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Danone, Reckitt race to ramp up US baby formula supply amid shortage

Stock Markets May 25, 2022 10:25
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© Reuters. FILE PHOTO: French food group Danone logo is seen at the company headquarters in Rueil-Malmaison near Paris, France, February 18, 2021. REUTERS/Gonzalo Fuentes/File Photo

By Richa Naidu

LONDON (Reuters) -Danone SA has been doubling shipments to the United States of Neocate formula for infants allergic to cow's milk while Enfamil maker Reckitt is also working to boost supplies amid a nationwide shortage, company executives said on Wednesday.

Top manufacturer Abbott Laboratories (NYSE:ABT) in February recalled dozens of types of its Similac, Alimentum and EleCare formulas, creating one of the most urgent food shortages in recent history for U.S. families.

Reckitt said it is working "extremely closely" with the U.S. Food & Drug Administration (FDA) on ways to increase supply, including expediting the approval of some products made at a facility in Mexico.

"Accelerating this process, while still ensuring high safety and quality standards, would allow us to significantly increase supply to U.S. consumers," Robert Cleveland, Reckitt's Senior Vice President of North America and Europe Nutrition, said in prepared remarks that he may read later on Wednesday at a hearing with U.S. lawmakers on the shortages.

The British company, which supplies roughly half the U.S. baby formula market, said it is also working with the U.S. Department of Agriculture (USDA) to expand the availability of formula under a programme that helps low-income families.

Danone - the world's second-biggest baby formula maker after Nestle but a relatively small player in the United States with less than 5% of market share - is stepping up supply of Neocate more broadly.

“The Abbott recall affected 38 markets – it’s not only the U.S.," said Magdalena Broseta, Danone's Vice President General Counsel of Specialized Nutrition.

"Our factory in Europe is serving multiple markets...of course, the numbers and the volumes and the U.S. are bigger just because of the size of the market.”

The French company declined to say how many cans or tonnes of product it is exporting.

When asked if Danone would bring its flagship Aptamil formula into the United States, Broseta said the company had been discussing a number of options with authorities, adding that it was easier to increase imports of products that were already available in the country than introduce new ones.

"Their focus is to try to unblock any logistical situations that other players could be facing," she added. "It's a bit early to say what exactly would that entail."

Broseta said Danone is producing more formula at its plant in Liverpool, Britain and not rerouting product from elsewhere.

“We will keep on serving our existing geographies at the level of their respective demand," she said.

U.S. states, manufacturers to decide if gov't benefits apply to imported baby formula

Danone, Reckitt race to ramp up US baby formula supply amid shortage
 

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