A2 Milk and Synlait infant formula feud worsens
The a2 Milk Company has cancelled the exclusive manufacturing and supply rights for most of the infant formula supplied by New Zealand’s Synlait, as tensions between the two groups worsen.
The decision by a2 Milk to ditch exclusivity opens the way for a2 Milk to shift more of its manufacturing to its own factory at Gore on the south island of New Zealand. That Mataura Valley plant is 75 per cent owned by a2 Milk and 25 per cent by the China Animal Husbandry Group.
a2 Milk chief executive David Bortolussi. Adam Firth
A2 Milk told the ASX on Monday it had given written notice late on Friday regarding manufacturing and supply rights. The company said the move resulted from Synlait not meeting performance requirements in 2022-23, including “delivery in full and on-time performance” measures. It was primarily related to English label infant formula.
A2 Milk owns nearly 20 per cent of New Zealand-based Synlait. The two have had a partnership for a decade. A2 Milk said Synlait would continue to be an important supplier.
Synlait had the exclusive manufacturing and supply rights over a2 Milk’s stage 1 to 3 infant milk formula products sold across China, Australia and New Zealand. But the company’s stage 4 infant milk powder and other a2 Milk products supplied by Synlait do not fall under any exclusivity arrangements, under agreements previously struck by the two groups.
Synlait shares went into a trading halt on Monday. Synlait, which is dual-listed on the New Zealand and Australian stock exchanges, has advised it is considering the notice of cancellation, that it reserves its rights, and will formally respond in due course.
A2 Milk said it would likely take a long time for the matter to be resolved.
“If Synlait disputes the
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