A gallon of milk in a display case at a grocery store contains whey and casein protein. There are two common forms of beta-casein: A1 and A2. A1 milk is the most common milk made and sold in the world today. It contains a mix of the A1 and A2 proteins, whereas A2 milk exclusively contains the A2 beta-casein protein.
The product was first developed in New Zealand in the 1990s. Since then, the A2 variety of milk has grown in popularity, bolstered by health effect claims related to digestive issues around A1 protein intolerance in milk. However, there is no scientific consensus on the health benefits of A2 milk.
Minnesota’s dairy industry generated more than $29 billion in economic impact in 2023. The market for A2 milk is small, representing less than 1.5 percent of all U.S. dairy product sales in 2024. However, according to research from the IMARC Group, North American sales of A2 milk are expected to grow by more than 16% between 2024 and 2032.
No studies have been conducted on the market potential of A2 milk in Minnesota. To address this gap, the Agricultural Utilization Research Institute (AURI) recently published the “A2 Milk Market Assessment” to help inform industry stakeholders about the supply and demand of A2 milk. The report is intended to help dairy producers, genetic companies, processors, and retailers make data-informed business decisions about A2 milk. To compile the report, AURI distributed a survey to dairy farmers in Minnesota and analyzed public data from leading genetics companies.
AURI conducted a survey of dairy producers to understand the supply of A2 milk in Minnesota and collect data on their interest in producing it. A total of 75 producers replied to the survey, representing 4% of Minnesota’s dairy producers.
The survey provided several interesting results. As of 2024:
- 44% of respondents had converted cows to A2 genetics (35% were in the process of converting and 9% had finished the process).
- 48% of respondents had not converted cows in their herd into A2 genetics and 8% of respondents were unaware of A2 milk.
- About a quarter of the cows in the sample size had been converted to A2 (4,062 of 17,512 cows).
AURI also asked producers why they converted their herds to A2 genetics. Eighty-two percent of respondents converted because of perceived consumer interest, 76% converted for market opportunities, and 64% responded that A2 milk is trending. Forty-two percent of respondents said they converted because they believe A2 milk is healthier. Only 15% said they converted due to current consumer demand for A2 milk products and a higher selling price for A2 milk products.
One survey respondent described the reason for converting as “I think everything will be A2 soon. [The] protein is more digestible. Non-A2 milk will be discounted.”
AURI also asked non-A2 dairy farmers if they were interested in converting their herds to A2 cattle and 31% of respondents said they were.
One dairy farmer interested in converting responded that the decision may be guided by changing consumer preferences.
Of the non-A2 farmers not interested in converting their herds, the most popular reasons were the lack of market opportunities (60%) and the additional expense for conversion (50%). One dairy producer not interested in converting said that market price would dictate the decision.
“Currently, I do not know of a market for A2 milk. I don’t see the need to switch without market or premium prices.”
To convert to A2 milk, farmers must breed or buy cows that produce the A2 protein. Converting a herd to A2 milk can take many generations according to researchers at the University of Minnesota-Morris.
Dairy genetics companies in the U.S. indicated an increase in A2A2 protein designated sires. In 2024, a review of the STgenetics directory showed that 75% of Holstein, 86% of Jersey, and 100% of Guernsey sires were A2. Furthermore, Select Sires, the leading dairy genetics company in the North American market, indicated that in 2023, 70% of its Holstein bulls were A2.
In addition to surveying producers, AURI analyzed market data and interviewed two regional retail chains to further understand the demand for A2 milk products in Minnesota.
Retailers provided four main reasons for carrying A2 products: market trends, price premium, consumer requests, and brand support. The retailers confirmed that conventional milk sales far outpace A2 milk (A2 represented less than 1 percent of total sales) and that A2 milk is sold at a 60% to 70% premium. Further, conventional milk sells much faster than A2 milk (15-18 times faster), but A2 milk sales have grown 15 percent annually over the past five years.
The retailers said the future for A2 milk is strong. They expect the product to share more space on grocery store shelves with conventional milk as consumers’ interest in wellness drives demand for A2 products. Retailers also identified increased demand for A2-based dairy products like ice cream, sour cream, cheese, and yogurt.
As part of the research, AURI interviewed Ten Finns Creamery in Menahga, Minnesota. The business was among the first adopters of A2 milk in the state. They started converting their herd in 2014 and finished approximately three years later. Owner Joel Hendrickson told researchers that he decided to switch to A2 milk because he believes it is healthier for consumers. Today, the creamery sells milk directly to 10 Minnesota school districts and retailers in Minnesota and surrounding states. He says that selling directly to schools and retailers, rather than through a co-op, helped start and grow the business. The farm is exploring adding A2 ice cream and A2 butter.
Sanchez Philocles, AURI’s market research analyst, is the study’s lead author. He says the survey results are strong indicators that producers will convert more cows to A2 in the next five years and that the market report will play an important role in guiding the industry. Philocles says connecting with Ten Finns Creamery and learning more about the challenges the business faced, especially with getting into the market and introducing the A2 brand to consumers, helped improve the finished report.
Philocles states that one of the report’s most interesting findings is the potential for growth in non-fluid milk A2 products like yogurt, butter, and ice cream. He says the number of farmers interested in converting their herds to A2 and the overall familiarity with A2 milk among producers are also notable results of the report. “Dairy producers are looking for insights into A2 milk and whether the investment to convert their herd is worth it,” Philocles says. “With this report, we can bring awareness around where the market stands and what market opportunities exist for producers.”
The report also identified some important next steps for future research, but Philocles says more conversation is needed amongst dairy processing cooperatives and farmers to further define the market opportunities for A2 milk.
