It has been a tumultuous ride for shareholders in a2 Milk Company Ltd (ASX: A2M) throughout 2016.
Up one minute, down the next. Shareholders of the a2 Milk Company will be left wondering what's next.
Are your a2 Milk Company shares at risk?
Indeed, following the recent downgrade, trading halt and then suspension of Bellamy's Australia Ltd (ASX: BAL), the a2 Milk Company share price has fallen from over $2.40 to below $2.
Blackmores Limited (ASX: BKL), the vitamins producer cum infant formula maker, has had its share price cut 23% over the past six months.
Similar to the a2 Milk Company, both Bellamy's and Blackmores are an investment in a high quality Australian brand that is seeking to replicate its local success in the huge Chinese market.
Regulatory change
The problems for a2 Milk Company's competitors started when China announced it would regulate the supply of infant formula.
Bellamy's said the market is being swamped by poor quality products from suppliers that are unlikely to meet the new requirements due to come into effect at the beginning of 2018.
The a2 Milk Company, with its premium brand, previously said it remains well placed to meet the requirements. However, investors also thought Bellamy's would be fine with the changes until it issued a profit downgrade on December 2.
Foolish takeaway
With its premium a2 protein variety of infant formulas and dairy products, shares of the a2 Milk Company continue to be a compelling long-term investment in my opinion. While I'm not rushing out to buy shares today, I think it remains well placed to deal with the impending changes relative to its competitors.
