Perrigo to buy Wisconsin baby formula plant, expand production in $170M investment

Irish health and wellness products company Perrigo Company plc said Tuesday that it is acquiring an infant formula plant in Wisconsin from Nestlé as part of a $170 million strategic investment to expand formula production in the U.S.

Under the transaction, Dublin, Ireland-based Perrigo will acquire the Gateway infant formula plant at 5023 Venture Drive in Eau Claire and the U.S. and Canadian rights to the Good Start infant formula brand.

The investment will also include a $60 million project to expand Gateway’s 29 million pound-per-year production capacity by 7 million pounds, or more than 100 million more 8-ounce bottle equivalents per year, within 18 months. Perrigo said in a press release that the acquisition and expansion will help it address insufficient capacity to meet consumer demand for its 17 store brand customers that sell infant formula at approximately a 50% discount to the major national brands.

“Long before this year’s infant formula shortage, we had been pursuing options to increase capacity to meet growing demand for our infant formula in the U.S.,” said Perrigo president and CEO Murray Kessler. “But this year’s industry shortage galvanized our commitment to not only invest to meet the demand for our store brand and contract customers, but also to help prevent future infant formula shortages.”

Perrigo will operate the Good Start infant formula brand in the U.S. and Canada. Good Start is a brand of Gerber, a Nestlé company.

“This sale enables Gerber to pursue new growth opportunities and focus on what we are known for in the U.S. — our core baby food business, which includes purees, snacks and cereals,” said Gerber CEO Tarun Malkani, in the release.

Gerber and Perrigo are two of just four companies that control nearly 90% of the infant formula market, with Abbott and Mead Johnson being the other two, according to a May 2022 letter sent by a group of U.S. senators to the U.S. Secretary of Agriculture that expressed concerns about corporate concentration in the industry. The concerns came amid a nationwide shortage of infant formula that resulted in the Biden Administration importing formula from overseas.

David Schuyer, Milwaukee Business Journal

Leave a Reply

%d bloggers like this: