 2 1 I N V E S T O R D A Y
Market
•Continuing the journey to focus on our China market opportunity in particular
Brand
•Reviewing our brand positioning to create continued distinctiveness amongst an
evolving consumer base and new entrants in the category
Channel
Adjacencies
•Outside our core, we are also considering opportunities for adjacent category growth
in China, ANZ and USA as well as assessing opportunities in new emerging markets
Product
•Re-imagining our infant formula product portfolio in English label and China label
to appeal to a broader set of consumers and maximise distribution potential
12
We have adapted our a2MC growth strategy
2 0 2 1 I N V E S T O R D A Y
Purpose
Goals
Strategic
priorities
Enablers
People
Create the safest and most diverse,
inclusive and engaging place for our
people to thrive
Sustainability
Supportour farmers, protect our
planet and cows, rethink packaging
and contribute to our communities
Consumers
Bring the unique benefits of pure
and natural a2 Milk™to as many
consumers as possible
Shareholders
Create long-term, enduring value
for shareholders and a trusted,
transparent relationship
To enrich lives by harnessing the nutritional wonders of nature
Values
Bold PassionPioneering spiritRespectIntegrity
Brand strengthScience & innovationStrategic relationships
Transform our
supply chain
•Expand CL registered
market access
•Utilise MVM capability
•Develop China supply
capability over time
4
Capture full potential
in China IMF
•Gain more control over
CL and EL distribution
and get closer to our
consumer
•Increase investment in
our brand, digital
marketing and E-comm
2
Invest in people and
planet leadership
•Invest in our people to
enable them to thrive
•Take direct action to
lead the industry in
GHG emissions reduction
and farming practices
1
Ramp-up product
innovation
•Expand our CL and EL
IMF product portfolios
•Enter adjacent product
categories in relevant
markets to drive growth
3
Capability development
Accelerate path to
profitability
•Take action to realise
potential in USA
•Expedite insourcing and
3
rd
party volume to
significantly increase
MVM utilisation
5
Humility
Ambition
Rebuild a2MC into an exciting, innovative and sustainable growth company
13
Our strategy is designed to drive growth across multiple horizons
2 0 2 1 I N V E S T O R D A Y
FY22
FY23-24
FY25-26
Stabilise and reset strategy
Full scale roll-out of
growth & other initiatives
Deliver “next wave” growth
from innovation and supply
chain transformation
Enablers
•Restore demand & supply balance
and attractive channel economics
•Stabilise EL IMF decline
•Commence CL in-market growth
initiative pilots
•Focus on new user recruitment and
Stage 4 penetration
•Invest in content generation and
always-on brand comms
•Launch new GB std. CL range and
roll-out distribution initiatives
•Innovate in EL IMF and increase
control of distribution
•Scale innovation in USA
•Innovate in ANZ core & adjacencies
•Implement MVM electrification
•Deliver more sustainable packaging
•Expand CL product portfolio with
additional registrations
•Scale adjacent categories
•Achieve profitability in USA and MVM
businesses
•Grow 2-3 new emerging markets
•Operationalise China supply capability
•Achieve meaningful progress on
Scope 1 & 2 GHG emissions reduction
•Refresh strategic priorities and
execution plan
•Review China brand positioning
•Ramp-up innovation focus
•Invest further in digital marketing and
E-comm capability
•Increase investment in brand
•Implement IT and data roadmap
•Create rolling innovation pipeline
•Leverage next level scientific research
Strategic
priorities
Explore opportunities to accelerate strategy execution through M&A, JV and alliances
14
We are focused on five key non-financial measures of success over time
2 0 2 1 I N V E S T O R D A Y
1
People
Safety TRIFR <10
with continuous
improvement
Engagement >80%
Diversity and
inclusion rated >4
out of 5 by team
Sustainability
GHG emissions
reduction
-Scope 1+2 net zero
by 2030
-Scope 3 net zero
by 2040
100% completion of
Farm Environmental
Plans and Certified
Animal Welfare
Programs
100% reusable,
recyclable or
compostable
packaging with 50%
average recycled
content
Brand health
China unprompted
awareness >25%
Australian fresh milk
loyalty >40%
USA household
penetration >10%
in premium milk
Market share
Top-5 CL IMF player
with share >5%
Leading EL IMF
range with share
>25%
Australian fresh milk
share >15%
USA premium milk
share >5%
Incremental $100m
revenue from existing
and new emerging
markets
Innovation
Access to ≥3 CL
registrations
Expanded EL IMF
portfolio
Incremental $200m in
revenue from dairy
and other nutritionals
to China
>25% of sales from
new products in
Australia and USA
23
4
5
Source: Management estimates
15
Defining a specific timeline to achieve our financial goals is challenging
2 0 2 1 I N V E S T O R D A Y
•The pace and degree of change in the China IMF market over the past 12 months is truly unprecedented –
including from the prolonged COVID-19 impact and the reduction in the number of Chinese newborns
•There are key macro uncertainties impacting the future outlook, including:
‒How the China birth rate will evolve and the impact policy changes may have on this
‒The extent and pace of recovery in cross-border trade post COVID-19
‒How the competitive landscape will evolve in China including the outcome of the new GB registration process
‒The extent and pace of change in consumer product and channel preferences
‒How the China regulatory framework and international relations may evolve and impact trade
•Because of these uncertainties and the range of potential outcomes, it is very difficult to define future state
targets and when they will be achieved –the path is also unlikely to be linear
•However, we remain confident that with our unique brand proposition, coupled with our team’s ability to execute,
we are well placed to rebuild a2MC into an exciting, innovative and sustainable growth company
16
Growth in milk and
adjacent categories
Notwithstanding, we have an ambition to grow sales to over NZD$2 billion
2 0 2 1 I N V E S T O R D A Y
Medium-term indicative sales ambition (≥ 5 years)EBITDA margin dynamics
•Indicative range
‒IMF sales, particularly EL, key driver of upside/downside risk
‒Target margins probably in the “teens” in the medium term
due to expected market conditions, investment and innovation
‒Target margins possibly in the “low-to-mid 20s” in the
medium-to-long term subject to higher than expected market
recovery, EL channel growth and share gains
•Key accretion drivers
‒Operational leverage impact of share growth, cross-border
trade recovery and/or increase in China birth rate
‒Mix impact on delivered margin (EL > CL > ANZ > USA)
‒Mitigation of USA losses and path to profitability
‒Nutritionalsinsourcing margin capture by MVM
‒Pricing, promotional activity, trading terms and FX
•Key dilution pressures
‒Operational de-leverage impact of China IMF market
headwinds and regulatory risks
‒Mix impact on delivered margin (EL > CL > ANZ > USA)
‒Increasing brand reinvestment rate and margin pressure in
China as competition intensifies
‒Innovation, reformulation and FX impact on margin
‒Supply chain transformation period
‒Investment in capability and sustainability
Growth in existing and
2-3 new markets
Growth in other dairy and
nutritional products to
China through innovation
and distribution growth
Regain half of EL revenue
decline from FY20 to FY21
through channel recovery post
COVID-19 and execution of EL
strategy to gain share
Double CL share
from c.2.5% to 5%
Source: Management estimates
Wide range of outcomes
possible with significant
upside and downside risk
17
Key messages for today
2 0 2 1 I N V E S T O R D A Y
•The market landscape has experienced unprecedented
change over the past 12 months, requiring us to adapt
•As a result, we have adapted our growth strategy to
achieve the full potential of our business
•Importantly, our brand is strong, we have a relatively small
share in China IMF and significant opportunity to capture
•We have reorganised to prioritise our most important
growth levers and have a clear plan to execute
•We have a great leadership team and pioneering culture
to lead the execution
18
BRAND
Janelle Tong (Chief Marketing Officer, Interim)
2 0 2 1 I N V E S T O R D A Y
19
How it began...
•The a2 Milk Company was founded in New Zealand by two passionate pioneers –scientist
Dr Corrie McLachlan and his business partner, Howard Paterson –who recognised that not
all milk is the same
•Early scientific research revealed that there was a difference between beta casein proteins
in cows’ milk with predominantly two types –A1 and A2 –and McLachlan discovered there
was a safe and simple way to identify cows that produced milk that was naturally A1-protein
free. From there The a2 Milk Company was born
•Since then we have worked alongside scientists from around the world to pioneer the
scientific understanding of the unique benefits of A1-protein free milk and bring true
benefits to our consumers
•To this day our purpose remains the same, to enrich lives by harnessing the nutritional
wonders of nature –through the naturally occurring a2 Milk™difference
Howard Paterson’s contribution to the company was not merely that he....persuaded
many of us to invest in the A2 story. Equally important were Howard’s boundless
enthusiasm and his unshaking belief that A2 Corporation Limited...was also a
company that was destined to do good for human health globally
Annual Report 2003
Our founders’
sense of
purpose
continues to
exist today
2 0 2 1 I N V E S T O R D A Y
Note: Photo credit: Dean Purcell/Getty Images News
Source: 2003 Annual report
20
Our brand proposition
Our a2 Milk™comes from cows
specially selected to naturally
produce milk with only the
A2 beta-casein protein type.
Many people say they can
feel the difference
2 0 2 1 I N V E S T O R D A Y
21
Our proposition has enabled us to build a leading position in market
Pioneer, innovator and leader in understanding
the unique benefits of a2 Milk™
(single-minded focus)
Aspirational and progressive values and
lifestyle positioning
Pure and natural dairy with superior taste and
country provenance
Premium and high quality product and
brand experience
2 0 2 1 I N V E S T O R D A Y
22
We have maintained this leadership despite multiple challengers
2 0 2 1 I N V E S T O R D A Y
Only The a2 Milk Company...
...is dedicated exclusively to the
A2-protein difference
23
Our brand foundations have been built on three main areas
Advocated
by others
2 0 2 1 I N V E S T O R D A Y
Underpinned by
developing science
Celebrated
by us
24
The a2 Milk™difference goes beyond the selection of a cow
The a2 Milk™difference
The difference starts with
selecting the right cow...
...but it doesn’t stop there;
The a2 Milk Company also
applies expertise, proprietary
know-how and care to deliver
consistently high quality
across all our products
Typical cow herds
produce conventional
milk containing a mix of
A1 and A2-protein types
Our branded milk is sourced
from herds producing milk
naturally containing only the
A2-protein type and no A1
A1
Our process
2 0 2 1 I N V E S T O R D A Y
25
We continue to invest in further understanding the a2 Milk
TM
difference
Dr Corrie McLachlan
joins Prof. Elliott in
furthering the
understanding of
different beta casein
protein types
1990’s
Lab studies focus on
better understanding
how A1 and A2-protein
types break down during
digestion
1999
a2 Milk™brand is
launched and later
enters China and
the USA
2000’s
Mechanistic work on
cell culture identified A1
protein derived BCM-7
interaction with human
cells identifying the
potential mechanism
2013-2015
Human clinical trial in
China reports post-dairy
digestive discomfort was
reduced in milk intolerant
adults when drinking A1-
protein free milk (compared
to conventional milk)
2016
Larger scale human clinical
research is published in China
(600 adults) which showed a
reduction in acute GI
symptoms after consuming
A1-protein free milk
2017
Human clinical trial conducted
amongst 5-6 year old Chinese
children showing consistent results
to adult studies. Commenced study
with Deakin University to examine
potential benefits of a2 Milk™on
gut-brain axis in women
2018-2020
Infant milk formula clinical
trial in China initiated to
better understand the
benefit of a2 Platinum®
on infant digestion and
comfort
2021
Future
research
Investing into
further clinical
research and
patent
development
Consumer
experiences begin
to inform further
research
hypotheses
2006-2013
2003-2006
A series of animal
studies report digestive
benefits of A1-protein
free milk to gut
function
Early work identifying
different beta casein
protein types exist
(A1 and A2-protein)
1960’s
2 0 2 1 I N V E S T O R D A Y
1980’s
Prof. Robert (Bob)
Elliott begins research
into differing health
effects of milk protein
types
Note: A subset of key research milestones that the Company and others have sponsored can be seen above; the Company remains focused on continuing to build the scientific evidence across age groups, populations and consumer benefit areas
26
Our products create a positive wave of advocacy
“a2™makes my
tummy happier
than regular
milk!!”
