Blake Waltrip, the company’s CEO, told Food Dive in a statement the products are a “natural progression” to meet demand for premium milk.
As dairy milk sales decline amid the rise of plant-based offerings, producers such as a2 are using premium product launches to differentiate their portfolios through healthier and more ethically sourced products to attract consumers.
Originally hailing from New Zealand, a2 Milk introduced many Americans to the difference between the two types of protein produced by cows, A1 and A2. a2 Milk products are sourced from cows only bred to create the A2 protein, which the company said makes the milk easier to digest.
The benefits of a2 milk are sometimes conflicting. The products still contain high amounts of lactose, so consumers who are intolerant may still get sick from consuming them. But one study published by Frontiers In Nutrition found milk that only contains A2 proteins causes less gastrointestinal pain for lactose intolerant consumers.
The new a2 products are banking on the increased visibility of the grass-fed milk segment. a2 Milk logged a 30% revenue increase in the U.S. during its last fiscal year, the company said. He cited SPINS data showing the grass-fed milk segment grew nearly 25.8% in the three months ending in January 2023, indicating a demand for the offering.
Roughly 71% of people consume only dairy products, according to a 2022 McKinsey dairy report. At the same time, the popularity of alternative milks has exploded. Still, one-third of consumers struggle to find a plant-based milk product that fits their needs, including taste and mouthfeel. This has opened up a market for dairy brands such as a2 to thrive.
During the past two years, a2 has added to its portfolio to increase its ability to stand out among dairy consumers. In early 2022, it debuted a collaboration with candy giant Hershey on 2% chocolate milk.
Milk prices increased 8% over the past year, according to the most recent CPI data, but there are signs the picture for milk could be improving. Dairy milk prices are currently moderating, according to a report from CoBank, as the supply of cows increased by 12,000 in February. Lower costs could result in more consumers being willing to try a premium milk product.
