Exclusive maker of Walmart, Amazon’s branded infant formulas anticipate shortages through rest of 2022

Empty shelves show a shortage of baby formula at a Target store in San Antonio, Texas, US, May 10, 2022. REUTERS/Kylie Greenley-Bell

Register now to get free unlimited access to Reuters.com

NEW YORK, May 13 (Reuters) – The Perrigo Company PLC (PRGO.N), which makes branded baby formula for retailers including Walmart Inc (WMT.N) and Amazon.com Inc (AMZN.O), expects a shortage Increased demand and CEO Murray Kessler said in an interview with Reuters that it will continue until the “balance of the year.”

Kessler said Perrigo’s formula manufacturing facilities in Ohio and Vermont are now operating at 115% of their capacity. At the FDA’s request, Kessler said, the company makes only four items, which are store-brand versions of Similac Pro Sensitive, Pro Advance and Enfamil Gentle Ease and Infant. Perrigo also has a smaller company that makes some national formula brands including Bobbie.

The shutdown of the Abbott Laboratories (ABT.N) infant plant in Sturgis, Michigan, has exacerbated shortages linked to the national pandemic, leaving empty shelves in supermarkets and supermarkets and causing parents to panic. Abbott’s brands include Similac formulas.

Register now to get free unlimited access to Reuters.com

Kessler said Perrigo is working with retailers including Walmart and Target Corp (TGT.N) so they get something every week. He said the allowances for retailers are based on the average of what retailers received before “this crisis.”

“We’ve gone ahead and are killing ourselves to do everything we can,” Kessler said.

Some retailers including CVS Health Corp (CVS.N) and Target ration infant formula.

On Thursday, the White House announced steps it was taking to ease the shortage, including allowing more imports.

French food and beverage company Danone SA (DANO.PA), which also makes infant formula, said, “The unexpected recall of Abbott Nutrition in February led to increased demand in the US market.

“We are in discussions with the US authorities to see how we can support them in addressing their shortage.”

Of the total US infant formula market, Perrigo makes up about 8%, Kessler said, adding that it gained a share as it worked to meet growing demand.

Because of “massive inflation,” Kessler said, Perego raised prices by about 3% in the first quarter.

He said the company ordered materials to meet the increasing demand throughout the year.

Laura Moody, CEO of Laura Moody, told Reuters that Bobby, a new European-style infant formula on the market, saw its customers double in the first week after Abbott’s formulas were withdrawn, and has continued to climb. Moody said Perrigo makes the Bobbie formula, but can only meet about 50% of the company’s demand, which has led it to stop accepting new customers. She said Perrigo can meet 100% of Bobbie’s existing customers’ needs.

Bobbie has about 70,000 customers.

Abbott closed its Michigan manufacturing facilities after complaints of bacterial contamination.

The Food and Drug Administration later cited five bacterial infections reported in children according to the company’s formula, including two deaths. Abbott said her factories are “not likely to be the source of infection” and she plans to reopen the facility in the next two weeks.

Register now to get free unlimited access to Reuters.com

(Reporting by Jessica DeNapoli in New York and Richa Naidoo in London; Editing by Nick Ziminsky)

Our Standards: Thomson Reuters Trust Principles.

Leave a Comment