A truce, of sorts, appears to have broken out in the war over the use of the term A2 protein.
The A2 Milk Company has reached an out of court settlement with Lion Dairy and Drinks following a three and a half-year war of words and marketing tactics over the right to use the reference to containing A2 protein on bottled milk labels.
A2 Milk, which has championed the value of the A2 beta casein protein as being more easily digested by some consumers, has built its brand and reputation on the fact its products come from cows only producing A2 in their milk.
Most cows naturally produce with both the A2 and A1 protein – a fact which prompted Lion in 2014 to start labelling it’s Pura and Dairy Farmers milk products with the message “contains A2 protein”.
A2 Milk’s various products sell at a significant premium and the company has become a sharemarket star in the past two years after making particularly big sales gains in China with its A2 Platinum infant formula, made in New Zealand.
It has also launched fresh milk in China, flown direct from its new southern Sydney factory at Smeaton Grange, as well as breaking into the US market and relaunching its efforts in the UK.
The past year’s market successes have built on A2’s carefully cultivated reputation for supplying a uniquely healthy, natural dairy products, and have subsequently delivered a big lift in its share price to around $7.30 in recent weeks.
When A2 Milk listed on the Australian Securities Exchange (ASX) in 2015 its shares traded at just 55 cents.
The trans-Tasman company, now headquartered in Australia, argued Lion and another dairy rival, Parmalat, appeared to deliberately set out to confuse consumers or even deceive them into thinking their own standard fresh milk lines were equivalent to A2 products.
It also alleged Lion had not been disclosing to consumers that “all regular cows milk” naturally contained A2 protein.
Lion eventually made its own legal claims in reply against A2 Milk's slick marketing efforts, arguing simply there was no indisputable evidence to show A2-only products made milk drinkers feel better.
Lion’s claim, filed in the federal court in August, hit at the heart of A2 Milk's marketing, product proposition and scientific research claims.
A2 Milk and Lion have not disclosed details of this week’s settlement, or whether Lion will continue to refer to A2 protein on its bottled milk.
Industry observers suggest Lion may be about to change its labels, with some saying its market-leading national milk brands may still refer to milk containing A2, but also A1 proteins.
A statement from A2 Milk said both parties had “mutually agreed not to proceed with their cases against each other”.
Terms of the settlement were confidential.
“The parties are very satisfied with the outcome and will remain focused on building and maintaining the strength of their individual brands," both dairy companies said in a shared statement”.