The share price of A2 Milk Company Ltd (ASX: A2M) is up for another day. It’s now up 0.86% to $5.88, which means it’s gained more than 8% this week.
The company that makes fresh milk and baby formula said it would change its supply chain in China by hiring a new executive. This caused the stock price to go up.
But it’s likely that A2 Milk shares are also up because the market as a whole is up. This comes after a good night on Wall Street, when the Nasdaq Composite (NASDAQ:.IXIC) rose more than 7%.
At the moment, the S&P/ASX 200 Index (ASX: XJO) is up 2.45% and the S&P/ASX 200 Consumer Staples Index (ASX: XSJ) is up 1.5%.
Let’s look at what A2 Milk said about itself yesterday.
A2 Milk hires a new head of its supply chain.
Chopin Zhang, who has a lot of experience in the China infant milk formula market, has been hired by A2 Milk as its new chief supply chain officer.
Zhang’s job is to run the “end-to-end supply chain in all categories and markets” for A2 Milk.
He will be in charge of “bringing together the company’s operations and manufacturing teams to transform the company’s supply chain as a key part of its refreshed growth strategy.”
The company lost its most important daigou corporate customer this year, which led to the new job. “Daigou” is a term for people who sell luxury goods, like baby formula, to customers in China from outside of China.
David Bortolussi, the CEO of A2 Milk, mapped out how the company would get back on its feet after this loss. One important step was “simplifying and delaying [A2 Milk’s] English label infant milk formula distribution network.”
So, it seems like the right thing to do to hire Zhang for this job.
A2 Milk says that Zhang has worked in supply chain management for more than 35 years and has “significant experience” in China and New Zealand.
One of the best parts of his career was being Yashili’s CEO from 2017 to 2020. There, he reportedly changed the company’s growth and performance in China and improved its export business in New Zealand.
He used to work for Danone as the operations and supply chain director for Greater China.
What did management say?
David Bortolussi, the managing director and CEO of A2 Milk, said this about the appointment:
We’re happy to hire Chopin at such an important time as we change our supply chain to make it easier to get into new markets, come up with new ideas, and grow.
With the help of our strategic partners, China National Agriculture Development Group Co (CNADC), China State Farm Agribusiness (CSFA), and China Animal Husbandry Group, we will invest in Mataura Valley Milk and buy more manufacturing capacity in New Zealand and China (CAHG).
Chopin is the best person to take on this new strategic role for the company because he knows a lot about the baby formula business in China and has worked in both New Zealand and China.
A look at the share price of A2 Milk
The price of A2 Milk shares has gone up about 7% so far this year, but it has gone down about 5% over the past year. The ASX 200, on the other hand, is down 4% so far in 2022 and 3% in the past year.
The market value of the company is about $4.32 billion.
