US – Perrigo Company plc, a global consumer self-care company, has acquired Nestlé’s Gateway infant formula plant in Eau Claire, Wisconsin, along with the US and Canadian rights to the Good Start® infant formula brand.
The acquisition is part of the company’s US$170 million strategic investment to expand and strengthen its US infant formula manufacturing, which is expected to bolster industry capacity, enhance consumer choice, and increase access to safe, affordable infant formula for parents and caregivers.
As part of the investment, Perrigo will immediately inject US$60 million into expanding Gateway’s 29 million pounds per year production capacity by 7 million pounds, or more than 100 million more 8-ounce bottle equivalents per year, within 18 months.
This addition of a total of 36 million pounds of capacity to its infant formula production is to ensure the company meets consumer demand for its 17-store brand sold at approximately a 50% discount to the major national brands.
Perrigo had insufficient capacity and was also unable to fully meet the demand for contract manufacturing customers, including new market entrants and rapidly growing premium national brands.
Apart from meeting the demand of its brands and expanding the Gateway plant’s capabilities to produce a wider range of formulations, these new investments will help Perrigo increase consumer choices for infant formula in the marketplace.
The investment is also an extension of the company’s investments of approximately US$20 million each year to ensure a safe, high-quality supply of infant formula from its Vermont and Ohio infant formula facilities.
Perrigo President and CEO Murray Kessler said: “Long before this year’s infant formula shortage, we had been pursuing options to increase capacity to meet the growing demand for our infant formula in the US. 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.”
“The purchase and expansion of Gateway is the first major initiative in our recently announced Supply Chain Reinvention program. It solidifies our long-term manufacturing supply of infant formula in the US, increases the availability of lower priced, high-quality infant formula to consumers, and delivers value to Perrigo shareholders.”
Perrigo will operate the Good Start® infant formula brand in the US and Canada, whereas Nestlé will continue to fulfill its existing Women Infants and Children (WIC) contracts to ensure uninterrupted supply, with Perrigo supplying products through the Gateway plant.
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