FDA approval to supply infant milk formula to United States

NZX Code: ATM
ASX Code: A2M
The a2 Milk Company Limited
www.thea2milkcompany.com
3 November 2022
NZX/ASX Market Release
FDA approval to supply infant milk formula to the United States
The a2 Milk Company (a2MC, the Company) advises that the United States (US) Food and Drug Administration (FDA)
has notified the Company that it has exercised its discretion to allow a2MC to import infant milk formula (IMF)
products into the US.
Following the onset of IMF supply disruption in the US, FDA Guidance was released on 16 May 2022 in relation to
case-by-case consideration of enforcement discretion to be applied to companies with the goal of increasing IMF
supplies. a2MC applied to the FDA on 26 May 2022 under its enforcement discretion to supply IMF to the US. As
announced by the Company on 10 August 2022, the FDA had deferred further consideration of a2MC’s application for
enforcement discretion. However, the Company has continued to engage with the FDA to meet its requirements and
to reconsider a2MC’s application.
Pleasingly the Company has today received confirmation from the FDA that its application for enforcement discretion
to import, sell and distribute a2 Platinum® IMF product (Stages 1 and 2) from New Zealand into the US has been
approved through to 6 January 2023. The Company is also able to supply Stage 3 toddler product in addition to this
which does not require enforcement discretion.
The FDA published its Infant Formula Transition Guidance on 30 September 2022 applicable to companies with
enforcement discretion that are seeking to obtain permanent approval to supply IMF into the US. Under certain
conditions, the transition guidance allows enforcement discretion to be extended through to 18 October 2025 to
enable such companies to comply with statutory and regulatory requirements. Any extension is subject to compliance
with the FDA’s infant formula transition guidance and ultimately FDA approval.
Product to be supplied to the US has the same formulation as a2 Platinum® but has different scoops, mixing
instructions and labelling requirements to meet the FDA requirements. This product is not currently available in
inventory and needs to be manufactured as soon as possible. a2MC previously indicated to the FDA that if approval
was obtained by 30 September 2022, it had the capacity through Synlait Milk Limited (Synlait) to manufacture 9
million cans of a2 Platinum® (equivalent to 211 million 8oz bottles) by 30 June 2023 if required during the supply
shortage period subject to customer demand. Whilst supply plans will need to be updated, it is expected that Synlait
will have substantially the same capacity to supply such volumes over a nine-month period which is well within the
limits of a2MC and Synlait’s past production volumes.
a2MC believes the US represents a significant opportunity to develop its brand in the IMF category over the long
term. However, at this early stage, it is difficult to predict the IMF sales potential in the US which is a highly
competitive market to enter. Accordingly, the Company believes sales will be significantly below indicated
manufacturing capacity unless the situation changes. In the near-term, and prior to confirming distribution plans,

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sales during FY23 are expected to be up to 1 million cans all within 2H23, assuming enforcement discretion remains in
place throughout the period. Actual sales will ultimately depend on customer demand, consumer offtake, supply
shortages and market conditions at the time.
In terms of FY23 earnings impact, whilst incrementally beneficial, the Company expects gross margins to be lower
than average, distribution costs to be higher due to potential air freight and rework costs in the near term, and
incremental marketing and trade investment to enter the category. The Company will provide an update on US IMF
distribution gains and sales outlook in connection with its 1H23 interim results release or earlier as appropriate.
The a2 Milk Company’s Managing Director and CEO, David Bortolussi, said: “We are pleased to be able to assist
parents and caregivers in the US by providing access to significant volumes of high quality, a2 Platinum® infant and
toddler milk formula manufactured in New Zealand during this challenging period. Our a2 Platinum® product meets
the FDA’s food safety and nutritional requirements and is made with a2 Milk™, which has digestive and other
potential health benefits that have underpinned the success of our brand in other markets.
“a2MC is well positioned to support this initiative being one of the leading premium international infant milk formula
brands with annual sales exceeding 30 million cans. We have scalable production capacity in New Zealand with
Synlait plus existing a2MC US sales, marketing and supply chain capability that can be leveraged.
“We are increasing our supply to respond to this situation, while importantly ensuring that we continue to meet the
needs of our other IMF consumers and trade partners in China and other markets. If the US requires further support
over an extended period, we have the proven ability to scale up significantly.”
a2MC’s Chief Executive in the US, Blake Waltrip said, “Over the past seven years, we have invested in developing our
liquid a2 Milk® business in the US based in Boulder, Colorado. We currently supply a2 Milk® Whole, 2% Reduced Fat,
Fat Free, Half and Half and HERSHEY’s a2 Milk® with nationwide distribution to approximately 27,000 stores in the
grocery, mass, natural and club channels. We have established customer relationships with all major retailers, many
of which have expressed strong interest in ranging our a2 Platinum® product.”

Authorised for release by

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
Investor Relations Manager
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