Reckitt Sees US Baby Food Formula Crisis Persisting Till Spring: Report

Author: Anusuya Lahiri | December 02, 2022 07:53am

Enfamil maker Reckitt Benckiser Group Plc (OTC:RBGLY) (OTC:RBGPF) sees the near year-long infant formula shortage in the U.S. that prompted White House intervention will likely "persist" until spring.
Supplies have yet to return to normal since the peak of the crisis in May and June, despite the U.S.'s progress in replenishing stocks, said Robert Cleveland, Reckitt senior vice president of North America and Europe Nutrition, Reuters reports.
"I suspect that will persist to some degree until the spring resets," he said. The situation was improving, he said, however. "There is much more volume on shelves than a few months ago and enough to feed America's babies."
In 2022, panicked parents had emptied the baby formula aisles at supermarkets after former top U.S. manufacturer Abbott Laboratories (NYSE:ABT) in February recalled dozens of types of its Similac, Alimentum, and EleCare formulas.
The products, made at a plant in Michigan, were pulled after complaints of bacterial contamination.
Supermarkets like Target Corp (NYSE:TGT) and Walgreens Boots Alliance Inc (NASDAQ:WBA) had to limit sales, putting pressure on the U.S. government to address the crisis.
Since the Abbott recall, Reckitt's infant formula market share has skyrocketed, making it the No.1 supplier in the U.S.
Its position has been further boosted by the U.S. saying it will temporarily cover the cost of baby formula for low-income families dependent on government discounts in states contracted with the company.
Reckitt has said its formula factories are operating 24/7 and feeding more than 40% of all low-income WIC infants.
Price Action: ABT shares closed higher by 0.33% at $107.93 on Thursday.
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