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GLENVIEW, Ill. — Mead Johnson Nutrition CEO Stephen Golsby on Thursday announced that the company will be deploying a significant ad campaign to recapture any lost trust among moms because of an Enfamil "pull-and-hold" in December.
Retailers had pulled the product off their shelves out of an abundance of caution — the product had been consumed in the days prior to a child's death — but both the Food and Drug Administration and the Centers for Disease Control and Prevention later vetted Enfamil from having any link to that tragedy.
"While it is very difficult to quantify the impact at this early date, we believe that misleading headlines and the resultant uncertainty caused some moms to switch from the Enfamil brand and others to start on an alternative formula," Golsby said during a fourth-quarter conference call with analysts. "We responded quickly with appropriate activities, including an extensive e-mail communication, reassuring millions of mothers about the 2,300 quality and safety checks we perform to ensure the integrity of every product that we ship to market."
Golsby asserted that the campaign was necessary despite the fact that many of the moms impacted by the recall will be out of the market by third quarter 2012. "It makes sense because as a consequence of misinformation, misleading headlines and, in our opinion, some inappropriate actions, a large number of parents were highly concerned by what they were hearing, reading and seeing," he said. "Market research data would show us that the trust in Enfamil has been diminished in the eyes of some consumers, and we need to restore that quickly. We've been in this business for 106 years, [and] we intend to be in it for another 100 years. We are going to spend whatever it takes to restore the trust in Mead Johnson and our products that we fully deserve and make sure that [our consumers] understand our unwavering commitment to quality."
The broader mass-market campaign, which will only run for a few weeks and will include television advertising, will focus on Mead Johnson's quality testing and the fact that Enfamil is the No. 1 brand recommended by pediatricians in the United States, Golsby said. "While there was no noticeable impact on our fourth-quarter sales given the late December timing, we expect to see lower market share potentially into the third quarter of this year, as those babies who switched were started on another formula age into heavier consumption period."
Other factors that will impact the infant formula market in 2012 include a trending lower birth rate, Golsby added. In addition, there are a number of WIC contracts that are open for bidding in 2012, Golsby said. WIC, the USDA's Special Supplemental Nutrition Program for Women, Infants and Children, is one of the largest purchasers of infant formula in the United States. "The biggest contract that we currently hold is in California, which accounts for more than 14% of total WIC births," Golsby said. "California was rebid late in November, and I am pleased that we retained this contract, which will roll over effective Aug. 1. We have two other contracts that account for a total of 7% of WIC births that have yet to be bid with a rollover date of Oct. 3."
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