China Food

Today, Abbott announced! Nestle, Danone and Mead Johnson are all on fire

If there is no accident, Abbott’s US factory caught in the recall storm will restart soon.


Today, Abbott announced that it has reached a settlement agreement with the U.S. Food and Drug Administration (FDA). Once the FDA confirms that the factory meets the initial requirements for startup, the company will restart the infant formula factory in Michigan within two weeks. The agreement still needs to be approved by the United States Court.


Xiaoshidai noted that since the suspension of the above factories for investigation, the supply chain has been tight under the superposition of the epidemic, and the “milk powder shortage” in the United States has become more and more intense recently, and is facing a series of “soul torture” about market monopoly and over regulation. In order to alleviate the supply pressure, the US FDA is also pushing to speed up the import of infant milk powder.

It is worth mentioning that American infant milk powder is currently mainly imported from Ireland, the Netherlands and other countries, which are also “big suppliers” in the Chinese market. When replying to the snack agent’s query today, a number of multinational dairy enterprises stressed that the shortage of milk powder in the United States will not affect the stable supply of the Chinese market.


Let’s have a look.


“No evidence”


According to Abbott today, after the restart of the Michigan plant, the company will first start producing EleCare, Alimentum and formula for metabolic problems, and then start producing Similac and other formulas. From the restart of the factory, it takes 6-8 weeks for the products to be put on the shelves.


Prior to this, the plant was shut down for investigation because it was suspected to be related to bacterial infection. The snack generation said that in February this year, Abbott took the initiative to recall Similac, Alimentum and EleCare milk powder produced by the factory because four consumers complained that babies had bacterial infection after eating relevant products, involving cronobacter sakazakii or Salmonella Newport.


Abbott China said that among the products voluntarily recalled this time, other nutritional products sold by Abbott China in the mainland will not be affected except Xikang Baotian, an infant nutritional supplement.


In response to the snack generation’s query today, Abbott China said that after the restart of the Michigan factory, the supply of recalled products to the Chinese market will resume as usual. “At present, our overall supply of infant milk powder in the Chinese market is long-term and stable.”.


At the same time, Abbott also released the latest inspection results. The company said in a statement that after “thorough investigation” by FDA, CDC and Abbott, “there is no conclusive evidence that Abbott’s formula is related to the illness of these infants”.


The company further noted that the survey results showed that all retained products tested by Abbott and FDA during factory inspection were negative for cronobacteria sakazakii and / or Salmonella. In addition, the Clostridium sakazakii found in the factory environmental test is located in the non product contact area and is not related to any known infant cases.


Abbott also said that the local state, FDA and / or CDC tested Abbott products consumed by four children, and the results showed that all unopened containers were negative. Two negative and one positive results were found in the detection of unsealed containers in three cases.


The statement pointed out that the above positive results detected two different strains of cronobacillus sakazakii, one of which was matched with the strain causing infant infection and the other with the strain found in distilled water used to prepare milk powder in the child’s home. In addition, the two strains did not match the strains detected in Abbott’s Michigan plant.


Today, Abbott chairman and CEO Robert B. Ford said in a statement that the company hopes to cooperate with the FDA to restart the factory as soon as possible and safely to alleviate the shortage of infant formula in the United States.


Supply crisis


The shutdown of Abbott’s Michigan plant comes as the United States, where Abbott is located, is experiencing a widespread milk powder supply crisis.


According to datasembly data quoted by many foreign media, as of May 10 local time, the supply of infant formula in the United States was only 56% of the normal level. But FDA Commissioner Robert M California said in the interview that the data was “incorrect”, and IRI data showed that the inventory was close to 80%.

However, in any case, these data show that the current supply of milk powder in the United States is indeed lower than normal. Considering the shortage of supply caused by the epidemic, it is undoubtedly “worse” for Abbott, the country’s largest milk powder supplier, to shut down its factory.


The reasons behind this tension include that American infant milk powder belongs to a highly concentrated industry and is extremely dependent on local production. On the other hand, due to the high threshold of imported milk powder in the United States, if “something goes wrong”, it is difficult to rely on imports to solve the supply problem in a short time.

(Bloomberg: Nestle and Danone have a low market share in us milk powder)

It is reported that Mead Johnson, Nestle Garbo and Perrigo nutrition under Abbott and Lijie occupy nearly 90% of the infant formula market in the United States. Among them, Perrigo nutrition mainly produces its own brand milk powder to major retailers such as Sam, target and Kroger. The other three companies are suppliers of WIC (women, infants and children) nutrition program.


Statistics show that WIC is a social welfare plan funded by the U.S. authorities, which will provide free breastfeeding support and other services to eligible families. According to the Washington Post, about half of the purchase of infant milk powder in the United States comes from the WIC program. The New York Times recently pointed out that among the three enterprises serving WIC program, Abbott has the highest market share, reaching about 40%.