Michelle (USA)
“This Milk is great!!! If
you like milk but can't
drink regular milk....you
really need to try this.... ”
Noelle (USA)
2 0 2 1 I N V E S T O R D A Y
“I considered myself lactose
intolerant for a long time, but I
felt well after drinking a2 Milk™
by accident. Now I’ve decided to
purchase it regularly, and it turns
out that I’m not intolerant to
lactose but to A1 BCM-7 instead”
YiyiTiara(China)
“Completely changed
my stomach problems,
since using a2 Milk™
never been better”
Wendy (Australia)
27
Our brand naturally sits at the heart of macro consumer trends
2 0 2 1 I N V E S T O R D A Y
PROACTIVE
WELLNESS
Consumers are
proactively addressing
their health in a holistic
and personalised way
with tailored products
that meet physical
needs
RISE OF PROTEIN
POWER
Protein is consumers'
short-cut super-hero,
shifting beyond quantity
and into quality and
optimal protein types
PURPOSE-DRIVEN
BRANDS
Consumers now look
beyond “what” a brand
does to “why” it exists,
with an expectation that
brands will stand for
something “more” than
functional benefits
NATURAL &
WHOLEFOOD
REVOLUTION
Increasing demand for
“real” wholefood
goodness, minimally
processed, “clean” label
and transparency
AWARENESS OF GUT-
HEALTH IMPORTANCE
Increased awareness of
gut-immune health has
triggered demand for
“digestion” solutions to
protect consumer
health and wellness
28
We deeply understand our consumers and their needs
Implemented
robust and
comprehensive brand
health tracking
across China, USA
and Australia
Enhanced our
analytical ability to
isolate and measure
communication
effectiveness and test
& learn initiatives
in China
Introduced
comprehensive and
detailed portfolio
tracker of broader
dairy categories in
China
Invested in
data analyticsto
track consumer and
market trends, NPD
and competitor
actions
Undertaken
consumer usage &
attitude studies and
other insight
innovation
Invested in
Consumer
Segmentation
2 0 2 1 I N V E S T O R D A Y
29
We have consistently invested in and celebrated our brand in positive and
uplifting ways in advertising
2 0 2 1 I N V E S T O R D A Y
30
We will continue to go beyond “A2” to drive a more purposeful brand
Sustainability from farm to consumer
Smarter recyclable packaging
Processing innovation to eliminate waste
Playing a bigger role in our community
2 0 2 1 I N V E S T O R D A Y
31
SUSTAINABILITY
Jaron McVicar (Chief Legal, Sustainability Officer & Co.Sec)
2 0 2 1 I N V E S T O R D A Y
32
Our sustainability program has evolved significantly including updated
commitments to achieve net zero by 2030 for Scope 1 & 2 and by 2040 for Scope 3
To enrich lives by harnessing the nutritional wonders of nature
Enriching
communities
Passionate
people
Highestquality
products with the
A2-protein difference
from the A2-protein
pioneers
Relentless focus on
product quality &
safety
Climate impact &
natural resources
Thriving
farms
Sustainable
packaging
Enriching community
wellbeing
Safety TRIFR < 10
Engagement > 80%
A minimum of 40%
women and 40% men
in leadership positions
Sustainability
Champions at all
worksites
Scope 1 & 2 net zero
2030; Scope 3 2040
Reviewing water,
waste and
biodiversity measures
Farm environmental
plans for 100% of
farms by 2023
Certified animal
welfare program for
100% of farms
by 2023
Aligned to APCO
targets for products
sold in all markets
Quality
nutrition
Our purpose
Our targets &
commitments
Our programs
Responsible
sourcing &
distribution
Safety and wellbeing
Human Synergistics
Culture Amp
Employee &
sustainability
committee
Scientific research
Innovation and new
product development
stage and gate
Quality systems
Community
engagement and
investment through
key partnerships
across our markets
Farm environmental
plans
Animal welfare
On-farm pilot /
research
Sustainable packaging
roadmap and action
plan
GHG emissions
reduction
Water, waste and
biodiversity
Climate risk and
opportunities
Committed to the
principles of Modern
Slavery Act
Responsible sourcing
Responsible sourcing
& distribution
roadmap and action
plan
All underpinned by the highest standards of governance and doing business the right way
Protecting nature and THE PLANET for future generations
utilising The a2 Impact Fund™
Supporting OUR PEOPLE, consumers and
communities to be healthy and safe to thrive
Our focus
2 0 2 1 I N V E S T O R D A Y
Source: Management estimates
33
2 0 2 1 I N V E S T O R D A Y
We are supporting the role our farmers play in our supply chain
Our holistic approach
to assist farms and
farmers to thrive
Farm environmental
plans
Animal welfare
program
Plans developedto:
•Lower GHG emissions
•Manage water quality and efficiency
•Manage soil quality
•Boost on-farm biodiversity
•Improve nutrient (effluent) management
Target
100% of farms supplying raw A1-protein free
milk to have a farm environmental plan in
place by the end of 2023
Program designed to:
•Meet globally recognised standards set
by the World Organisation for Animal
Health and uphold the Five Freedoms
framework for animal welfare
•Our approach is to drive improvement,
reduce risk and ensure farmers are
welfare centric –this is achieved through
the combination of increased audits,
wider audit scope, milk monitoring,
on-farm technology and training
Target
100% of farms to be certified under an
upgraded program by the end of 2023
34
We are investing to significantly reduce our GHG emissions
New High Pressure
Electrode Boiler
Boiler conversion to
biomass
•New Zealand's first High Pressure Electrode
Boiler (HPEB) will replace all current
coal-fired heat duties on the MVM site by
October2023
•HPEB is a clean and 100% renewable energy
alternativewhich will reduce MVM’s
processing emissions to almost zero
•Co-funding from the New Zealand
Government Investment in Decarbonising
Industry (GIDI) Fund, which is administered
by EECA (the Energy Efficiency and
Conservation Authority)
•Projecttotal capital expenditure:
NZD16.3 million
•Boiler 2 at Dunsandelwill be converted
from coal-fired to biomass
•Wood pellets are a more sustainable
fuel than coal and will significantly
reduce carbon emissions at the
Dunsandelsite
•Co-funding from the New Zealand GIDI
Fund
•a2MC contribution of NZD1.2 million
2 0 2 1 I N V E S T O R D A Y
35
We are committed to making a meaningful change in our packaging
•Continue to investigate and look
towards innovative packaging
design for sustainable solutions
•Operationalise sustainable
packaging initiatives within our
supply chain
•Target setting for products sold
outside of Australia
Progress in sustainable
packaging
Committed to Australia’s
2025 National Packaging
Targets
100%
Reusable, recyclable, or
compostable packaging
70%
Plastic packaging being
recycled or composted
50%
Average recycled content,
included in packaging
1
(revised from 30% in 2020)
Phase out of the problematic
and unnecessary single-use
plastics packaging
2 0 2 1 I N V E S T O R D A Y
Note: (1) APCOs recycled content targets vary by component (between 10% and 60%) with an average of 50% recycled content
36
We support the communities in which we operate
FOODBANK
•Supported Foodbank since
2015
•FY21 became a Foodbank
National Donor Partner
•FY22 sponsorship of their
School Breakfast Program
240,219kgs of product
donations to people in
need in FY21 equivalent to
432,830 meals
•Supported Cure Kids over
the past two years to
research digestive health for
children, with a special focus
on coeliac disease and
irritable bowel disease
$200k donated to Cure
Kids towards research
CURE KIDSFEED THE CHILDREN
•Supported Feed the Children
to give struggling families the
supplies they need to send
their kids back to school with
confidence
10% of every carton of
a2 Milk® purchased, up to
$100k, was donated to
Feed the Children
2 0 2 1 I N V E S T O R D A Y
MORE GOOD FOR
RURAL SCHOOLS
•Partnered with rural schools
in China and Guangming
Daily to support school
children with nutrition
stations to help drive better
educational outcomes
Product donations and
customised health care
plans for families and their
children
Source: a2MC internal data
Providing disaster relief support in our communities including:
NZD1M donation to assist in the development of a COVID-19 vaccine and AUD350K donation to support the Bushfire Relief
37
2 0 2 1 I N V E S T O R D A Y
PEOPLE &
C U L T U R E
Amanda Hart (Chief People Officer)
38
Our team is powered by its purpose
We enrich lives by harnessing
the nutritional wonders of nature
OUR VALUES
Respect
Seek to understand
difference in all its
forms
Integrity
Do the right thing for
our consumers,
partners, people...
and our cows
Bold passion
Driven to realise our
amazing potential as a
Company and
individuals
Pioneering spirit
Unconventional
open-minded thinking that
re-imagines the possibility,
outcome driven
Humility
We’re never done
growing and discovering
and we have a
willingness to continually
iterate and learn
2 0 2 1 I N V E S T O R D A Y
OUR PURPOSE
39
We have held onto this, whilst scaling for growth
“I’m passionate about working for The a2 Milk
Company because I really am making a
difference. We not only change the lives of our
consumers but we also change the lives of our
farmers, adding value back into dairy.”
Russel Ebel, National Field Sales Manager
–Australia (15 years)
We have more than doubled our relatively small team
over the past five years
We have retained existing teams whilst
introducing new talent
“The a2 Milk Company is a place where I can
be an integral part of building an innovative
and game changing brand.”
Carly Hofstedt, Senior Manager, Innovation
–US (4 years)
“I am most impressed by the passionate,
driven and motivated people who have come
together to deliver on our shared a2 vision.” fe
John Zhang, Head of Legal and
Compliance –China (2 years)
2 0 2 1 I N V E S T O R D A Y
Source: a2MC internal data; FY21 total employee headcount per FY21 annual report
40
Our strategy is to attract passionate people, provide opportunities for them to
grow and maintain an environment which celebrates diversity and inclusion
Our People Strategy
•Harness the substantial passion people bring to The a2 Milk Companyinto
opportunities for our team to grow with the business to achieve their potential
•Continue to treat each member of our small team as an extension of our
own families, maintaining the highest health and safety standards so that
everyone goes home each night safe and well
•Build on the natural energy that comes with working at The a2 Milk
Company and promote an environment that allows people to thrive personally
and professionally
•Leverage the unique attributes of working at a big “small” company,
including through accelerated learning, development and leadership
opportunities
•Celebrate diversity in all its forms, create an environment of inclusion and
in doing so, continue to attract and retain the highest quality talent
2 0 2 1 I N V E S T O R D A Y
41
CHINA IMF
M A R K E T
Eleanor Khor (Chief Strategy Officer)
2 0 2 1 I N V E S T O R D A Y
42
Summary of key messages
•While the China IMF market remains the largest and most attractive in the world, FY21 marked
an inflection point where volume growth started to decline
•With declining volumes, retail pricing is also now under pressure, as premiumisation through
price band trade-up is not enough to offsetASP decline
•Making conditions even more challenging is the fact that consumers are no longer actively
prioritising international brands. Instead, consumers are looking for brands that resonate, and local
competitors are more effectively connecting with consumers in their home market than MNCs
•This is potentially unsurprising given the speed at which the consumer landscape is evolving.
Generations are getting “shorter” and the marketis now made up of mostly post-90s mumswith very
different attitudes and behaviours
•Regulatory environment remains a watching brief and anticipated to change more rapidly
4
5
3
2
1
2 0 2 1 I N V E S T O R D A Y
43
The China IMF market is the largest and most attractive in the world
Note: Market size based on a2MC internal estimation approach; channel and regional splits based on Kantar
Source: Kantar Worldpanel 0-6 years old Baby & Kids panel: National IMF market tracking (Key&A+ BCD cities) for the 52 weeks ending 18 June 2021
Total: NZD 47B
CL IMF channels
2 0 2 1 I N V E S T O R D A Y
Estimated China IMF market retail value sales (FY21)Commentary
•China is the biggest, most premium
IMF market in the world
–China has a huge population with a strong
desire for high quality, premium nutrition for
their children
–In addition, Chinese children tend to use IMF
for longer, staying on Stage 3 for ~20 months.
