The fall comes despite The Australian reporting the dairy company has settled its trademark dispute with Oklahoma family-owned ice cream chain Braum's.

Let's have a closer look at the details.

A2 Milk brand protection

Brand recognition and protection are incredibly important in a competitive industry. A2 Milk has fought fiercely to fend off other companies from using the 'A2 milk' definition. Previously, the milk company has won bouts against Lion and the ABC.

In its recent trademark dispute, A2 Milk issued Braum's a cease and desist for its range of dairy products in May 2020.

These products are sold exclusively through the company's 280 restaurants throughout Oklahoma, Kansas, Texas, Missouri, and Arkansas. A2 Milk took issue with the use of 'A2 milk' branding on Braum's products.

Reportedly, the dispute has now been settled with the specific terms of the settlement confidential. However, sources are reporting that Braum will be given a grace period to make changes on its website and labels so they can advertise themselves as "A1 free", rather than "A2 milk".

A2 Milk Company US Chief Executive Blake Waltrip said:

We will always vigorously protect our trademark rights in the A2 Milk trademarks and are happy we have been able to reach a mutual agreement with Braum's.

Curdling as competition heats up

ASX-listed A2M is not the only milk-maker attempting to trample competition over trademark infringements.

Similarly, US-listed oat milk producer Oatly Group AB (NASDAQ: OTLY) has been caught in a stoush with Glebe Farm Foods over a similar deal. Oatly suggests the smaller Glebe is infringing on its trademark with its name and packaging too similar.

The case is being heard in the High Court in London and is ongoing.

Past year for A2M on the ASX

A2 Milk's share price has taken a hit over the past year. The closure of international borders brought the company's daigou channel to a halt. As a result of the excess supply, the dairy company's products were severely marked down in value.

Over the year, the A2 Milk share price eroded by 65.7% to $6.73 a share. Consequently, the market capitalisation of A2M is now $4.85 billion.

The post A2 Milk (ASX:A2M) share price falling despite trademark settlement appeared first on The Motley Fool Australia.

While it has been a bleak time for the Australian milk company, things are looking brighter further afield. In the United States, there is a newly listed alternative milk producer on the block. Swedish plant-based milk company Oatly Group (NASDAQ: OTLY) successfully listed on the NASDAQ last week, with its shares now sitting almost 22% above their initial public offering (IPO) price.

Let's take a moment to compare the two.

ASX-listed A2 Milk's Achilles' heel

Firstly, A2 Milk and Oatly are both traditional cow's milk alternatives, though there's still a significant difference between the two. While A2 Milk offers an easier to digest product that lacks the A1 protein, Oatly goes a step further and cuts the cows out completely.

Oatly is the world's largest oat milk company. Being made from oats, it is a vegan-friendly alternative to cow's milk for those who are lactose intolerant.

Although the company is new to public markets, Oatly was founded in 1994. Today, its products are sold in 60,000 shops and more than 32,000 coffee shops across 20 countries.  

This points out a recent area of weakness for the ASX-listed milk company. While only 13% of Oatly's revenue is derived from Asia, over 48% of A2 Milk's FY21 first-half sales were from China and other Asian geographies. That leaves A2 heavily exposed to geopolitical risks associated with China.

Oatly is truly lactose free

A2 Milk acts an alternative for those who may have difficulty digesting standard cow's milk. Without getting into the nitty-gritty details, the company's milk still contains lactose. However, Oatly's oat milk is completely dairy-free, lactose-free, and milk protein-free. Therefore, it is arguably an option for a wider audience of people with allergies or significant intolerances.

The plant-based food and beverage market is a high-growth industry. An expected growth in the vegan population and an increasing intolerance to animal protein is set to provide strong tailwinds. Already, Oatly estimates its total addressable market is in the realm of US$600 billion.

How the numbers stack up

Looking at the financials, Oatly achieved approximately A$617.5 million in revenue for the full year ending 31 December 2020. For comparison, A2 Milk's revenue for the trailing twelve months ending 31 December 2020 came in at A$1,490 million.

Additionally, the US-listed Oatly is currently loss-making on the bottom line. Meanwhile, A2 Milk remains profitable despite challenging conditions.

Although A2 Milk generated more than double the revenue of Oatly in FY20, its freshly listed foe commands a market capitalisation of around A$13 billion – which is more than triple the valuation of ASX-listed A2 Milk, based on its current share price.

The post Move over A2 Milk (ASX:A2M), there's a new company on the block appeared first on The Motley Fool Australia.