ACOPF - A2 Milk: Brand And Growth Fully Captured By Stock Price
Synopsis
The a2 Milk Company (ACOPF) has a valuable brand that confers considerable pricing power. The company sells premium infant formula as well as milk that mitigates digestive difficulties, products that consumers are either highly sensitive to in perceived quality or dependent on for health reasons. The company is capital-light and generates substantial free cash flow, which facilitates heavy reinvestment into the brand. This is the substance of the moat: a premium brand endowed with significant pricing power accommodates much larger marketing investment than what other companies, absent pricing power, can afford, which