Japan’s top baby formula maker joins the race to feed America’s children

(Bloomberg) — Meiji Holdings Co. plans to enter the $5.9 billion U.S. infant formula market, joining Nestle SA, Danone DA and other global giants seeking to supply milk powder to alleviate a national shortage.

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Japan’s largest infant formula maker has applied to the Food and Drug Administration for permission to export to the United States, including specialty formulas and its cube-shaped portable milk powder, Shinichirou Tanaka said, director of Meiji’s global infant nutrition business, in an interview.

In the United States, parents are struggling to find formula amid a national shortage, prompting President Joe Biden to invoke emergency powers under the Defense Production Act to speed up milk production formula and use government planes to import ingredients and formula. Meanwhile, infant deaths suspected of being linked to contaminated infant formula earlier this year have also fueled concerns about product quality.

“The opportunity came unexpectedly, and we really want to try,” Tanaka said, adding that the cost and quality of Meiji’s products are competitive. An 800-gram (28-ounce) container of formula costs about $15 in Japan, while a 12.5-ounce box of Abbott’s Similac sells for about $17.50 on Walmart Inc’s website. “We let’s stock up for the US market.”

The FDA has temporarily relaxed its rules until Nov. 14 to import more powdered milk. Global infant formula suppliers, including Nestle, Danone and Abbott Laboratories, have already obtained approval to sell foreign-made formula in the United States. The current environment provides a good entry point for brands outside the country to access the lucrative market, according to Bloomberg Intelligence analyst Ada Li.

“If the regulator approves entry, there will be opportunities for new entrants like Meiji,” Li said. Even so, “it will be incredibly difficult to compete head-on with giants such as Reckitt Benckiser Group Plc, Abbott and Nestlé. , which have dominated the U.S. market for decades,” because the demand for infant formula is very sticky and consumers are not making it. switch products easily, she says.

Meiji, which has focused on expanding sales in Asia, sees a chance to create a new revenue stream. In its home market, Japan, the country’s low birth rate has translated into lower sales of baby milk powder. Even so, Meiji’s nutrition business, which includes infant formula and liquid foods for the elderly, grew 7.8% to 110 billion yen ($806 million) for the year ended. in March, representing 11% of total turnover.

Meiji also sells infant formula in Asia, including Vietnam and Taiwan. The company, which also manufactures and markets dairy products, chocolates and beverages, plans to export milk powder made at its plant in Saitama, Japan, which meets international food standards, to the United States.

“We make high-quality products at a relatively low cost,” said Tanaka, who declined to disclose expected shipment volumes but said prices in the United States would likely be at least twice those in the United States. Japan. “Our industry standard for quality checks is much higher than that of food, as good as for medicine, because the climate in Japan accelerates the growth of bacteria.”

Japanese infant formula quality control standards are high, after a scandal in the 1950s when arsenic in Morinaga Milk Industry Co.’s infant formula allegedly led to the deaths of more than 100 infants.

Meiji sought new growth opportunities overseas. Currently, the company cannot sell its products in China, the world’s largest infant formula market, as the country banned imports of dairy products from Japan after the Fukushima nuclear disaster caused by a severe earthquake. land in 2011.

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Virginia C. Taylor