In contrast, while Europeans have relatively
high retail price points, children quickly
switch from IMF to other foods
•The competitive landscape in China is
fragmented, creating opportunity for
brands that resonate with consumers
–China is a uniquely fragmented market with
the top 5 brands representing ~45% of the
market
–In addition, consumers in China are generally
more open to trying new brands, creating a
path to growth for brands that can connect
with consumers
44
IMF channels are experiencing very different growth trends
EL IMF channelsCL IMF channels
C2C (incl. Daigou)CBECMBSMTDOL
Role of
channel
•Recruits new users,
leveraging network of
brand “promoters”
•Provides brand buzz
and endorsement
Growth
trends
(FY20-FY21)
volume sales
-40%
value sales
-42%
•Traffic and volume
sales contributor
•Allows “show-
rooming”, through
flagship store content
volume sales
-7%
value sales
+3%
•Recruits new users,
through “higher-touch”
offline sales model
•Enables education
and image building
volume sales
+7%
value sales
+9%
•Recruits new users,
in provinces where
offline sales skew to
MT (vs MBS)
•Enables convenience
for other consumers
volume sales
-10%
value sales
-5%
•Traffic and volume
sales contributor
•Allows “show-
rooming”, through
flagship store content
volume sales
+8%
value sales
+19%
Source:
For C2C/Daigouand MT channels: Kantar Worldpanel 0-6 years old Baby & Kids panel: National IMF market tracking (Key&A+ BCD cities)
For CBEC and DOL channels: SmartpathChina IMF online market tracking: domestic online and cross-border platform sales (by value and volume)
For MBS: Nielsen MBS retail measurement service: mother and baby stores only retail sales (by value and volume)
2 0 2 1 I N V E S T O R D A Y
45
IMF market volumes impacted by decline in newborns, which should partly
recover over time
•The number of newborns in China has
declined, primarily due to changing
socio-demographics
•Further pressure on the birth rate is
anticipated in the near term, following
COVID-19 impact and earlier advice
relating to pregnancy and vaccination,
followed by some recovery in the birth
rate
•Longer term birth rate may recover
following the introduction of the 3
rd
child policy and the potential for
further measures to stimulate the birth
rate which are likely to have a positive
impact
Number of newborns in China has declined and future is uncertain Commentary
Source: National Health Commission of the People’s Republic of China (historical); management estimates (future)
Historical
Potential Future Outcomes
No. of newborns
forecasted range
2 0 2 1 I N V E S T O R D A Y
46
IMF market will skew to BCD cities, in line with the number of newborns
Note: Market includes S1-S4
Source: Nielsen MBS retail measurement service: mother and baby stores only retail sales by volume (for 2020); management estimates for potential future scenarios
Key/A city market outlook subduedBCD city market supported by higher birth rate
2 0 2 1 I N V E S T O R D A Y
I L L U S T R A T I V E
47
We are already seeing diverging Stage 1 growth rates in Key/A vs BCD cities
Key/A and BCD cities MBS monthly Stage 1 value growth vs pcpCommentary
Source: Nielsen MBS retail measurement service: mother and baby stores only retail sales (by value)
2 0 2 1 I N V E S T O R D A Y
•Key&Acities typically have higher
cost of living, with birth rate
typically negatively correlated with
the costs of raising a child
•In addition, a higher rate of the
population in Key&Acities are
college-educated, and therefore,
more likely to prioritise career and
professional development over
raising a child
•In contrast, lower tier cities have
greater affordability and include a
higher mix of rural areas, which are
both generally associated with a
higher birth rate
48
Provincial differences also exist in terms of birth rates across China
Province archetypes
•Historically, significant uplift from 2
nd
child policy including in
provincessuch as Hebei, Shandong, Hubei, Inner Mongolia
•However, although there was an immediate uplift post
implementation of the policy, the trend did not continue in all
provinces in subsequent years
•Birth rate negatively correlated with cost of living; expect
increasing gapbetweendeveloped provinces vs. others
•More births in lower cost provinces: Guizhou, Jiangxi, etc
•Fewer births in higher cost provinces:Beijing, Shanghai, etc
•Birth rate driven by social demographic factors; expect existing
social factors to remain in force
•More births in provinces biased towards larger family units:
Guangdong, Fujian, etc.
•Fewer births in provinces with lower marriage rates,
younger generation emigration, etc: Liaoning, Xinjiang, etc.
Policy
driven
Economy
driven
Social
factors
driven
0.57%
1.46%
Ningxia 1.37%
0.61%
0.65%
Beijing: 0.81%
Tianjin: 0.67%
1.37%
Shanghai: 7.0%
1.37%
0.81%
0.82%
1.33%
0.82%
1.29%
0.91%
1.26%
1.29%
1.04%
1.04%
1.26%
1.25%
12.0%
1.0.%
1.06%
1.18%
1.14%
Latest official provincial birth rate (2019)
1
1.10%
1.08%
1.07%
0.11%
National average
2
:1.06%
Note: 1. Birth rate = # of new born / average total population in the province in 2019; 2. Arithmetic mean of all provinces; this is the most recent data available
Source: National Health Commission of the People’s Republic of China (historical)
2 0 2 1 I N V E S T O R D A Y
49
There continues to be a clear trade-up to ultra-premium segments
IMF market by price segment
IMF market by city tier and price band
China IMF retail value sales by city tier by price band (FY21)
20%
Share of
newborns
Note: Price tier based on Stage 1 price: Ultra premium >=390RMB/KG; Super premium 290-390RMB/KG; Premium 190-290RMB/KG; Mainstream <190RMB/KG
Source: Nielsen MBS retail measurement service: mother and baby stores only retail sales (by value); Kantar Worldpanel 0-6 years old Baby & Kids panel: National IMF market tracking (Key&A+ BCD cities)
80%
China IMF retail value sales
by price band (FY21)
2 0 2 1 I N V E S T O R D A Y
50
However, like-for-like ASP is under pressure
Nielsen ASP trend for UP/SP*
RMBper KG
Super Premium
(290-390
RMB/KG)
Ultra Premium
(>390 RMB/KG)
Premium
(190-290
RMB/KG)
Mainstream
(<190 RMB/KG)
Ultra Premium sample: Astrobaby, Enifinitas, Profutura, Zhichu, IllumaBlueDiamond
Super Premium sample: Super Feifan, Beta Star, AptamilClassic
Average RRP
ASP
~460
~17% discount shifts ASP into SP
~15% discount shifts ASP into P
~335
~380
~285
Dec’20
~365
~280
Jun’21
~4% ASP drop
over time
~2% ASP drop
over time
>490
390
290
190
240
340
440
Actual ASP might be
lower given limitations
of Nielsen data
capture
Actual ASP likely to
be lower than what is
recorded byNielsen
Source: Nielsen MBS retail measurement service: mother and baby stores only retail sales
2 0 2 1 I N V E S T O R D A Y
51
Focus of competitors’ innovation is generally in the ultra-premium segment
Current focus on
next generation
ingredients
Expanding into
new milk bases
Participating in
high growth
categories
A2-protein
Goat MilkOrganic
NextGen Ingredients
Expand into
A1-protein free
milk base
Essensis
A2-protein
Organic
May 20
RMB 450/900g
Organic
Sep 20
RMB 121/800g
Goat
IMF
Q3
RMB ~300
Chunrui
Organic
Oct 20
RMB 305/800g
Proaffinity
A2-protein
Mar’20, EL
RMB 289/800g
S26
DHA
Lutein
EL
RMB 429/850g
Nov’20, CL
RMB 309/850g
Enfamil
A2-protein
202020212022+
Illuma
Goat
Essensis
Niel(OPO)
EL
Ultra Premium
Essensis
HMO+FOS
EL
Ultra Premium
Liquid IMF
EL & CL
RMB ~25 / serve
Liquid
IMF
Liquid
Dec 20
RMB 338/708g
Astrobaby
A2-protein
+OPO
Zhuoran
Bb12+ LF
Jul 20
RMB 173/700g
Goat
IMF
Q3
RMB ~400
Q4
Ultra Premium
Astrobaby
A2-protein
Wyeth
BELSOL
Organic
CL
RMB 358/800g
Illuma
A2-protein
OPN
CL
RMB 343/850g
CL
RMB 199/800g
Enfinitas
MFGM
CL
RMB 348/800g
Illuma
HMO
EL
RMB 375/850g
CL
RMB ~420/850g
Illuma
Goat
Illuma
HMO
CL
RMB ~370/850g
Source: Literature search
Aptamil
Feihe
Wyeth
Mead
Johnson
2 0 2 1 I N V E S T O R D A Y
52
Local brands are taking share from MNCs
Note: Kantar data based on a panel of 9,000 consumers covering 0-6 year oldsand only seeks to project ~40% of the population
Source:KantarWorldpanel 0-6 years old Baby & Kids panel: National IMF market tracking
MNCLocal
2 0 2 1 I N V E S T O R D A Y
53
However, “local vs MNC” is less important than building a brand that resonates
Note: Relative importance of an individual attribute indicates the ranking in consumers’ minds when they make an IMF purchasedecision
Source:a2MC purchase driver quantitative survey (n=3000); a2MC internal country sentiment tracking (n=1000)
2 0 2 1 I N V E S T O R D A Y
Extreme product choice
exists for Chinese parents
China now the most trusted
IMF country, followed by NZ
•There are an extremely high
number of brands for Chinese
parents to consider (>400
registered brands)
•However, research suggests
consumers ultimately only want to
assess 3-5 brands
Most trusted source country for IMF
Ultimately consumers look for
“brands” that resonate
26% of IMF
decisions made
with brand as
primary driver
IMF purchase importance driver
54
Brands must seek to connect with a rapidly evolving consumer landscape
Mix of newbirths in China by generation of mother
Note: Post-70s, 80s, 90s, 95s, 00s refers to the mother’s year of birth
Source: National Health Commission of the People’s Republic of China (historical); management estimates (future)
2 0 2 1 I N V E S T O R D A Y
Comments
•A unique feature of the IMF
category is that consumers
“graduate” relatively quickly and
new users must constantly be
recruited into the brand funnel
•Complicating this further is that
brands must communicate with a
constantly evolving consumer
base, with new “generations” of
mothers entering the category
•Each generation of consumer has
grown up in a different
environment, has different values
and obtains information from
different sources –brands must
adapt to stay relevant across
generations of consumers
55
Post-90-95s mothers are very different to post-80s mothers
Post-80s parentsPost-90s parents
•Perceives pressure to be a
“perfect mum”, delivering on all
dimensions for themselves and
their child
•Potential for “tiger-mum”
parenting approach, wanting their
children to “win” from the beginning
•Parents from the 1950s, who
tended to be more traditional than
future generations
•Books as a major tool in
education, using fewer number of
sources than what is available today
•Parents from the 1960s,who
tended to be more open-minded
than earlier generations
•Online boom occurred during
later childhood, so although
“digitally savvy”, can find today’s
large number of information sources
somewhat overwhelming
•Focused on achieving success
through hard work
•Economic success as a measure
of overall success
•Focused on “experiences” for life
enrichment
•Questioning whether economic
success is the end goal
Parenting
mindset
Upbringing
Social
environment
3
1
2
Post-95s parents
•Being younger in absolute age,
post-95s parents are more focused
on experiencing their children’s
development
•Parents from the 1970s, some of
whomhave benefited from the
economic boom
•Highly digitally savvy, and
extremely efficient at navigating the
endless number of information
sources available online today
•Less defined life goals and
ambitions. However, this is also
due to post-95s parents currently
still <30 years old
2 0 2 1 I N V E S T O R D A Y
Source: a2MC brand consultant
56
We are already seeing this evolution in the way current consumers approach IMF
Online becoming bigger first purchase channelFragmented ecosystem for educating online shoppers
Source: Kantar Worldpanel 0-6 years old Baby & Kids panel: National IMF market tracking (Key&A+ BCD cities); a2MC priority platform survey (n=1000)
Offline most
used source
even for online
shoppers
Online
Online sources
2 0 2 1 I N V E S T O R D A Y
This includes
C2C channel
Key & A cities
BCD cities
57
L A B E L
CHINA
Xiao Li (Chief Executive –Greater China)
2 0 2 1 I N V E S T O R D A Y
58
Summary of key messages
•We have built a significant business in China over a relatively short period, and have been the exception to the trend of MNC
brands losing share to domestic brands
•There are several key drivers of our growth, with clear runway remaining
•Footprint expansion has been the biggest driver of our offline growth, with opportunity to expand further
•Like-for-like growth in mature stores has been relatively flat, making this an increased future focus for us
•We have had strong performance in Key&Acities and in key accounts, enabled by our in-market investment; however, we under-index in lower tier
cities, providing a further growth opportunity
•We have performed particularly well in select provinces, which provide “proof points” of our potential
•Good progress in building online capability; however, our DOL share is underweight relative to our MBS share, suggesting morework is required to
over-index in online
•Underpinning our growth has been the strength of our brand, our differentiated product and the increasing investment we
are making to increase consumer awareness and understanding of our unique difference
•We have invested to refine our understanding of our target consumers, enhanced our brand tracking capability to understand how our proposition
resonates, and are continuously improving the effectiveness by which we communicate with our consumers
•With these key tools in place, we have stepped up our China marketing investment and brand health tracking reveals that we have done so while
maintaining market leading brand health measures, which is critical given the importance of “brand” when making IMF purchase decisions
•Effectiveness of our brand investment and activation is also evident in our strong growth in early-stage products (despite the decline in newborns)
and Stage 4, giving us confidence in our ability to recruit and retain users
•In addition to opportunities to grow within our current portfolio, further opportunity exists with an expanded portfolio.
