A2 shares rise as new distribution deal opens up South Korean market

Monday 16th April 2018

A2 Milk Co has signed an exclusive distribution deal with Yuhan Corp in South Korea, more than a decade after an earlier foray into that country which ended in litigation. The milk marketing firm's shares rose 1.3 percent.

The Auckland-based, Sydney-headquartered company today signed an exclusive sales and distribution agreement with Yuhan to promote and distribute a2 branded products in South Korea, it said in a statement. The products will be sourced from New Zealand and Australia, with nutritional products produced by Synlait Milk. Early sales are expected in the second half of this calendar year. The shares rose 16 cents to $12.36.

"Yuhan Corporation is a long established, highly credentialed and principled Korean business," a2 managing director Geoff Babidge said. "We share similar values and ambitions, and with our complimentary capabilities believe that together we can build a meaningful business in Korea."

The milk marketing firm first tried to enter South Korea with an exclusive distribution deal with Purmil, formerly Lotte Dairy, to sell fresh A2 milk in the Asian nation in 2007. Purmil chose to pull A2 milk from the Korean market in late 2008 year, prompting a2 Milk to sue in 2010. A settlement was eventually reached in 2011.

Separately, a2 said it's about to introduce a new powder product blended with New Zealand sourced Mānuka honey. That comes the same day Mānuka honey health products maker Comvita said it may face a takeover with an unnamed third party undertaking due diligence, while also downgrading annual earnings guidance as wet weather weighed on honey production.

(BusinessDesk)

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