a2MC Infant Formula Supply Disruptions Hit FY26 Revenue; Recovery Expected in FY27
The a2 Milk Company's FY26 revenue was impacted by significant supply chain disruptions in its China-label infant formula, leading to market share loss and a 14% year-on-year revenue drop in that segment. Recovery is projected to be gradual through FY27, with new product launches planned to regain market position.
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Sydney, Australia — 17 August 2026
The a2 Milk Company (a2MC) reported a 12.4% revenue increase to NZD$1.97 billion for FY26, yet net profit after tax declined 5.8% to NZD$207.5 million. This disparity was driven by premiumisation, which offset a low single-digit volume decline. Critically, the company's China-label infant milk formula (IMF) segment experienced significant supply chain disruptions in Q4, resulting in a 14% year-on-year revenue decrease to NZD$544 million for this crucial segment. The disruption led to a 33% revenue drop in the second half of FY26 for China-label products, despite a 6.5% growth in the first half.
Out-of-stock situations for its a2 ZhiChu product line in Q4 forced consumers to switch to competitor brands. Contributing factors included freight challenges exacerbated by the Middle East crisis, production backlogs, extended product release times, and new customs clearance requirements. While these operational issues are now resolved and product availability has significantly improved, a2MC estimates China-label IMF uptake is currently at only 40% of pre-disruption levels. CEO David Bortolussi confirmed that regaining early-stage infant users will be challenging, as mothers are reluctant to switch brands unless new products present issues, indicating a prolonged recovery period. Competitors capitalised on the supply gap with attractive promotional offers, leading many consumers to accumulate significant pantry inventory, further delaying potential brand switching back to a2MC.
To counter this, a2MC is focusing on recovery by launching new China-label IMF products in H1 FY27: a2 ZhiChu QiRun for the ultra-premium segment in lower-tier cities and a2 ZhiChu ZhiChun for the organic ultra-premium segment in higher-tier cities. English-label products like a2 Platinum and a2 Genesis are also being upgraded with enhanced ingredients such as increased DHA, lutein, and higher Human Milk Oligosaccharide (HMO) content. The company will also introduce three new English-label paediatric supplements for immune health and bone development in H1 FY27, including liquid sachet calcium supplements, targeting Australia, New Zealand, and China via cross-border e-commerce.
What this means for China
China-focused infant formula manufacturers and brand owners must reassess supply chain resilience, given a2MC's 33% H2 FY26 revenue drop from disruption. Stockouts create immediate market share erosion, requiring costly, protracted recovery strategies and promotional incentives to regain consumers with established competitor loyalty. New product launches, such as a2MC's planned ultra-premium offerings in H1 FY27, indicate a strategy to capture new demographics and drive growth. Manufacturers must optimise lead times and navigate evolving customs regulations to prevent similar market losses. Competitive pressure from brands leveraging supply gaps demands agile marketing and robust distribution to maintain in-market presence and customer retention, safeguarding future revenue streams.
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