However, this isdependent on our ability to access more CL registrations over time
3
2
1
4
2 0 2 1 I N V E S T O R D A Y
59
a2MC has built a significant business in China in a short period
Source: a2MC internal data; Nielsen MBS retail measurement service: mother and baby stores only retail sales (by value); SmartpathChina IMF online market tracking: domestic online platform sales (by value)
1
1
1
1
Data not available
2 0 2 1 I N V E S T O R D A Y
60
a2MC has been the exception to the trend of domestic brands winning share
from MNCs; new A2-protein IMF competitors are helping to grow the category
Source: Nielsen MBS retail measurement service: mother and baby stores only retail sales (by value)
MBS MAT value share change from FY20-FY21Channel share of A2-protein IMF brands
2 0 2 1 I N V E S T O R D A Y
+1.0%
61
We have continued to expand our store footprint, which has been the primary
driver of our growth offline
Note: Difference between distributor sales to retailers and a2MC ex-factory sales is inventory held by distributors
Source: a2MC internal data tracking of stores with active sales in the past 6 months. Restated store numbers for December 2020 and June 2020 reflecting enhanced data capture and updated internal tracking methodology.
a2MC CL IMF offline footprint Drivers of a2MC distributor sell-out (i.e. sales to retailers)
100%
15%
2%
-8%
123%
14%
2 0 2 1 I N V E S T O R D A Y
Key initiatives to drive LFL sales growth
•Improve in-store execution, pricing/promo activity and trade
marketing effectiveness
•Utilisedata and analytics to continuously optimisemix of trade
marketing activities to allow precise deployment of investment
•Leverage partnerships with key accounts into new opportunities for
joint business growth; extend learnings to underperforming accounts
•Deepen brand and trade marketing investment in higher priority areas
62
Runway remains to further expand our footprint
Note: Numeric distribution is the percent of stores in China that sell the item; Weighted distribution is the percent of stores in China that sell the item weighted by the sales of the stores
Source: ND% and WD% from Nielsen MBS retail measurement service: mother and baby stores only retail sales (by value) as at end of FY21; estimated number of stores assumes ~140K MBS stores
(except for a2MC where actual number of active stores has been shown)
Estimated number of offline stores for ultra premium brands (FY21)
a2MC target of
30-35K stores
with a WD ~50%
2 0 2 1 I N V E S T O R D A Y
63
Performance in national key accounts (NKAs) has been an important growth
driver; however, opportunity remains in some chains
Source: a2MC internal data
We have focused our efforts on building share
in national key accounts
However, opportunity remains to grow in some
underpenetrated chains
23%
2 0 2 1 I N V E S T O R D A Y
64
Strong performance in Key&Acities, however, opportunity remains in BCD cities
Source: a2MC internal data; Nielsen MBS retail measurement service: mother and baby stores only retail sales (by value)
Majority of growth driven by
sales in Key&Acities
However, a2MC is under-
indexed in BCD citiesKey initiatives for BCD growth
23%
2 0 2 1 I N V E S T O R D A Y
Nielsen MBS value share (MAT)
•Further develop our distributor
network to enable strong
coverage of lower tier cities
•Partner with distributors to
continue to expand our CL
footprint
•Apply learnings from NKAs to
relevant regional key accounts
•Deepen marketing investment in
select, higher priority areas for
accelerated growth
•Strong channel and inventory
management
65
a2MC’s share position also varies widely by province
2 0 2 1 I N V E S T O R D A Y
Source: Nielsen MBS retail measurement service: mother and baby stores only retail sales (by value)
Province
1
Province
2
Province
3
Province
4
Province
5
Province
6
Province
7
Province
8
Province
9
Province
10
Province
11
Province
12
Province
13
17%17%32%27%19%19%23%9%21%22%25%16%14%
5%5%7%13%7%11%10%8%9%5%14%13%8%
4%8%12%10%3%4%5%6%3%10%16%5%6%
10%10%7%3%5%4%5%6%3%4%3%4%5%
10%8%4%4%5%5%4%8%2%9%3%4%11%
4%5%6%4%6%6%4%9%2%5%2%7%15%
3.5%4.3%4.0%2.7%1.9%1.3%2.0%2.8%1.2%3.4%0.6%2.2%1.2%
MNC
Feihe
Junlebao
Nutricia
Mead
Johnson
Wyeth
Yili
Local
Value share by
province
(MAT Jun 2021)
M B S O N L Y
Provincial leader
66
Key account growth enabled by investment in activation
ROADSHOWSMAMA CLASSES
BRAND AMBASSADORS
IN-STORE EXPERIENCE
•High impact events
designed to build brand
awareness and
engagement
•877events run in FY21
across 158cities
•Provide an opportunity for
deeper brand education
•Range in size from <20
people to "mega" classes
with >100 people
•42.3Kevents run in FY21
•In-store consultants to
provide mothers with
advice, sales support and
connect them with other
mothers
•4.5Ka2MC consultants
as at the end of FY21
•Ranging from in-store
shelf displays and brand
banners to flagship fitouts
•a2MC rolled out 106
flagship stores in FY21
Source: a2MC internal data
2 0 2 1 I N V E S T O R D A Y
67
We have made good progress in growing sales via domestic online channels;
however, we still under-index relative to our MBS channel share
Source: a2MC internal data; Nielsen MBS retail measurement service: mother and baby stores only retail sales (by value); SmartpathChina IMF online market tracking: domestic online platform sales (by value)
a2MC DOL sales growthRetail sales mix by local vs MNC players
Local PlayersMNC Playersa2MC
DOL
MBS
Brand 1
Brand 2
Brand 3
Brand 4
Brand 5
Brand 6
18%
2 0 2 1 I N V E S T O R D A Y
a2MC DOL
share of
2.0% and
MBS share
of 2.5%
68
We take an integrated approach to investing in our brand
•Historically leveraged broadcast media for
awareness building, supplemented by
in-market events, which can be deployed at a
city-level
•Recent focus on improving our capability in
social and digital media to engage consumers
throughout their brand journey
•Targeted deployment of online and offline
investments in purchase conversion
•Improving monitoring of effectiveness and
efficiency of marketing spend, to drive
continuous improvement, and to ensure we get
maximum impact from our investment
2 0 2 1 I N V E S T O R D A Y
69
Our brand investment begins with a deep understanding of our consumers
Original segmentation
New archetypes added
‘I want a product
with the most
enhanced,
scientific formula’
Savvy rational
Focused on product-
features
Prefers formulations
based on latest IMF
science
‘I want a natural
product from a
high quality
overseas milk
source that I can
trust’
Resourceful mum
Prefers imported
products
Overseas natural,
imported sourcing
critical
‘I want something
that is exclusive
and seen to be the
best’
Peacock mum
Prefers expensive
and exclusive
brands
Driven by status
‘I want something
that my kid likes
and makes my life
easy’
Carefree mum
Practical
Values convenience
and availability
‘I want a product
that delivers the
best value within
my budget’
Value seeker mum
Prefers value-for-
money
High price
sensitivity
Skews to local
brands
‘I want something
specifically
designed for
Chinese babies,
ideally from a local
brand’
China Pride mum
Prefers local brands
designed and
manufactured in
China
Proud of Chinese
lifestyle
‘I am open-minded
and progressive
about life and
raising my child’
Balanced
progressive mum
Progressive mindset
against lifestyle and
parenting
Open-minded and
willing to try
innovative brands
Defining
drivers
Source: a2MC quantitative survey (n=3000)
2 0 2 1 I N V E S T O R D A Y
a2MC focus archetypes
70
We have enhanced our brand health and competitor tracking capabilities
2 0 2 1 I N V E S T O R D A Y
•Conduct quarterly IMF brand health and equity tracking in China as
well as quarterly global competitor NPS and trend tracking
•Robust sample sizes and broad geographic coverage with 9600 IMF
mothers surveyed per quarter across all regions, city types (both K&A
and BCD cities) and provinces
•Key performance indicators for tracking and diagnosis include: loyalty
through the funnel, net promoter score (NPS) and brand equity
measures
•Enhanced analytical capabilities that enable us to isolate and measure
communication effectiveness, test & learn marketing and trade
initiatives
•Track new IMF formulation, ingredients and milk basesto consider in
connection with our product innovation and scientific research programs
71
We are also continuously improving our approach to measuring marketing
effectiveness along the brand funnel
Broadcast media
•Assess impact withBHT
•Compare by province
Digital/social
•Review impact of investment on
search indices, brand buzz,
engagements and EC traffic
•Conductsocial listening of positive
and negative sentiment
E-commerce
•Analyse effectiveness and efficiency of
driving traffic and recruiting new
fans/members
•Analyse effectiveness and efficiency of
triggering purchase, mix of new
purchasers
POSM
•Conduct BHT correlation analysis to
understand impact on awareness
•In-store sales analysis to assess
impact of POSM post-installation
•BHT analysis to test impact on sales
velocities and trial
Roadshows
•Conduct BHT correlation analysis to
understand impact on consideration
•Measure direct ROI (based on GM
value of sales) and indirect ROI (incl.
