a2 ventures into online milk sales to China

a2, a premium milk company listed on New Zealand''s share market, is in the latter stage of negotiations for the sales of fresh Australian milk on the popular Alibaba online retail platform in China.

It is currently targeting a launch on Alibaba''s online retail platform, Tmall, by the end of 2014.

The development follows a deal to directly supply fresh milkto homes in Beijing, Shanghai and Guangzhou. In addition, a2 has already struck a deal with Chinese online retailer, Jingdong, to offer milk to 500,000 registered users of the site.

"Jingdong developed a strategy for a new business stream which was high quality fresh foods that consumers can order and have delivered to their door within 24 hours", said a2''s general manager for Asia, Phil Wohlsen. "They were looking for a premium high quality fresh milk to be one of their leading brands on the platform and they came to us."

With internet transactions, milk is being sold to Chinese consumers over at an average price of US$7.82/litre. Prices have been as high as US$9.77.

a2 produces milk at its Smeaton Grange processing facility outside of Sydney, Australia.

While regular cow''s milk contains a blend of the A1 and A2 beta casein proteins, a2 claims to be the only company which processes milk containing the A2 protein, which is said to be easier on digestion compared to regular milk.

After several months of trials, the first delivery of A2 milk on Jingdong was made on August 29.

a2 plans to ship at least 1.5 million litres of fresh milk to China over the next 12 months. It expects demand to double yearly.

In addition, a2has a long-life UHT milk product which it supplies to China. Combined with fresh milk, the company could "easily supply 10 million litres (to China) within two years, and 20 million litres after that, with fresh milk being the flagship'''', said Wohlsen.

The group is also attracting interest from high-end ­supermarkets in China.

New South Wales dairy co-operative, Norco, is already supplying fresh milk to Chinese supermarkets and plans to increase sales under a new distribution agreement with a Chinese importer.