“The operations of each of these companies are highly concentrated. Therefore, even if one plant is shut down for only a few weeks, the whole industry will have a chain reaction.” Brian dittmeier, senior director of public policy at the national WIC Association, pointed out in the Washington Post.


Recently, the New York Times quoted Rudi leuschner, a supply chain expert at Rutgers University, as saying that due to the small fluctuation in the sales of infant formula in normal times, factories generally lack the ability to quickly speed up production. Therefore, the production increase of other factories cannot make up for the suspension of Abbott factory. Perrigo nutrition, which accounts for about 8% of milk powder production in the United States, also said that it is expected that the shortage of milk powder in the United States will continue for the rest of 2022.




Seeing the “limited capacity” of local production, the snack generation noticed that the US FDA has announced today that it will further increase imports.


In fact, before that, it was not easy to get a “pass” for exporting milk powder to the United States. The FDA revealed today that about 98% of infant formula in the United States is produced locally, and the rest is mainly imported from countries such as Mexico, Ireland and the Netherlands.


In response to the situation of milk powder imported from the United States, the New York Times has bluntly said that the market “may be over regulated on other superficial issues (Note: such as labels)”. It cited comments that many products sold in Europe were above FDA nutritional standards, but these milk powders were banned from sale in the United States.


According to the FDA today, since February, the agency has simplified the import process of infant milk powder and introduced more products. Since 2022, US infant formula imports have increased by more than 300% over the same period. “FDA has worked and will continue to work actively with USDA, UK and European authorities to accelerate the entry of products manufactured abroad into the market.”.


At the same time, the Department also issued the latest guidelines for relaxing import. The FDA said it had established procedures and would not oppose the import of milk powder or the sale of products produced in the United States but originally used only for export.


In addition, FDA will also provide flexibility for us infant milk powder export enterprises, including calling on enterprises to submit information to them for rapid product evaluation, in order to seek to further increase the supply of domestic products in the United States.


Today, Abbott announced that it had flown millions of cans of milk powder produced by an Irish factory to the United States and would continue to import from the factory to help alleviate the supply shortage.

Other milk powder manufacturers are also “fully open fire”. Nestle is airlifting Garbo infant formula and alfamino infant formula from the Netherlands and Switzerland to the United States, Reuters reported today. The company said that these two products are for infants with milk protein allergy and play an important role. In addition, Lijie is increasing the production of infant formula by about 30% and increasing the delivery frequency to cope with the national shortage of supermarkets in the United States. Before Abbott announced the recall, the supply of infant milk powder in the United States accounted for slightly more than one-third, and now the proportion has reached more than 50%.


A Danone spokesman said in an email to Bloomberg today that it would continue to push for as much production as possible. “High demand has affected our formula supply,” she declined to comment on whether the company will ship milk powder products from other regions to the United States or which formulas it will give priority to. “Our factory is operating at maximum capacity and we are giving priority to the production of its best-selling infant formula.”


China situation

Commenting on the above situation today, a senior person in the milk powder industry pointed out to the snack generation that the reasons for the shortage of milk powder in the United States include market monopoly, Abbott’s “accidental” recall and so on. In contrast, China has a higher degree of market liberalization, and the number of brands, production capacity and raw material supply are very abundant. It is basically impossible to have the same shortage.


“There are more than 400 enterprises that can respond quickly to changes in the Chinese market anytime, anywhere.” The source said.


So, will the “chain reaction” of the change of American milk powder affect the Chinese market? In this regard, Abbott, Nestle, Danone, feishilan and Aoyou all told xiaoshidai today that the company’s supply in the Chinese market is stable and has not been affected by the shortage of milk powder in the United States.


Danone China further said that its warehouses for the supply of infant formula milk powder in Lingang, Nansha, Qingdao and other places operate normally to ensure market supply and price stability. Feishilan said that affected by the epidemic, cargo transportation and customs clearance had been under certain pressure, but the overall supply to the Chinese market was stable and steadily promoted according to the plan.

When analyzing whether the current U.S. milk powder market will attract more layout of local enterprises, the above senior milk powder people believe that different from the similar standards of infant milk powder in Europe and the United States, the current standards of China and the United States are quite different, and the formula of local brands “going to sea” needs to be modified. Therefore, it is difficult and unlikely to export to the United States in the short term.


However, if the US milk powder import is really “deregulated” for a long time because of this shortage, it may make multinational brands rooted in the market reconsider the “overall chess game” and optimize the global milk powder layout. The reason behind this is not only the opportunity brought by the opening of the market, but also that the US milk powder market has achieved good growth even if the epidemic has led to a general decline in the global birth rate.

Xiaoshidai introduced that in February this year, Laxman Narasimhan, CEO of Mead Johnson’s parent company, once said that the United States is one of the largest milk powder markets. There are only two real participants in this market (Mead Johnson and Abbott). Li Jieshi’s milk powder business in the United States “had a very good time” last year.


Pay attention to “snack generation” (wechat: foodinc) “and reply to” Abbott “to see the wonderful news.

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