new user value)
•Compare effectiveness and
efficiency across provinces
•Cross-check with BHT correlation
analysis against purchase metrics and
change in Stage 1 share
Mama classes
In-store consultants
AwarenessConsiderationTrial/purchase
2 0 2 1 I N V E S T O R D A Y
Note: BHT = Brand Health Tracker
72
With these tools in place, we have stepped up our investment in marketing
Source: a2MC internal data
2 0 2 1 I N V E S T O R D A Y
Marketing has increased over
the past 5 years
Marketing mix weighted to
in-channel activities Comments
Intention to
increase
further in
FY22
•Although we have increased our
marketing spend, we estimate that
we are still underinvesting
compared with competitors
-Our research suggests we invest less
than half of other MNC brands and a
fraction of leading domestic brands
•Our intention is to further increase
our marketing investment as well
as adapt our marketing mix
-Historically, strong investment in
online content by our EL resellers has
allowed us to focus on building
awareness and driving purchase
conversion
-Following EL channel disruption, we
are increasing our brand-led digital
and social media investment to
supplement efforts from resellers
Intention to
increase
further in
FY22
73
Investments are deployed across the brand funnel
ATL marketing to build
awareness
In-market events to engage and
educate consumers
In-store POSM and brand
ambassadors to convert
2 0 2 1 I N V E S T O R D A Y
74
Marketing effectiveness evident in strong brand health metrics
Source: IPSOS China brand health quarterly tracker
Brand awareness
Ever trialled
Brand used most often
2 0 2 1 I N V E S T O R D A Y
75
We have significant room to grow awareness with encouraging “proof points”
around conversion and loyalty when consumers do become aware
Brand 2
Brand awareness
Trial conversion
Loyalty conversion
Brand 1Brand 3Brand 4Brand 5
Brand 2Brand 1Brand 3Brand 4Brand 5
Brand 2Brand 1Brand 3Brand 4Brand 5
2 0 2 1 I N V E S T O R D A Y
Source: IPSOS China brand health quarterly tracker (n= 9750 respondents)
76
We also have the highest NPS across all brands
2 0 2 1 I N V E S T O R D A Y
Source: IPSOS China brand health quarterly tracker (n= 9750 respondents)
77
Key brand equity measures are also encouraging
a2MC equity statements vs. category
Source: IPSOS China brand health quarterly tracker (June 2021); based on those aware of a relevant brand (a2MC = 4695)
2 0 2 1 I N V E S T O R D A Y
20
30
40
50
60
70
Is a brand I will recommend to others
Is the closest to breast milk
A natural brand
Good reputation
Exclusive formula/patented formula
Is a popular brand
A brand I can trust
Helps reduce constipation/diarrhea
Contains A2 protein
Strengthen immunity/prevent illness
Has superior milk source
Is a premium brand
Helps baby brain development /
learning development
Easy to digest
Innovative brand
Provides superior nutrition
Specially formulated for Asian/ Chinese babies
100% imported
Category average
a2
78
Strong growth in early-stage products (despite fewer newborns) and fast ramp-
up of Stage 4 (launched Dec-20) demonstrates ability to recruit and retain users
Source: a2MC internal data; Nielsen MBS retail measurement service: mother and baby stores only retail sales (by value);SmartpathChina IMF online market tracking: domestic online platform sales (by value)
YoY growth
Positive growth in early stage products Growth reflected in market share gains
Nielsen MBS shareSmartpathDOL share
2 0 2 1 I N V E S T O R D A Y
22%
79
Overall, performance to date gives us “proof points” that we can be successful,
as well as highlighting a clear pathway to future growth
Source: Nielsen MBS retail measurement service: mother and baby stores only retail sales (by value); SmartpathChina IMF online market tracking: domestic online platform sales (by value)
Cross-channel growthCross-province growth Cross-tier growth
2 0 2 1 I N V E S T O R D A Y
a2MC MBS value share
by city tier
(MAT, FY21)
80
Further opportunities exist with an expanded portfolio, subject to registrations
RRP
1
/ 900g tin per brand (MBS, FY21, RMB)
Bubble size: FY21 IMF retail sales
2
Note: Price tier based on Stage 1 price RMB / 900g tin: Ultra premium >350; Super premium 260-350; Premium 170-260; Mainstream <170 1. Using each sub-brand’s stage 1 IMF original selling price, converting to price per kg;2. From Nielsen MBS
data (high level estimation to directionally show comparison); 3. Value share change from Nielsen value share data MAT Jun 2020 to MAT Jun 2021
Source: Nielsen MBS retail measurement service: mother and baby stores only retail sales (by value)
CL MBS only
# of brands/labels17261612
P12Mshare change
3
+0.4 ppt-1.8 ppts+0.2 ppt-1.4 ppts+4.9 ppts+2.1 ppts
Brand 1
Brand 2Brand 3Brand 4Brand 5
Ultra premium
Super
premium
Premium
Mainstream
2 0 2 1 I N V E S T O R D A Y
81
There are multiple directions into which we could expand our portfolio
Note: *Assume goat/sheep/plant has same split of CL MBS sales with that of cow milk IMF
Source: Nielsen MBS retail measurement service: mother and baby stores only retail sales (by value); management estimates used to extrapolate into FY26
Cows’ milk base
Niche IMF
Goat/Sheep/Plant
•We are seeking to innovate
our CL IMF portfolio
•There are several directions
under review, including:
-Additional ultra premium
ranges (sitting alongside
our current CL brand)
-Extending into the super
premium price segment
to extend further into
BCD cities
-Considering whether our
brand can stretch into
other A1-free IMF
offerings
CommentaryEst. China CL MBS IMF market by price band and product type (FY26F)
2 0 2 1 I N V E S T O R D A Y
82
Our China strategic partners are key to enabling portfolio expansion
•Strong partnership formed
in China with CNADCand
through its subsidiaries,
China State Farm and
China Animal Husbandry
Group
•China State Farm has been
our strategic logistics and
distribution partnerin
China since 2013 as our
exclusive import agent for
our China label IMF
products
•Recent MVM acquisition
has initiated a relationship
with the China Animal
Husbandry Group, who
retains a 25% interest
2 0 2 1 I N V E S T O R D A Y
•a2MC has a 19.8% share in
Synlait; Bright holding a
39.0% share
•Foundational IMF
partnership since 2012 and
supply rights for defined IMF
products into ANZ & China
•Work to progress
re-registration of our
Chinalabel product is
on-track, targeting SAMR
approval in late 2022 with
new product in market in
early 2023
83
Our CL IMF strategic priorities
Ambition
Strategic
priorities
Enablers
Continue to invest in
&nurtureour brand
To be a top-5 CL IMF brand in China
Evolve a2MCbrand
promise and establish
clear positioning with
consumers and trade
Achieve full potential
in key accounts
Optimise marketing,
strengthen joint
business planning, and
deploy “best practice”
across more chains to
improve LFL growth
Capture opportunity
in lower tier cities
Further develop
distributor network and
deepen investment in
higher priority areas
Accelerate online
growth
Further increase
capabilityonline,
including omni-channel
management and
social/digital media
strategy
Broaden our
IMFportfolio
Address untapped
consumersegments
and broaden
distributionfootprint
with wider product
portfolio
IMF innovation
capability and
supply chain
Expand China
market access
with additional
registrations
Continued
management of
sales channels
and inventory
Maximise impact
from marketing
investment
Relentless
commitment to
highest quality
product and
safety standards
Leverage data
and analytics to
drive continuous
improvement
Measures
of success
Achieve top quartile awareness
whilst maintaining strong trial
and loyalty metrics
Expand footprint to 30-35K
stores (~50% WD), with
positive LFL growth
Achieve total CL share of >5%
Outperform in DOL, with
higher DOL share than MBS
2 0 2 1 I N V E S T O R D A Y
42135
84
While the China IMF market remains the biggest, most premium IMF market in
the world, current and near-term headwinds are making growth challenging
Overseas manufacturing is no longer a primary decision driver for consumers.
Instead, consumers are looking for brands that resonate and have a distinctive
product proposition
Once consumers become aware of our brand, we have category-leading brand
health metricsand, combined with our relatively low CL market share, we are
confident that significant opportunity remains for us in China
We have identified how to deliver this opportunity, across different city-tiers,
channels and through development of our brand and product portfolio
We will increase our level of investment and are confident in our team and
ability to achieve our full potential in China
Key takeaways
2 0 2 1 I N V E S T O R D A Y
85
ENGLISH
L A B E L
Yohan Senaratne (Executive General Manager –International)
2 0 2 1 I N V E S T O R D A Y
86
Summary of key messages
•The EL market is more than just daigou and CBEC and, critically, it has developed well beyond the traditional
“suitcase trade”. The “daigou” channel is more appropriately described as a “reseller network”, referencing the complex
routes-to-market developed to supply Chinese consumers with EL IMF. These include developing direct e-commerce
platforms, leveraging existing C2C and B2C e-commerce platforms, pioneering development of O2O channels, as well as
providing drop-ship services to “closed network” C2C sales (e.g. conducted via WeChat)
•EL channel disruptions during FY21 had a profound impact on our business, prompting us to take significant steps
to reduce inventory build-up. Pleasingly, these efforts are yielding results with improved EL pricing, increasing demand,
improved brand health and a more optimal sales mix across stages. We remain confident that we have a compelling IMF
proposition for consumers seeking a premium brand, high quality product, at a more accessible price point, and this is
demonstrated in our consumer tracking
•Outside of the inventory write-down, we are taking other measures to support EL recovery:
•Improving our ability to manage inventory in the channel in the future, enabled by traceability
•Actively working to increase brand support to the reseller network, and incorporate EL into our China marketing
•Increasing focus and investment in other EL routes-to-market(including O2O)
•Working to simplify and increase control over distribution and “get closer” to our consumers
•We are also reviewing opportunities for growth through an expanded portfolio
4
3
2
1
2 0 2 1 I N V E S T O R D A Y
87
EL market is significantly more consolidated than the CL IMF market
Estimated breakdown of EL IMF channels in China marketEstimated EL geographic split
*Note: There are variations between CBEC data shown here from Kantar and Smartpath. Kantar data has been used here for a single-source view of the EL IMF market. SmartpathCBEC MAT value share as at end of FY21 was 21.1%
^Note: Due to the lack of clear channel definition between O2O/C2C (incl. Daigou)/CBEC, O2O sales may also be captured in C2C(incl. Daigou) and CBEC channels
Source: Kantar Worldpanel 0-6 years old Baby & Kids panel: National IMF market tracking (Key&A+ BCD cities) for the 52 weeks ending 18 June 2021
2 0 2 1 I N V E S T O R D A Y
88
Different EL channels play distinct roles
New user
reaching /
endorsement
New user sell-
through
Traffic & volume
contributor
Image building &
price anchor
Discount
platforms
Awareness building
channels with targeted
consumers and rich
content, but not
typically sales
conversion channels
Awareness building
channels with effective
education / word of
mouth as well as high
sales conversion
Sales booster channels
with high traffic, large
consumer bases and
large basket sizes
Brand equity showroom
with official market
content, guaranteed
authenticity and price
stability
Discount platforms
with volatile pricing and
sales trends
2 0 2 1 I N V E S T O R D A Y
Source: a2MC management
89
EL routes-to-market are complex and rapidly evolving
Niche social ECO2OC2C / B2CSocial EC
Source: Management estimates
Cross-border
focused, social
retail platforms
leveraging
individual shop
owners’ personal
networks
Offline POS for EL
(allowing online
orders via a CBEC
mechanic)
Platforms with
heavy discounts
PDD
New user sell-through
Content ECVertical EC
Mom & baby or
medical-focused
platforms with
targeted audiences
Content-heavy,
with both KOL
network &selling
channel
O’MallYunji
Danchuang
KTT
MiyaDXY
New user reaching / endorsement
Discount
platforms
CBEC FSS
Brand / TP
operated flagship
on CBEC
Major CBEC
High traffic
mainstream cross-
border B2C
(largely platform-
owned inventory)
TmallGlobal Flagship
TDIJD
KaolaVIP
Image building &
price anchor
Traffic & volume
contributor
Daigou stores on
EC marketplaces
(Taobao / JD) & in
private domains
(WeChat）
TB C2CWechatC2C
TM B2CJD B2C
BRAND
Indicative target price index (ASP)
10090-9595-10095-100
80-8575-85
95-10570-75
CONSUMER
2 0 2 1 I N V E S T O R D A Y
90
The daigou channel has itself evolved from the traditional “suitcase trade” to a
sophisticated reseller network
2 0 2 1 I N V E S T O R D A Y
O2O
(~40% of sales)
“Open-network” C2C
(e.g. Taobao)
(~25% of sales)
“Closed-network” C2C
(e.g. WeChat)
(~30% of sales)
E-commerce platforms
(~5% of sales)
Suitcase trade
Daigoubegan as a
suitcase trade for
family and friends
Corporate daigou
“Pick-and-Pack”
emerged with scale
logistics and supply
chains
Reseller network
Now sophisticated, omni-
channel B2B2C and
B2C2C selling
models
Source: Management estimates
91
Case study: MYAZ.COM comprises an e-commerce sales platform, C2C sales
enabled by digital applications as well as O2O
MYAZ.COM
CONSUMER
China online
China offline (O2O)AZ Global
AZ Global APPAZ Global distributionAZ ANZ APP
Corporate / personal
reseller network
AU pharmacy,
corporate
network
Regional
agent
O2O store
Daigou
Example: O2O store activation
2 0 2 1 I N V E S T O R D A Y
Supported by
livestreaming
Supported by
livestreaming
Supported by
livestreaming
Centralised Packing and Distribution
92
Market disruption has had a profound impact on our business in the past year
Source: a2MC internal data; For CBEC data: SmartpathChina IMF online market tracking: for cross border e-commerce platforms only retail sales (by value); For Daigou/C2C and O2O data: Kantar Worldpanel 0-6 years old Baby & Kids
panel: National IMF market tracking (Key&A+ BCD cities)
Note: DaigouMAT value share of 22.4% was reported as at end of FY21 in our FY21 results release. Following internal SKU data cleansing and reclassifying at Kantar, this number has been restated to 22.5%
Data not available
Commentary
•In FY21 there was significant disruption to cross-
border trade which had a profound impact on the
Company’s results
•a2MCwas impacted by a significant decline in cross-
border English label IMF and other nutritional sales
through reseller channels
•Decline in market shares has been more modest, with
C2C value share declining by ~2%pts, and CBEC
value share declining by 0.6%pts
•This is because reseller network sales were impacted
by a channel reduction (40-50% decline), and CBEC
sales were down as a result of cycling a high
comparative period and as a result of the actions
taken in 2H21 to rebalance inventory within the
channel
2 0 2 1 I N V E S T O R D A Y
Data not
available
93
We have taken significant steps to reduce inventory build-up which has
improved freshness and EL market pricing
Note: CBEC average price calculated excluding Pinduoduo; Inventory written off reflects EL only
Source: a2MC internal data, including data collected from distributors and from publicly available EC platforms
EL inventory written down to
reduce stock in supply chains Freshness has improvedEL prices have also improved
2 0 2 1 I N V E S T O R D A Y
Distributor inventory holdings by
age profile (Aug 21)
94
Disruption evident in our sales mix; some improvement can be seen in 1Q22
although this has not yet been reflected in our share
Source: a2MC internal data; KantarWorldpanel 0-6 years old Baby & Kids panel: National IMF market tracking (Key & A + BCD cities)
•In addition to addressing
inventory build-up, we are also
increasing brand-building
efforts in EL channels,
including providing more
reseller network content
support, and stepping
upinvestment in new
userrecruitment activities on
CBEC
•Key focus is workingtowards
consistency of brand
messages across channels
Commentary
1Q22 saw improvement
in stage mix (Stage 1:
9.8%, Stage 2: 20.1%)
2 0 2 1 I N V E S T O R D A Y
95
EL disruption also visible in brand health; recent tracker suggests improvement
EL awareness also
benefited by marketing
campaign conducted
during 4Q21
2 0 2 1 I N V E S T O R D A Y
Source: IPSOS China brand health tracker
96
Consumer research confirms the unique role EL plays in our portfolio
2 0 2 1 I N V E S T O R D A Y
a2 CL usera2 EL user
a2MC CL users’ rationale for purchase:a2MC EL users’ rationale for purchase:
•The A2-protein leader
•Premium lactoferrin for immunity (designed for Chinese
babies)
•Highest quality and natural New Zealand milk source
•Easy to find and explore (face-to-face information)
•“Only the best” –a necessary step-up from EL
“A2 leader designed with lactoferrin to be the best”
The Chinese label formulation is better for the baby than the
English label; it designed with premium lactoferrin which is
for immunity and strength.
