By Tobias Yao


The WAM Capital investment team began our journey with a2 Milk, a New Zealand-founded dairy company in June 2015. Our initial investment in the company was at 52 cents per share. Fast forward to December 2023, a2 Milk has become one of WAM Capital’s top 20 holdings and a force in the global dairy industry, with a focus on innovation and consumer health. Our reaffirmed confidence in the company’s prospects and its market position is underpinned by the following three factors.

Demographic Shifts and Market Potential

a2 Milk operates in a market with significant potential, in particular China. A spike in marriage rates in the fourth quarter of 2023, coupled with the auspicious “Year of the Dragon” and post-COVID pent-up demand is expected to fuel a resurgence in birth rates in China. While the macroeconomic environment in China may present challenges for the overall industry, the sheer size of the market, with reported annual birth rates nearing half the population of Australia, presents a compelling opportunity for growth.

Strong Brand Recognition and Market Penetration

a2 Milk’s brand strength has been a cornerstone of its success. With a focus on the ultra-premium category in tier one and two cities in China, the company has been able to steadily gain market share. The evolving landscape of digitally savvy new mothers in China plays to a2 Milk’s advantage, as they meticulously research and opt for brands they perceive as offering superior quality, even if it comes at a higher price point. This brand loyalty, coupled with the company’s commitment to maintaining quality standards, ensures a resilient demand even during periods of economic uncertainty. We believe a2 Milk has the potential for further market share expansion and can replicate its success into tier three to five cities, which represent a significantly larger market share, adding to the company’s growth narrative.

Robust Management and Strategic Vision

a2 Milk’s management team has demonstrated resilience and strategic commercial acumen, navigating through regulatory challenges and market fluctuations. Under the leadership of Chief Executive Officer David Burtlossi and Chief Financial Officer David Muscat, the company has maintained a steadfast approach to business operations. Having recently visited the China office, the performance of the China team, led by Chief Executive Officer Li Xiao, underscores the company’s commitment to excellence and gaining market share. The team have strong experience in managing large multinational organisations including dairy companies, a track record of success and a disruptive mindset. a2 Milk’s management is well-positioned to capitalise on emerging opportunities and drive long-term value for shareholders.


We believe the outlook for a2 Milk is promising over the next two to three years. With a focus on expanding market share in China and a resilient brand presence, the company is poised for earnings growth and shareholder value appreciation. As demographic trends evolve and consumer preferences continue to shift towards premium quality products, a2 Milk stands at the forefront of capturing this market opportunity.

With favourable demographic trends, a robust brand presence and a strong management team, a2 Milk is well-positioned to capitalise on the evolving landscape of the dairy industry, particularly in China. As the company continues to execute its growth strategy, we remain optimistic about the potential for long-term value.

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