A2M: Can a milk producer be a growth stock?

From 2015 to 2020, A2 Milk (ASX:A2M) grew its market capitalisation from about $200 million to $20 billion. They produce milk. And milk products. Not AI or other high tech wizardry. Just the most generic of products, milk.

Food products are not typically high growth. People do not start eating a lot more than they used to just because a new product comes out. Aside from a small amount of change due to population growth and the trend to eat more protein as wealth increases, the success of one food product normally comes at the expense of another. If you decide to drink A2 milk you substitute it for another brand of milk. You do not double your milk consumption.

Consequently, the success of A2 milk was largely due to great marketing. They were able to exploit a competitive advantage based on the perceived health benefits of the type of milk. All milk actually contains the A2 beta-casein protein, however regular milk also contains the A1 protein. A2 milk is marketed as potentially being gentler on the stomach due to the absence of A1 protein.

Lion Group decided to challenge this marketing competitive advantage. In 2016...