Shanghai mother, 2021
a2 is already a good enough product. I don’t really see why
just having some lactoferrin being added would mean it is
that much better.
Shanghai mother, 2021
•Brand buzz and “Hermes” status
•ImportedNew Zealand quality milk source
•The A2-protein leader
•A “smart” choice –do not see “just lactoferrin” as a reason
to justify a price increment
“a2 as a brand is already premium and trusted”
Source: Consumer focus groups (n= 8 groups)
97
Traceability measures will further enhance our channel management
Introduced QR code technology, unique to
each tin
Activating functionality in FY22 to support
channel management
•Traceability at tin, cartonand pallet levelfrom
manufacturing through to distributor sale
•Monitoring program for product sold across
authorised channels
•Introducing scanning technology at first-tier
distributors to increase visibility through the supply
chain and channels
•Traceability-enabled product in CBEC currently
being sold into our authorised distributors and
platforms via Hong Kong and this will be available
in reseller and other EL channels during 1H22
2 0 2 1 I N V E S T O R D A Y
98
Actively working to increase support to reseller network
Increasing reseller support
•Upgrading content and other
brand assets to be used across
CBEC and reseller networks
•Expanding team resources to
provide direct channel marketing
support to reseller networks
•Reviewing ways to leverage
China in-market investment to
also promote EL IMF sales
•Integrating English label images
in China ATL campaigns to provide
further brand building support to
reseller networks
Examplecontent support provided to resellers
Integration of EL IMF in China OOH
Provenance video created as content
support for resellers
2 0 2 1 I N V E S T O R D A Y
99
Increasing our focus and investment in other EL channels
Investing further in O2O
•Opportunity exists to leverage
offline stores as EL "showrooms"
for purchase through CBEC (O2O)
•O2O provides a good mechanism
to increase awareness of a2MC's
lower-priced EL product
amongstconsumers in China
•Pilot studies suggest that growth is
incremental, with limited
cannibalisation of existing CL sales
•We are increasing resources to
expand the brand-led O2O rollout
Case study: Introduction of EL at major retail chain in China
Source: a2MC internal data
2 0 2 1 I N V E S T O R D A Y
100
We are working to simplify and de-layer our current EL RTM, which is complex
and limits visibility over, and engagement with, end consumers
Product flow
Source: a2MC internal data; management estimates
China domestic end consumers
Tier 1
DT
Sub-tier
DT
End
Customers
DT/TP 1DT/TP 3DT/TP 2DT 1
Others
Mainly retail
customers
AUS offline channels
Pharmacy, retail, etc.
DT 5
& others
AUS gift shops
B2B / resellers
DT 3DT 4DT 2
Unofficial sourcing
O2O
Taobao
C2C
WeChat
C2C
PDD
C2C
Reseller
network
B2C
(Tmall, JD)
Niche
social EC
DT end-consumer EC platform
Reseller network
~70% of FY21 volume
CBEC
~30% of FY21 volume
Other B2B platforms
Hipac, SeaTent, etc.,
DT 6
>55% reseller volume~40% reseller volume<5% reseller volume
2 0 2 1 I N V E S T O R D A Y
101
We are also reviewing opportunities for growth through an expanded portfolio
EL CBEC** only (SKU non-exhaustive)
Note: Price tier based on Stage 1 price: Ultra premium >390RMB/KG; Super premium 290-390RMB/KG; Premium 190-290RMB/KG; Mainstream <190RMB/KG; Using each sub-brand’s stage 1 IMF original selling price from Tmall/JD,
converting to price per kg
Source: Internal analysis
2 0 2 1 I N V E S T O R D A Y
RRP / 900gtin per brand (EL TMALL, FY21, RMB)
# of brands/labels161111
Ultra premium
Super
premium
Premium
Mainstream
Bubble size: 2020 IMF retail sales
Brand 1
Brand 2Brand 3
102
Our EL IMF strategic priorities
Ambition
To be the no.1 EL product range in China
Strategic
priorities
Enablers
Maintain tight control
of EL inventory across
channels
Continuously improve
visibility of, and ability
to react to, EL supply
chain dynamics
Remain the preferred
brand forthe
EL reseller network
Manage EL
eco-system carefully
and increase reseller
marketing support
Accelerate online
growth with omni-
channel mindset
Continue e-commerce
capability build to
recruit new EL users
Focus on developing
O2O channel
Leverage in-market
China resources (team
and marketing) to
support brand-led and
reseller O2O rollout
Broaden our
IMFportfolio
Expand portfolio with
innovation and NPD
Effective cross-
regional EL
management
Continue team
capability build
Increase
visibility through
the supply chain
Maximise impact
from marketing
investment
Relentless
commitment to
highest quality
product and
safety standards
Leverage data
and analytics to
drive continuous
improvement
Measures
of success
Stable channel pricing
Leading flagship range and
EL share >25%
30% of sales in Stage 1 and 2
Premiumisation of range with
ongoing innovation pipeline
2 0 2 1 I N V E S T O R D A Y
Reseller
relationship
management
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103
Key takeaways
EL channels have been disrupted across the industry
We are working to address a2MC EL challenges and
improvements have already been seen in pricing, product
freshness and sales mix
Our brand proposition remains compelling and brand
health is strong
We are implementing actions to address our route-to-market
and management model
2 0 2 1 I N V E S T O R D A Y
104
2 0 2 1 I N V E S T O R D A Y
O P P O R T U N I T I E S FOR
A D J A C E N T G R O W T H
Eleanor Khor (Chief Strategy Officer)
105
Consider other opportunities
for transformative growth
Outside our core, a2MC is considering other opportunities for growth
Prioritise adjacent growth opportunities, where we can leverage
existing strengths, as well as reinforce our core
Selectively invest in other opportunities, where they could transform our
business; ensure the investment is "right-sized" for the prize
Focus our time, energy and resources on achieving full potential in our
core IMF business
Build engine 2
Pursue near-in
adjacencies
Deliver full
potential in our core
2 0 2 1 I N V E S T O R D A Y
106
In China, we are expanding our portfolio into dairy-based nutrition for the
whole family
Pre-birthInfants and toddlersYoung childrenFamilies
2 0 2 1 I N V E S T O R D A Y
Targeting NZD ~$200 million in sales growth from non-IMF product categories in China over time
107
There are proof points to suggest we can achieve meaningful scale outside IMF
(although EL market disruption impacted FY21 performance)
•Early launch of whole milk
powder, with EL launched
in FY15, and CL launched
in FY16
•CL fresh milk sales also
commenced in FY15
•FY21 saw the full scale
launch of UHT as well as
the introduction of CL skim
milk powder
•FY21 sales impacted by
reseller network disruption
•Relaunched EL Manuka
Honey in Feb 2021
•a2 Platinum® pregnancy
formula initially launched
in FY18 (and subsequently
relaunched in FY20 as a
broader concept of
Nutrition for Mothers
TM
)
•Launched EL Manuka
Honey in Jun 2018
•EL Smart Nutrition
TM
launched in FY19, with a
CL version launched in
FY20
•UHT pilot launched in
FY20 to better understand
opportunity
2 0 2 1 I N V E S T O R D A Y
Source: a2MC internal data
108
We are leveraging learnings to adapt our model to operate outside IMF
Building capability in
modern trade is key
•Precise targeting critical to recruit
users into our ultra premium
price points
•We are using "test and learns" to
refine approach to winning users
online, whilst leveraging IMF
investment for offline sales
Need a new “playbook”
to launch new products
•Majority of non-IMF sales occur in
the modern trade channel
•We have added distributors to
support MT and in FY21,
increased our adult milk powder
distribution footprint by >3x
•As we enter new product
categories, we must learn as
much from what "is" working as
well as from what "isn't" working
•We are applying learnings to
inform our overall future
innovation pipeline
We are still testing our
brand's ability to “stretch”
2 0 2 1 I N V E S T O R D A Y
109
Recent launch of UHT in China has exceeded expectations
•UHT was launchedin China in Oct 2020both in-store and online
•Initial response has been extremely positive withmonthly sales
volumes increasing
•Key focus of the launch has been building an online consumer
base through digital marketing campaigns
•Marketing campaigns have been ROI positive, with average
monthly offtake in online platforms up >500% from a small base
since investment began
•We continue to review our supply chain for best fit as demand
increases
2 0 2 1 I N V E S T O R D A Y
Source: a2MC internal data
110
Expanding our portfolio in China provides opportunities to differentiate our IMF
marketing for S3 and S4 and leverage “halo” benefits from our S3 strengths
•a2
TM
conducted a Trial Endorsement Amplification Campaign
in China in August 2021
•The purpose of the campaign was to encourage fresh milk trial
as a way to increase confidence in a2™IMF in China
•Given that a2™IMF is fortified directly from a2 Milk™, parents in
China have the opportunity to try the milk source for themselves
2 0 2 1 I N V E S T O R D A Y
111
Outside China, we are also reviewing opportunities to expand into new markets
Use our current
product portfolio to
enter new markets
(i.e. fresh milk, IMF, milk
powder, UHT)
Leverage existing
products
Consider different route
to market options to
access markets
(i.e. distributor-led,
licence model, etc)
Choose the right
route-to-market
Investwhen there are
enough “green shoots”
to increase confidence in
ROI of investment
Invest selectively
2 0 2 1 I N V E S T O R D A Y
112
We have successfully expanded into South Korea in close cooperation with
YuhanCareacting as our exclusive distributor
•In December 2019, a2MC successfully launched Stages
1-3 IMF in Korea with our exclusive distributor
YuhanCARE(Yuhan)
•At the end of FY21, a2MC had a market share of ~3% in
the South Korea IMF market
•As a result, we have also successfully launched a2 Milk
TM
skim milk powder (1kg) and a2 Milk
TM
UHT
(1L and 200mL)
IMF-led launch into South KoreaMonthly IMF volume has increased
Source: a2MC internal data
2 0 2 1 I N V E S T O R D A Y
113
Several markets have been prioritisedfor further evaluation
2 0 2 1 I N V E S T O R D A Y
Source: Literature research
Vietnam
•Rapid economic growth is
projected to bolster affluent
population and willingness to
pay for premium products
•Vietnamese consume more
dairythan others in Asia-
Pacific
•Sizeable shelf-stable milk
and IMF categories
Indonesia
•Affluent population forecast
to grow from ~12% to ~21%
by 2030
•Dairy increasingly
associated with health and
wellness, and digestive
health is a key consideration
•Very large IMF market,
dominated by MNC brands
•However, regulatory
environment more complex
than other SEA markets
Malaysia & Singapore
•Smaller than other SEA
markets in region, but high
degree of affluence, especially
Singapore, and large
community of Chinese-
Malaysians
•High willingness to pay for
IMF (Malaysia and Singapore)
•High modern trade
penetration
•Comparatively fewer
regulatory hurdles
Targeting NZD ~$100 million in sales growth from existing and new emerging markets over time
114
Key takeaways
We continue to prioritise core growth, with IMF to China
remaining our biggest focus
A broader product range allows us to “grow-up” with
existing consumers, leverage our brand to acquire new
consumers, and bring further value to our retailer and
distributor partners
A diverse set of geographies will set us up for “Horizon 3”
growth –but we are pacing our expansion to primarily focus
on our core growth engine of China IMF
2 0 2 1 I N V E S T O R D A Y
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ANZ
Kevin Bush (Executive General Manager -ANZ)
2 0 2 1 I N V E S T O R D A Y
116
Summary of key messages
•The Australian fresh milk market is mature, with total volume declining over recent years and
growth primarily in specialty segments
•Despite overall market decline, a2 Milk™has consistently grown ahead of the market,
resulting in significant market share gains
•Growth enabled by ongoing investment in our brand, leading to strong loyalty measures;
however, new user recruitment remains challenging
•With growing sales, we are investing to expand our manufacturing network and increase our
production capacity
•We are also working on leveraging our brand strength into an expanded product portfolio
3
2
1
4
5
2 0 2 1 I N V E S T O R D A Y
117
Australian supermarket milk market consists of fresh milk and long life milk
Fresh Milk Market ($1,923M sales) Long Life Milk ($757M sales)
Source: IRI Australian Grocery Weighted Scan for the 12-months ending 30 June 2021
2 0 2 1 I N V E S T O R D A Y
118
The Australian fresh milk market has experienced some small declines over
recent years
Source: Dairy Australia December 2020; IRI Australian Grocery Weighted Scan
Overall, fresh milk volume in decline
However, grocery sales up in FY21
due to COVID-19
2 0 2 1 I N V E S T O R D A Y
119
a2 Milk™, plant-based and lactose-free have been gaining share
Note: Totals will not add up to 100% as there is overlap between private label and organic, private label and lactose free
Source: IRI Australian Grocery Weighted Scan
•Lactose-free growth driven by an
increase in the number of people being
diagnosed (self or medically-diagnosed)
as lactose intolerant (+14.8% YoY) and
high price points
•Plant-based growth has been driven by
more consumers switching to plant-
based milk substitutes for proclaimed
health and environmental benefits
•While almond and soy milk have been the
key drivers of growth historically, oat milk
substitutes are becoming increasingly
popular with consumers
Key consumer trends
Lactose-free milk
Plant-based milk substitutes
TM
2 0 2 1 I N V E S T O R D A Y
120
Our fresh milk sales have grown ahead of the market
Source: a2MC Internal Data, IRI Australian Grocery Weighted Scan
a2MC sales growth year on yearResulting in significant market share gains
a2MC is the only brand that
is distributed in all major
national retail chains
2 0 2 1 I N V E S T O R D A Y
TM
121
Australian sales skew to the supermarket channel in NSW and VIC
a2MC FY21 sales by type, pack, channela2MC value share by state
Source: IRI Australian Grocery Weighted Scan for the 12-months ending 30 June 2021
2 0 2 1 I N V E S T O R D A Y
122
We are also making progress in NZ with our licensed product to Anchor
