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The Australian Company Selling China on Easier-to-Digest Milk

A2 Milk Co. has struck it rich on the mainland selling infant formula from cows that produce only the A2 protein.

About 12,000 specialty stores in China stock A2 Milk.

About 12,000 specialty stores in China stock A2 Milk.

Photographer: Qilai Shen/Bloomberg
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Global dairy giants have reaped a windfall in China since a 2008 tainted-milk scandal sent parents scurrying to buy infant formula from foreign suppliers. Multinationals including Danone SA and Nestlé SA today control more than half the $23.4 billion Chinese market. But lately a different health concern has provided entree for a scrappy challenger from Down Under.

A2 Milk Co., with offices in Australia and New Zealand, has more than doubled its Chinese market share over the past year, to 5.6 percent. Its selling point: milk from New Zealand dairy herds that produce only a protein known as A2, which the company contends is easier to digest than the blend of A1 and A2 proteins found in most European and U.S. herds. The naturally occurring variation in protein content stems from genetic differences among cattle breeds.