Fancy milk has helped crown the new king of New Zealand’s stock market.
A2 Milk Co., whose namesake product can sell for more than twice as much as a store brand, is now worth more than the likes of Auckland International Airport Ltd. and Fisher & Paykel Healthcare Corp. after adding almost two-fifths of its NZ$9.33 billion ($6.82 billion) market value.
Behind the recent rally is a production, distribution and licensing deal with dairy giant Fonterra Cooperative Group Ltd., which had previously dismissed a2 Milk as a marketing gimmick. A2 Milk says its products are better than traditional versions because they lack a protein, called A1, which it says can cause discomfort.
The agreement with Fonterra, the world’s largest dairy exporter, is an “endorsement” of a2 Milk’s proposition, UBS Group AG analyst Jordan Rogers wrote in a note. A2 Milk briefly even eclipsed Fonterra, whose cooperative units trade in a private market and had a combined value of NZ$9.85 billion.
Securities of both companies also trade in Sydney.