According to Reckitt Benckiser, the maker of what is now the largest brand on the market, Enfamil, the nearly year-long shortage of infant formula in the United States that prompted the White House intervention is likely to last into the spring. “.
Panicked parents had cleared baby food aisles in supermarkets earlier this year after former US top manufacturer Abbott Laboratories recalled dozens of varieties of its Similac, Alimentum and EleCare formulas in February.
The products, made in a Michigan factory, were pulled after complaints of bacterial infections.
Supermarkets like Target TGT.N and Walgreens Boots Alliance WBA.O were forced to limit sales, putting pressure on the Biden administration to handle the crisis.
The White House took steps in May to address the shortage by invoking the Defense Production Act to help manufacturers obtain the ingredients needed to ramp up supply.
Inventories have not normalized since the height of the crisis in May and June, despite the US making progress in replenishing supplies, said Robert Cleveland, Reckitt senior vice president of North America and Europe Nutrition.
“I suspect this will continue to some extent until spring recovers,” he said. The situation was improving, however, he said. “There’s a lot more volume on the shelves than a few months ago, and enough to feed America’s babies.”
Rival manufacturer Perrigo Company Plc declined to comment, while Danone, maker of Aptamil, did not immediately respond to a request for comment.
Since the Abbott recall, Reckitt’s share of the infant formula market has skyrocketed, making it the No. 1 supplier in the United States.
The British company has yet to see its newfound popularity wane, with Cleveland saying its market share of just over 50% has “remained relatively unchanged” since earlier this year.
Its position has been further strengthened as the United States said it will temporarily cover the cost of baby food for low-income families who rely on government rebates in contracted states.
Companies normally bid for state contracts to be the sole baby food provider for low-income families under the Women, Infants and Children (WIC) program. In their bids, they offer a “discount” in the form of rebates to the states.
The government’s intervention, aimed at encouraging companies to increase supply, effectively covers that discount.
Reckitt has said its formula factories are running 24/7 and it fed more than 40% of all low-income WIC babies.
“Certainly at some point in the future, we expect that they (the United States Department of Agriculture) will want to bring the program back to normal,” Cleveland said.
“What we tell them is to give us enough notice – to essentially put a date on the calendar…. don’t try to shock the system by making it happen too quickly – give us time to adapt, because we’re going to have to adjust our production, we’re going to have to adjust our distribution,” he said.
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