The purchase will be done by buying all of the shares in Yashili New Zealand Dairy Co. Limited from Yashili International Group Limited - a subsidiary of China Mengniu Group for approximately NZD$282m (US$167.4m).
The transaction is expected to close on September 1, 2025, the firm announced during the release of its its 2025 annual results yesterday (August 18).
The New Zealand-based company currently only has one China label infant milk formula (IMF) product, with the others sold in the country carrying English labels.
The manufacturing facility located in Pokeno, Waikato region of New Zealand has already secured two China label product registrations for two products made for Mengniu and its subsidiary brand Bellamy’s.
With the acquisition, a2MC will apply for regulatory approval to amend these two registrations for use under the a2MC brand.
As part of the amendment, the company will be changing the milk base to A1 protein-free.
One of the two products will be formulated as an ultra premium, organic offering containing DHA and ARA for brain development. The other will also contain DHA, ARA, high purity lactoferrin for immunity, as well as medium- and long-chain triacylglycerol (MLCT) - a component of breast milk.
The process of applying for regulatory approval to amend these two registrations is expected to take up to 12 months. The new products could potentially be launched in FY27.
The facility also has one unregistered slot available for use. As such, a2MC is also hoping to secure a third product registration at the site with the Chinese regulator and potentially launch it in FY29/30.
The facility, being located in the Waikato region, could also utilise the A1 protein-free milk pool that a2MC and Fonterra have jointly developed over recent years in Waikato.
Aside from the China label products, a2MC itself is already producing two other English label infant formula products at the site - namely a2 Gentle Gold and a2 Genesis.
The move is aimed at growing a2MC’s China label infant formula business in China, which achieved a record market share of 5.5% in FY25, based on data from Kantar Worldpanel.
a2MC’s growth in the China label IMF market is in contrast to the overall trends, where the China label market shrank 5.6%.
China label products could be sold in China’s offline retail and domestic online channels but companies would need to obtain product registration with China’s State Administration of Market Regulation (SAMR) before they could do so.
English label products, on the other hand, can be sold via cross-border e-commerce (CBEC) and do not require registration with the SAMR.
China label products are also generally priced higher than English label products.
a2MC CEO and managing director David Bortulussi said that increasing China label SKUs would help uncrack a large portion of the market.
“The China label IMF registered market makes up approximately 81% of China total IMF market. Access to the China label market is exclusively through SAMR registered products, linked to approved manufacturing facilities, with a limit of three product registrations per facility.
“The opportunity to improve a2’s China label portfolio sits with capturing the potential for future growth in lower tier cities, the domestic online channels, and the super-premium price segment, where we are currently under index.
“Of the top 10 players in the China IMF market, a2 is the only brand in the top 10 with a single China label product. It’s obviously challenging to capture full potential of our brand in a large and complex market with one product,” said Bortulussi.
Based on data from Kantar Worldpanel, a2MC is ranked number four in China’s infant formula market in terms of value share.
The top three brands are led by China’s Feihe, Danone’s Aptamil, and another China brand Yili. The fifth to tenth spot consists of Friso, Nestle, Junlebao, Wyeth, Mead Johnson, and Biostime.
a2MC also plans to invest approximately NZD$100m (US$59.4m) over the next few years in the Pokeno facility to increase capacity, capability to address potential future regulatory changes to align more closely to China domestic regulatory requirements.
FY25 results
Group revenue for a2MC climbed 13.5% to NZD$1.90bn (US$1.1bn) for FY25 which ran from 30 June 2024 to 30 June 2025, the company announced yesterday.
Net profit after tax rose 21.1% to NZD$202.9m (US$120.4m).
Total IMF sales went up 9.9%, led by its English label products, which was up 17.2%, while that of China label products was up 3.3% to NZD$632.5m (US$375.5m).
Growth in its China label products was said to be driven by effective new user recruitment initiatives, resulting in a record market share of 4% in stage 1 products in the mother-and-baby channels and a market share of 5.8% in domestic online channels.
Its English label IMF, on the other hand, saw sales increased by 17.1% to NZD$639.8m (US$379.7m). The English label products are sold globally in China, ANZ, other parts of Asia, and the US.
English label appeal
Sales of English label IMF is driven by the use of ingredients not widely available in China label products, such as human milk oligosaccharides (HMOs), said the a2MC.
“The rapid growth of HMO and specialty product segments continues to be a growth driver of the English label market with consumers adopting English label products due to ingredients and specialized formulations not widely available in China label - such as those including various HMOs,“ said the firm.
One of its recent English IMF launch is a2 Genesis, which was launched into Hong Kong cross-border e-commerce channel in January 2025.
The company has also launched its English label IMF into Vietnam, including a2 Platinum, a2 Gentle Gold, and a2 Immune fortified milk powder, with a focus on mother-and-baby chain stores.
Aside from infant formula, which is its largest portfolio, a2MC also sells liquid milk and nutritional supplements for seniors, with the latter focused on the China market. The company also recently launched China label kids fortified functional milk powder.
MVM divestment
By acquiring YNZ, a2MC also announced the divestment of its 75% and China Animal Husbandry Group’s 25% shareholding in Mataura Valley Milk Limited (MVM) to Open Country Dairy Limited.
This would lead to a net proceed of approximately NZD$100m.
The divestment would allow a2MC to optimise its manufacturing footprint and capacity utilization.
However, the company could still have access to A1 protein-free ingredients from MVM through commercial supply agreement.
