The A2 Milk Company Ltd (ASX: A2M) share price is surging on Tuesday morning.
In early trade, the infant formula company's shares are up 7% to $5.72.
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Why is the A2 Milk share price on fire today?
Investors have been bidding the A2 Milk share price higher today after the company released a major announcement relating to its operations in China.
As many readers will be aware, A2 Milk and other infant formula producers require approval to sell their products in China.
With A2 Milk's current approval period coming to an end in the near future, the company needed the thumbs up to continue operating in the key market.
Well, as you might have guessed from the performance of the A2 Milk share price today, the company has revealed that its dairy processing partner, Synlait Milk Ltd (ASX: SM1), has received approval from China's State Administration for Market Regulation (SAMR).
This is for the re-registration of A2 Milk's China label infant milk formula product, stages 1, 2 and 3, formulated in line with China's new GB standards.
SAMR's approval will allow Synlait to manufacture these products until September 2027. Production is expected to commence later this month with its products transitioning in the market during first half of FY 2024.
Management commentary
A2 Milk Company's Managing Director and CEO, David Bortolussi, commented:
We are pleased to confirm that our China label IMF product re-registration has been approved. We extend our sincere thanks to China's State Administration for Market Regulation, New Zealand's Ministry for Primary Industries, our strategic partners in China, CNADC Group and China State Farm Agribusiness, and our manufacturing partner, Synlait and its major shareholder Bright Dairy, for their support throughout the process.
We look forward to making our upgraded new China label IMF product available to parents and their infants and young children in China, building on the strong brand loyalty we have developed with Chinese families over the past decade as the pioneer and leader of the A2 protein category. The approval provides a2MC with continued access to China's substantial registered domestic infant milk formula market which remains the key focus of our refreshed growth strategy.
