A2 Milk Company (A2M AU) is a dairy company based in Auckland, New Zealand.

It started as a producer of liquid milk and has become dominant in this segment in Australia. In 2010, it launched an infant formula product that has become a massive success in China.

The company’s niche is producing milk without the A1 protein, which has been shown to cause digestive problems, especially among babies. A2 Milk is also deeply connected to its New Zealand heritage with Chinese parents trusting foreign infant formula more than they do their own domestic brands.

While Chinese overall infant formula industry volumes are flattish and birth rates have come down in recent years, the premium segment is growing nicely, and individuals have become more concerned about health. It’s mostly a shift in the product mix - but also pricing power as parents tend to be willing to pay up for a high-quality product.

A2 Milk’s business has been hurt badly during the pandemic due to a lack of travel between China and A…