TM
Launched in
July 2018
Note: a2MC receives licensing fees from this partnership and does not account for the sales
Source: NielsenIQhomescan
a2 Milk
TM
brought to NZ by Anchor
TM
retail sales (NZD)
2 0 2 1 I N V E S T O R D A Y
123
Our brand health remains strong
Source: EY Sweeney research December 2020 (n= 2000 respondents)
High brand awareness...and high brand loyalty
82%
83%
78%
81%
77%
79%
71%
63%
47%
43%
37%
2 0 2 1 I N V E S T O R D A Y
a2MC prompted brand awareness
124
We have a strong share of voice linked to ongoing investment
Our share of voice is high at 62%We continue to invest in key partnerships
Total a2MC share of voice
2 0 2 1 I N V E S T O R D A Y
Source: Nielsen media totals by calendar year
125
We are investing to expand our manufacturing network
Smeaton Grange Kyabram
•Smeaton Grange is a2MC’s first liquid milk processing
facility in our network based in New South Wales
•Smeaton Grange has a current capacity of
44ML/annum with a capex program underway to
increase this to 60ML/annum by 2024
•This manufacturing facility alone supplies 29 of the 60
national customer DC’s
•In FY21, solar panels were installed to increase the
Company’s use of renewable energy
•In September 2020, a2MC acquired the Kyabram
manufacturing facility from the KyvalleyDairy Group,
a2MC’s long-term fresh milk supplier in Victoria
•Kyvalleycontinues to operate the facility under a
long-term operating lease with an associated long-term
supply agreement in place
•Under the agreement, a2MC will be expanding and
upgrading the Kyabram facility
2 0 2 1 I N V E S T O R D A Y
126
We are reviewing opportunities to expand our ANZ product portfolio
Understand brand "stretch"
Build engine 2
Consider close
adjacencies
Protect and grow
our fresh milk "hero"
Continuously refine and invest in our brand
to defend share and capture new consumers
Leverage our brand and credentials to expand
intonear-in adjacencies, starting with UHT
Consider other categories where we can stretch
our brand
2 0 2 1 I N V E S T O R D A Y
127
We have recently introduced UHT into the Australian market
a2MC has recently launched UHT a2 Milk™in the Australian
market
A trial has been completed in a major retailer with a bulk pack
of 24x200mL
1L UHT a2 Milk™has been presented to other major retailers
and is expected to be launched nationally in 1Q22
2 0 2 1 I N V E S T O R D A Y
128
Our ANZ strategic priorities
Ambition
Strategic
priorities
Enablers
Maintain the no.1 position in fresh milk with expansion into new categories
Maintain brand
leadership
Continue to grow our
brand with category-
leading investment and
partnerships
Increase household
penetration
Increase trialand
conversion through
marketing and
innovation
Drive product
innovation
Develop new core fresh
milk offerings for existing
and new consumers
and explore leveraging
brand into adjacent
categories to expand
share of consumer
Invest in
sustainability
Accelerate sustainability
investment, particularly
in packaging, which will
assist with ongoing
brand resonance
Maximise impact from
marketing investment
Relentless commitment to
highest quality product and
safety standards
Measures
of success
Loyalty rate >40%Market share >15% in milkAchieve 25% of sales from innovation
Deepen capability to
innovate and launch new
products
Retain key talent and
capabilities
Expand capacity in our
supply chain
Invest in our
manufacturing network
to increase capacity and
capability in core
2 0 2 1 I N V E S T O R D A Y
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129
Key takeaways
We have a very established and well-loved brandin Australia
Ourproduction capacity is stretched but we are investing
in expansion
We have an opportunity to extend our brand outside our core
fresh milkoffer
Our new restructure will assist to deliver on our full potential in our
local market
2 0 2 1 I N V E S T O R D A Y
130
USA
Blake Waltrip (Chief Executive –USA)
2 0 2 1 I N V E S T O R D A Y
131
Summary of key messages
•While theUSA has a very large premium milk market, it is highly competitive and there are a
number of scaled and well-known specialty milk brands
•Our liquid milk net revenue declined in FY21 following a shift in execution approach in response
to COVID-19 market conditions (volume sales were +13% vs FY20)
•We are approaching our optimal distribution footprint. However, further investment in our brand
will drive trial and household penetration and in turn, increase velocities
•We are also actively working to innovate our product portfolio in core liquid milk and adjacent
categories to scale our business, with other opportunities existing to further expand our portfolio
•Participation in manufacturing over time will be an enabler to improving margin and innovation
capability
3
2
1
4
5
2 0 2 1 I N V E S T O R D A Y
132
The USA premium milk market is large, with a number of scaled specialty brands
Premium ($4,328M sales) Regular ($14,136M sales)
*Fairlifeis lactose-free and ultra-filtered
Source: SPINS US MULO
2 0 2 1 I N V E S T O R D A Y
®
133
The category is changing due to specialty players and shifting consumer trends
Regular milk declining except for COVID-19 bump and
specialty milk growing
COVID-19 has led to significant
shifts in consumer behaviour
•Initially, COVID-19 caused in home
consumption to increase
•Trips to grocery retailers have
recently declined back to
pre-COVID-19 levels as consumers
shift towards other outlets
(e.g. Mass, Club)
•Increasing vaccination levels and the
nation re-opening has led to
increased eating out and less
cooking and eating at home
Source: SPINS US MULO
2 0 2 1 I N V E S T O R D A Y
134
In FY21, a2MC reduced its effective retail prices, which resulted in increased
volume sales but a reduction in net revenue (also impacted by FX)
Source: a2MC internal data
•FY21 represented a shift in execution
approach with lower marketing
investment and increased price investment
to improve conversion and household
penetration
•a2MC leveraged trade investment to
reduce price to an affordable premium
with key retail customers in exchange for
more shelf presence and position which
will benefit the business over time
•The revenue decline represents the loss
of distribution in a major club customer
due to a shift to private label (with
underlying volume in other channels still
increasing) and unfavourable FX
USA net revenue declined between FY20-FY21Key drivers
2 0 2 1 I N V E S T O R D A Y
On a constant
currency basis, net
revenue increased
5.6% to $70M
135
a2MC USA sales driven by whole milk in the Grocery channel
Unit sales by typeUnit sales by channel Commentary
•The percentage of Club unit volume
has decreased vs. prior year
reducing our sales concentration
with a single customer
•The majority of volume has been
driven by two key SKUs with
significant distribution across the
major channels of distribution for
milk consumption
•Increases in Grocery and Mass
channels (14% in USD and 26% in
volume) diversifies our customer
base and demonstrates
mainstream adoption of the
a2 Milk
®
brand
Note: (1) The Mass channel is comprised of mass merchandise retailers (e.g. Walmart, Target, etc) (2) For this analysis, the Grocery channel includes smaller channels of trade (e.g. Military, Natural and Convenience)
Source: a2MC internal data
2 0 2 1 I N V E S T O R D A Y
136
Our distribution is approaching an optimal productive level of ~30K stores
a2 Milk
®
is now in over 26K stores across
the USA
This includes every major chain in the Grocery,
Mass and Natural channels of trade
Source: a2MC internal data
2 0 2 1 I N V E S T O R D A Y
137
Our brand health remains strong
Source: Mindsight Research, US brand health quarterly tracking (n=2100)
Awareness has increased
Conversion has
remained flat
HH penetration
has increased
Repeat purchasing at
category high levels
a2 Milk® awareness (prompted) %a2 Milk® conversion %a2 Milk® household penetration %a2 Milk® repeat purchasing %
2 0 2 1 I N V E S T O R D A Y
138
While a2 Milk® has comparable equity measures, it is clear that existing
specialty brands are also delivering on consumer needs
Loyalty
NPS
Satisfaction
Source: Mindsight Research, US brand health quarterly tracking (n=2100)
2 0 2 1 I N V E S T O R D A Y
139
a2 Milk® continues to maintain high equity attributes amongst a2 Milk®
consumers
Source: Mindsight Research, US brand health quarterly tracking (n=2100)
2 0 2 1 I N V E S T O R D A Y
140
We continue to invest to both build our brand and increase household
penetration
•Leverage online grocery to drive
trial of products
•Custom shopper plans integrated
with trade programs
•Leverage point of purchase
marketingin store to take
advantage of 80% of purchase
decisions made at shelf
Win in store
•Leverage social and digital to drive
awareness and conversion
•Optimisesearch to capture
consumers at point of interest
•Evolve creative message to drive
consumers through purchase
funnel
Educate on brand benefits
•New breakthrough campaign
•Broader media target to expand
household penetration potential
•CTV, YouTube and PR to stay top
of mind
Drive targeted awareness
2 0 2 1 I N V E S T O R D A Y
141
We have launched a2 Milk® Half and Half
•Total Half and Half market hasannual sales of $1.1Bandannual
growth of +5%;there is currently limited innovation in the category
•Consumers are in search of a natural, easier on digestion
Half and Half product
•a2MC has introduced a new product which is 100% real milk and
cream and with natural A2-protein
•It has been accepted in over 5K stores so far
•First shipped in June 21 with further expansionexpected in 2H22
2 0 2 1 I N V E S T O R D A Y
Source: SPINS, MULO + Natural, 52 weeks ending 24/1/21
142
We are excited to announce our Hershey’sa2 Milk®Partnership
•Hershey’sa2 Milk®partnership is the perfect combination to meet
consumers’ needs for health and taste
•Totalbrandedchocolate milk category hasannual sales of
$745M and YoY growth of 9%
•a2MC will introduce a 2% reduced fat chocolate milkin3Q22
leveraging Hershey’s chocolate (Americas #1 chocolate brand)
•4 product sizes to be introduced; 59oz multi-serve, 8oz,
6pk (8oz) and 18pk (8oz)
It is a milk for the whole family, it is a brand that kids
love and parents’ trust
2 0 2 1 I N V E S T O R D A Y
Source: SPINS, MULO + Natural, 52 weeks ending 24/1/21
143
Our co-manufacturing supply chain has served us well
Commentary
•The US product portfolio is ESL (extended
shelf life) milk that comes with an extended
code date to adequately travel the market in
the USA but must be refrigerated
•a2MC currently contracts with multiple farms
and three processors to supply its milk
•The current co-manufacturing supply chain
provides flexibility and optimised distribution
locations to cover the US with a refrigerated
ESL milk product range
•However, co-packing limits margin potential
and innovation
•A key part of the path to profitability in the
USA is further optimisation of manufacturing
and the associated cost structure, and
potential participation in manufacturing
Processing and
milk supply
Processing and
milk supply
Processing and
milk supply
USA office,
Boulder, Colorado
2 0 2 1 I N V E S T O R D A Y
144
Our US strategic priorities
Ambition
Strategic
priorities
Enablers
To be a top-5 premium milk brand with >10% EBITDA margin
Educate consumers on
the a2 Milk® difference
Bring to life the
distinctiveness and
value proposition of
a2 Milk® for US
consumers
Increase conversion
and household
penetration
Drive targeted
awareness together
with brand education
to increase trial
Extend brand into
new categories
Broaden product mix
to achieve scale and
win new users
Maximise impact from
marketing investmenton
awareness and trial
Relentless commitment to
highest quality product and
safety standards
Measures
of success
Grow household
penetration to 10%
Achieve 5% share of the
premium milk category
Achieve 25% of sales
from innovation
Deepen capability to
innovate and launch new
products
Retain key talent and
capabilities
Explore participation
in manufacturing
Explore participation in
manufacturing as an
enabler to achieve
profitability and
increase innovation
Continue to drive
in-store velocities
Deliver consumers a
premium experience to
maintain loyalty rates
and drive in-store
velocities
2 0 2 1 I N V E S T O R D A Y
Achieve profitability
during FY25/FY26
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145
Key takeaways
We are continuing to drive growth in the USA despite
COVID-19 unwind impact on overall market growth
Growth is supported by ongoing brand development with
penetration, awareness and repeat purchasing having
momentum
We are expanding into adjacent categories through
innovation and partnerships to drive scale
We are reviewing options to participate in manufacturing
over time
2 0 2 1 I N V E S T O R D A Y
146
M A T A U R A
V A L L E Y M I L K
Bernard May (Chief Executive –MVM)
2 0 2 1 I N V E S T O R D A Y
147
a2MC acquired 75% of Mataura Valley Milk (MVM) in July 2021
•MVM is a world-class dairy nutritionalsmanufacturing facility located in
Southland, New Zealand
•The MVM plant is a purpose built nutritionalsfacility with unique design
features –one of the most technically advanced nutritional sites globally
•The processing plant took its first milk in August 2018
•MVM today manufactures both commodity products (such as whole milk
powder and skim milk powder) aswell as nutritionals(such as IMF base
powder)
•MVM is exploring additional business development opportunities and will
seek to work with additional third parties to improve financial performance
•MVM is transitioning from coal to full site electrification –a first for the
industry in NZ
2 0 2 1 I N V E S T O R D A Y
148
Strategic rationale for a2MC acquisition of MVM
•A unique opportunity to acquire a new world-class nutritional manufacturing
capability
•Existing supply agreements with local farmers engaged to supply the highest
quality milk and significantly transition to A1-protein free in three seasons
•Supplier and geographic diversification (within New Zealand) –dual supply to
complement existing supply from Synlait
•Innovation and new products pathway for a2MC
•Enables a2MC to capture manufacturing margins
•The opportunity to build and enhance our relationships with key partners in
China including China Animal Husbandry Industry Co., Ltd. and China National
Agriculture Development Group Corp.
