Fonterra partners with A2 milk after 17-year consumer battle

Fonterra has partnered with a star performer on the New Zealand share market after years of trying to shut it out. 

It means A2 milk is now widely available to Kiwis under the Anchor brand, after an almost 17-year battle between Fonterra and the A2 milk company. 

Some studies have found A2 milk is easier for some people to digest, but whether it is 'better' than normal milk depends on who you ask. 

Fonterra has long been the cheerleader for conventional cow's milk with a mix of A1 and A2 protein. But now it's on board with selling milk from cows that produce A2 protein only, found in some studies to be easier on the stomach for those who are lactose intolerant.  

The cheerleader for that is former Jetstar turned A2 milk CEO Jayne Hrdlicka, who says she's been drinking it in her family for five years because it's "genuinely a better product". 

But Fonterra won't go that far, despite the newly formed friendship. 

"For me it's about choice A1 milk is fantastic. A2 milk is fantastic," says Grant Watson, Fonterra global director foodservice. 

Jetstar turned A2 milk CEO Jayne Hrdlicka meets with Fonterra's Grant Watson in Newmarket, Auckland.
Jetstar turned A2 milk CEO Jayne Hrdlicka meets with Fonterra's Grant Watson in Newmarket, Auckland. Photo credit: Newshub

The historic divide between the two sides had stemmed from concerns that promotion of A2 milk might damage perceptions of regular milk. 

"The A2 milk company is very proud of its position in the marketplace and it's providing a great product to our customers," says Ms Hrdlicka. 

If customers reach for the A2 milk they'll also be digging deeper into their pockets. The two-litre bottle at one PaknSave is $6.39, while the A1 Anchor milk is $4.47 - so almost $2 difference.

The Value brand is almost half the price. 

Although the A2 milk company's share price has fallen $4 since February, it's still up 135 percent on this time last year. 

"I think it's taken time for consumers to understand what A2 milk is all about, and it's taken time for us to realise that the demand is real in New Zealand," says Mr Watson. 

Currently only available in the North Island, it will roll out nationwide in October.