The A2 Milk Company Ltd (ASX: A2M) share price is trading lower on Tuesday morning.
At the time of writing, the embattled infant formula company’s shares are down 0.5% to $5.40.
Why is the A2 Milk share price dropping?
Today’s decline by the A2 Milk share price appears to have been driven by the release of an announcement out of smaller rival, Bubs Australia Ltd (ASX: BUB)
According to the release, Bubs is going head to head with A2 Milk by launching Bubs Supreme infant formula and toddler milk with natural A2 beta-casein protein.
The release notes that the Bubs Supreme formula range will be on shelf in 500 Coles Group Ltd (ASX: COL) supermarkets from May. This expands the company’s shelf presence in Coles stores, which already includes Bubs easy-digest goat milk formula and Bubs Organic grass-fed cow’s milk formula.
Bubs estimates that the global A2 beta-casein protein milk market is valued at US$1.23 billion and is forecasting it to reach US$2.6 billion by 2026.
Is this bad news for A2 Milk?
Whether Bubs will ever win a decent share of the A2 beta-casein protein milk market is difficult to say.
It has launched countless new products in recent years, diluting its original unique selling point as being a goat milk infant formula company.
For example, in 2020 the company talked up its launch of a Vita Bubs vitamins range. It appointed Jennifer Hawkins as its brand ambassador and spoke about its $2.3 billion opportunity in the Australian vitamin and mineral supplements category.
However, almost two years later, despite being ranged in 400 Chemist Warehouse stores at launch, the Vita Bubs product didn’t even get a mention with its first half results.
So, just like Blackmores Limited (ASX: BKL) probably wasn’t quaking in its boots over that launch, chances are that A2 Milk won’t be over this launch. Which may explain why there has only been a reasonably subdued response by the A2 Milk share price today.
But time will ultimately tell what happens.
The post Why is the A2 Milk (ASX:A2M) share price falling today? appeared first on The Motley Fool Australia.
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More reading
- Bubs (ASX:BUB) share price on watch amid A2 product launch
- These 2 ASX shares are growing rapidly, are they unstoppable?
- Broker tips A2 Milk (ASX:A2M) share price to rise 30% from here
- 5 things to watch on the ASX 200 on Monday
- The A2 Milk (ASX:A2M) share price has spilled another 12% in 3 weeks. Is now the time to pounce?
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended A2 Milk and BUBS AUST FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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