•Further enhance and protect a2MC intellectual property (extending to
formulation, manufacturing, on farm)
•Greater control over our destiny with respect to our China brand registrations
2 0 2 1 I N V E S T O R D A Y
149
MVM short-term outlook will be challenging; utilisation will increase over time
2 0 2 1 I N V E S T O R D A Y
Short-term outlook for MVM to be
more challenging than anticipated a2MC has a plan to increase MVM utilisation over time
Step 1:
Milk powder
Step 2:
Innovation
Step 3:
IMF
•MVM currently operates as a manufacturer of
commodity and nutritional base powders
•During FY22 we are targeting to start MVM production
of a2
TM
instant whole milk powder
•As we continue to expand our product portfolio in the
future, MVM will play a key role in the production
process, particularly for nutritional product innovation
•a2MC is reviewing ways for MVM to play a role alongside
Synlaitin supplying our IMF portfolio (EL and CL)
•Intention for MVM to invest in blending and canning
facilities and achieve SAMR registration for CL product
•MVM’s IMF customers have been
impacted by China IMF market dynamics,
which has resulted in a reduction in MVM’s
3
rd
party nutritional demand as these
customers work through their own
inventory issues
•The decline in a2MC volumes in FY21 has
also reduced the potential volume that can
be transferred to MVM
•Given these conditions are expected to
continue in the short-term, the factory will
need to produce commodity products,
which will adversely impact earnings
•Plans are being developed for the plant to
reach profitability during FY26 or earlier
150
S U P P L Y
& O P E R A T I O N S
Shareef Khan (Chief Operations Officer)
2 0 2 1 I N V E S T O R D A Y
151
Acquisition of MVM marks the continued evolution of a2MC’s supply chain
and operations
Greater ChinaNorth America
Australia
New Zealand
2 0 2 1 I N V E S T O R D A Y
Products sold into
China sourced
predominantly from NZ
and distributed through
China State Farm
Three processors
located across the US
to support our national
ESL liquid milk
business
•Synlait: IMF production
•Fonterra: Freshmilk &
ingredient supply
•MVM: Nutritionalsfacility
acquired recently in
partnership with CAHG
Fresh milk business
supplied by two owned-
sites (Smeaton Grange &
Kyabram) and supported
by other supply partners
across Australia
152
We continue to evolve our operations to support business objectives
Capital Smart
Approach
•Innovative approach to
supply chainthrough both
strategic partnerships and
direct ownership
•Our supply chain also acts
as a critical enabler for
market access into the
China market through the
registrations it accesses
Quality systems &
processes
•Strict focus on quality
•Thea2 System
TM
includes a
proprietary suite of
knowledge and know-how
•Extends from on-farm,
through to manufacturing
and down to branding and
marketing to consumers
Inventory management
& traceability
•Implementation of a new
traceability system
•Enhanced inventory
management systems
•Measures to improve
channel inventory in
progress
•Continuously seeking
opportunities to improve
S&OP systems and
processes
Australia & New
Zealand sourcing
•Australia and New Zealand
sourcing profile for
Asia-Pacific markets
•All our IMF issourced and
manufactured in
New Zealand
•Longer-term business
context and strategy will
likely requireChina supply
chain capability
2 0 2 1 I N V E S T O R D A Y
153
We are working to optimise our end-to-end supply chain
Synlait
ownership
a2MC
ownership
Tier 1
ownership
Tier 2+
ownership
CL –MBS &
DOL
EL –CBEC
QA ReleaseDT/TP
SUB-DISTRIBUTORS/
RETAILERS/
EC PLATFORMS
Transit TimeCSF
QA ReleaseDT/TPEC PLATFORMSTransit Time
LOGISTICS
PARTNER
EL –
RESELLERS
QA ReleaseRESELLERS
MARKETPLACE /
CONSUMER
Transit Time
LOGISTICS
PARTNER
2 0 2 1 I N V E S T O R D A Y
Indicative IMF inventory flow
154
We are currently managing COVID-19 related operational challenges
ChallengesWhat we are doing to manage this
Unreliable schedules
and port congestions
•Providing accurate forecasts to avoid last minute offload
•Utilising a combination of ports (AKL, CHC, TRG)
•Continuing open and frequent dialogue with partners in NZ, AU and HK; leveraging relationships where possible
•Seeking opportunities to bring flexibility back along the chain (compensating for flexibility lost from shipping side)
•Reusing containers as much as possible in our network rather than discharge and return
Escalating logistics
and shipping costs
•Limiting the level of shipping cost increases through negotiation
•Improving forward planning to create cost savings in logistics
Labour and driver
shortages (US)
•Implemented a consolidation model (shared trucks)
•Requesting full pallet order and reduction in distance travelled per order
Farm audits,
assessments and
sampling impacted
•Implemented virtual audits and assessments where possible
•Increased communication and desktop surveillance through the raw milk supply program
•Training for farmers to self sample
2 0 2 1 I N V E S T O R D A Y
New COVID-19
practices and
regulations
•Complying with all local Government COVID-19 requirements
•Engaging proactively with our suppliers on potential COVID-19 impacts
•Adopting risk-averse practices at Smeaton Grange to avoid potential COVID-19impacts, including: deferral of non-
essential factory visitors or maintenance, non-essential staff working remotely and encouraging all staff to get
vaccinated (with high vaccination rates among site staff)
155
FINANCE & IT
Race Strauss (Chief Financial Officer)
2 0 2 1 I N V E S T O R D A Y
156
Our Finance and IT priorities largely focus on enabling decision support
Build IT capability
Enhance our cyber
security defence
Build our cloud-based
systems
Integrate acquisitions
seamlessly
2 0 2 1 I N V E S T O R D A Y
Expand finance
capabilities
Improving data and
insight capability
We are building IT capability and developing a blend of insource vs outsource, to be more cost
effective and be able to operate faster
We are continuing to enhance our cyber security defence and have made headway over the past
18 months
We are building out our cloud-based systems capabilities, including applications to support ERP,
HCM, S&OP, CRM and Farm Services
We are focused on integrating MVM into a2MC’s IT strategy and operations to leverage our existing
investment and capability
We are expanding our finance capabilities, particularly in treasury and supply chain finance
We are improving our data availability, analytics and insights to help drive results in the business
157
FY22 trading update
•There is no material change to the FY22 position as outlined at the FY21 August results announcement –however, we
are seeing a different mix ofour business, favouring English label IMF
•English label IMF sales in 1Q22 were down on 1Q21, but were significantly up on 4Q21, which was constrained to
reduce channel inventory levels. English label IMF sales are expected to be down in 1H22 vs pcp, but ahead of
expectations
•As flagged in our FY21 results release, China label IMF sales in 1Q22 have been constrained to reduce channel
inventory levels further with sales significantly down on 1Q21 and 4Q21. Whilst distributor offtake and retailer sales
were up double digits during 1Q22 vs 1Q21, they are lower than expected. As a result, China label IMF sales are now
expected to be significantly down in 1H22 vs pcp
•IMF Tier 1 distributor inventory levels are now at required levels for both English label and China label
•ANZ fresh milk volumes were up in 1Q22 vs 1Q21, in part benefitting from extended lockdowns –however, sales in
1Q22 were flat vs 1Q21 due to FX movements
•US liquid milk volumes were down in 1Q22 vs 1Q21 due mainly to an expected reduction in ranging by a club channel
customer. Separately, distribution cost pressures continue in the US market
•MVM nutritional demand has reduced and active steps are being taken to secure additional volume
2 0 2 1 I N V E S T O R D A Y
158
Strong and robust balance sheet to support growth initiatives ahead of returning
capital to shareholders
Operating cash flow generation
Capital funding
Excess cash flow
Shareholder returns
Grow the core business in existing marketsExpand the boundariesBalance sheet strength and flexibility
•Investment in building core business
•Participate in infant nutrition manufacturing
•Enabling investment in systems, infrastructure,
quality, safety and expertise
•Organic growth –existing and new products/
new retail channels
•Assess M&A opportunities to support core
business growth and supply chain evolution
•Adjacent new product categories in
existing markets
•Geographic expansion of existing
products into new markets
•Assess M&A opportunities to expand
boundaries
•Capacity to support business growth and
risk management initiatives
•Maintain a conservative cash reserve to
manage in an uncertain environment
2 0 2 1 I N V E S T O R D A Y
159
Q&A
2 0 2 1 I N V E S T O R D A Y
160
Key takeaways
2 0 2 1 I N V E S T O R D A Y
•The market landscape has experienced unprecedented
change over the past 12 months, requiring us to adapt
•As a result, we have adapted our growth strategy to
achieve the full potential of our business
•Importantly, our brand is strong, we have a relatively small
share in China IMF and significant opportunity to capture
•We have reorganised to prioritise our most important
growth levers and have a clear plan to execute
•We have a great leadership team and pioneering culture
to lead the execution
THE a2 MILK COMPANY LIMITED
INVESTOR DAY
27 OCTOBER 2021
A D A P T I N G
F O R G R O W T H
2 0 2 1 I N V E S T O R D A Y
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.