Dive Brief:

• Walmart stores in Texas and on the East Coast are now offering "gut-friendly" a2 Milk, according to Food Navigator. Besides Walmart, the milk brand — which contains only A2 beta casein protein — is being sold at more than 6,000 locations around the U.S., including Wegmans, Stop & Shop, Giant Carlisle, Giant Landover, Whole Foods, Market Basket, Sprouts, Safeway, King Soopers, Target, Ralphs, Publix, ShopRite and The Fresh Market.
• The Australia-based company has gained approximately 10% share of the Australian liquid market and its CEO said it is looking for that same success in the U.S. The brand developed a test to identify cows that produce A2 beta casein protein.
• ​Blake Waltrip, U.S. CEO of The a2 Milk Co., told Food Navigator that getting its product distributed in Walmart "marks a critical point in our company’s drive to bring consumers back to dairy by providing our products to the roughly 75 million Americans who report dairy intolerance​." He said the company plans to debut other products besides milk in the U.S. market within the next year since it sees "significant opportunities to leverage the a2 proposition in other higher value products."

Dive Insight:

a2 Milk's deal with Walmart could help the company reach mainstream consumer acceptance in the U.S despite a skeptical dairy industry. Waltrip told Food Navigator the industry's response to a2 Milk is "still lukewarm at best," but he stated that "an irrational fear" was behind this sentiment.

It's possible conventional dairy producers may feel threatened by a2 Milk since most use cows produce A1 milk or a mix of A1 and A2. a2 Milk claims its products could relieve digestive problems for people with lactose intolerance or milk allergies because its milk only comes from cows that produce the A2 protein. The A1 protein is linked to side effects sometimes experienced from milk consumption such as bloating, nausea, and general discomfort, according to research conducted by the company.

However, it's expensive to switch herds and go in a different direction — especially for an industry facing so many other problems. Dairy producers have been hit hard by competition from beverages made from soy, rice, almonds, hemp, oats and other nuts and grains — as well as from a record milk surplus, prices below the cost of production and recent Chinese tariffs on U.S. cheese and whey.

Waltrip believes that a2 Milk will be one of the solutions that will bring back dairy consumers rather than lure them away, as has happened with plant-based beverages. In Australia, the brand reportedly has about 10% market share in the liquid milk category since debuting there more than a decade ago. The company has also seen profits significantly rise in recent years as its milk and infant formula products have grown in popularity. Its fiscal 2018 net profit more than doubled to $178.5 million — and the brand is now available in about 10,000 "mother and baby stores" in China, according to The Sydney Morning Herald. a2 Milk's rapid growth around the world could mean that its product may be favored over other milk and plant-based milk options.

With greater U.S. distribution through Walmart, the company is likely to continue touting the relative nutritional value of its milk. The company also says its cows haven't been treated with growth hormones, rBST or antibiotics — and its family farms are independently certified to make sure they meet strict animal welfare guidelines. Those qualities check a number of boxes U.S. consumers are looking for, whether or not they have lactose intolerance or other dairy sensitivities. However, the company might need to continue backing scientific studies to bolster its claims that the A2 beta casein protein is ​superior to A1 since the jury is still out on that issue.

For some consumers, though, price may be the deciding factor. A gallon of a2 Milk cost about $9 per gallon last fall, compared to about $5 for regular milk, according to CBS News. The steep price could be a deterrent for consumers in the U.S., but if the product can win them over in other ways, it might not matter.