Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

A2, Synlait agree to extend infant formula supply deal

A2, Synlait agree to extend infant formula supply deal

By Sophie Boot

July 3 (BusinessDesk) - Dairy marketer A2 Milk and milk processor Synlait Milk have agreed to extend their infant formula supply deal and increase the volume of formula Synlait will supply as the two continue to focus on sales in the lucrative Chinese market.

A2 and Synlait first signed a supply agreement in 2012 to support the milk marketing firm's plans to launch infant formula sales into China, and inked a new deal in August 2016 providing for increased scale if market demand warranted it.

The companies' arrangements were for a minimum of five years from 2016, with a rolling three-year term from August this year, but have been extended by two years so will last until at least July 2023. Synlait will increase the volume of infant formula products it is A2's exclusive supplier for and increase its committed production capacity.

They have also agreed on pricing terms "that reflect the commitment on the part of both companies to an ongoing market-competitive pricing regime", each company's statement to the NZX said. However, the companies either need shareholder approval for the changes or a waiver from NZX from needing to get shareholder approval.

A2 said the extension was consistent with the global strategic supply strategy it has been developing, while Synlait said the agreement reinforces the close working relationship between the two "as they work to develop A2 Platinum for the ANZ and China markets on an exclusive basis to a specified product volume."

"This step is about bringing Synlait and the A2 Milk Co closer together in anticipation of continued growth,” Synlait managing director John Penno said. "It also puts both companies in a great position to further leverage the Chinese Food and Drug Agency (CFDA) registration of A2’s infant formula products, which was achieved in September 2017."

A2's managing director Geoffrey Babidge said the deal "has been carefully developed to provide the company with security for nutritionals supply to our key markets consistent with our overall strategic objective of maintaining high-quality supply with ongoing cost-competitiveness."

A2's shares last traded at $11.43, up 42 percent this year, while Synlait's were last at $11.39, up 58 percent.

(BusinessDesk)

ends

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Tourism: Employers Welcome Back Working Holidaymakers

Tourism businesses gearing up for the return of Australian visitors from next week will be relieved to learn that they will also have access to an offshore pool of much-needed job candidates, Tourism Industry Aotearoa says. Tourism employers around ... More>>

Commerce Commission: Latest Broadband Report Confirms Improved Performance Of Premium Fibre Plans

The latest report from the Commerce Commission’s Measuring Broadband New Zealand programme shows that the performance of Fibre Max plans has improved substantially. This follows a collaboration between the Commission, its independent testing partner, ... More>>

Air New Zealand: Capital Raise Deferred

Air New Zealand has decided to defer its planned capital raise to later in 2021 allowing more time to assess the impacts of recent developments on the airline’s path to recovery. 'We’ve seen some clearing of COVID-19 clouds recently, with ... More>>

Commerce Commission: Cartel Conduct Now Punishable By Up To 7 Years’ Jail Time

Cartel conduct can now be punished with a term of imprisonment of up to 7 years, after the Commerce (Criminalisation of Cartels) Amendment Act 2019 came into effect today. Cartel conduct includes price fixing, market allocation and bid rigging (see ... More>>

Stats NZ: New Report Shows Impact Of Demands On Land In New Zealand

A new environmental report released today by the Ministry for the Environment and Stats NZ, presents new data on New Zealand’s land cover, soil quality, and land fragmentation. The land cover data in the report, Our land 2021 , provides the most ... More>>

ALSO:

Stats NZ: March Card Spending Rebounds Despite COVID

There was a lift in retail card spending in March following a fall in the lockdown-disrupted February month, Stats NZ said today. Seasonally adjusted retail card spending rose by $53 million (0.9 percent), compared with February 2021. Visit our website to read ... More>>

PwC: Outcome Of Review Into Air New Zealand Gas Turbines Business

Air New Zealand has received the report into its Gas Turbines business from independent external advisers PwC. Air New Zealand Chairman Dame Therese Walsh says the report identified a range of effective controls in the Gas Turbines revenue contracting ... More>>