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This American company is making a comeback with "European-style" milk powder

ThisAmericancompanyismakingacomebackwith"European-style"milkpowder

The company's mission is to provide a safe, healthy alternative for moms who are unable to breastfeed (or pump) and don't want their children to use American formula.

Photo credit: COURTESY OF BOBBIE

One afternoon in June 2019, two inspectors from the U.S. Food and Drug Administration (FDA) arrived at a warehouse in San Francisco.

The two uniformed women pulled a printed Fortune magazine article out of their briefcase titled, "Startups Disrupting the Breast Pump Industry. Will Baby Formula Be Next?". . In the article, they highlighted all references to "infant formula.

The two FDA officials are interviewing the founders of Bobbie, a small start-up company that sells formula. The startup launched a pilot subscription program to about 100 Bay Area customers. For the next 10 days, the company's founders were careful to advertise their product as "toddler formula" or "formula" on their website and product packaging. However, the Fortune magazine article and others described the startup as a member of the "infant formula" industry.

That was enough to get the FDA's attention. The government agency regulates infant formula more strictly than most other foods, and even more than other types of formula used by children who can consume other foods. In the United States, all products sold as infant formula must comply with the requirements of the Infant Formula Act, including rules for growth monitoring studies, nutritional testing and food safety for infants using formula. Products manufactured outside the U.S. typically cannot meet these requirements. bobbie uses European raw materials to manufacture its formula in Germany, with the goal of producing a product that is close to the formula sold in EU countries. bobbie sells to ingredient-conscious U.S. parents, who sometimes go through what bobbie co-founder Laura Modi calls U.S. distributors "black market" formula made in Europe.

The company received a warning and recall order from the FDA after FDA inspectors finished talking to Bobbie's team at the warehouse. The company's founder speculated that Bobbie was one of the smallest U.S. companies ever to receive a warning and recall. The company, which was just 18 months old and had fewer than 15 employees at the time, called 100 subscribers and explained to them that they had received a warning from the FDA and had been asked to stop milk powder production. The company's founders and employees, who all had newborn children at home, even stopped using the company's formula themselves. I have never felt so vulnerable," said Morty, the company's chief executive officer. I sometimes think it's not fair. We did a pilot in one city, but we still did a national recall."

Modi said the FDA's action came as a surprise to her because there are many infant formulas, formulas and even "nighttime" formulas on the market that have not received the same level of scrutiny from the department. She said the company's biggest mistake was to focus on communicating its message online and not stating on the product packaging that the formula was intended for young children "12 months and older" rather than newborns. In retrospect, Modi said, "It's hard not to feel remorse that we should have been aware of this issue. It was just a mistake."

It's not surprising that the FDA reacted so cautiously to a Silicon Valley startup that was trying to disrupt the formula industry. The government agency insists on strictly fulfilling its duty to ensure that children who use formula as their sole source of nutrition are using a product that is healthy and safe. Modi said, "There is no room for the infant formula industry to be misunderstood." In addition, for years, infant formula in the U.S. has been dominated by a few large companies, such as Mead Johnson's Enfamil and Abbott Nutrition's Similac. In the past five years, there have been no new infant formula brands in the U.S. market.

Laura Maudie, co-founder and CEO of Bobbie's. Photo credit: Courtesy of Bobbie

Infant formulas made by large companies crowd the shelves of drugstores. These companies have lawyers and regulatory professionals to report any labeling or ingredient adjustments to the FDA, whereas most other foods or dietary supplements do not require such "premarket notification." Bobbie is a small team with a 15-mile service radius and only a few days of experience, so the FDA knew about the new formula before it was introduced. Bobbie was a small team with a 15-mile radius and only a few days of experience, so by the time the FDA knew about the new infant formula company, it had not established a long-term relationship with the department.

Modi believes the company's ongoing mission is to provide a safe, healthy alternative for moms who can't breastfeed (or pump) and don't want their children to use U.S. formula; parents buy formula from Europe because they prefer the lactose, coconut oil and herbivorous cow's milk formula in European formulas to the palm oil, corn syrup and traditional cow's milk contained in many U.S. counterparts.

A former director of hospitality operations at Airbnb, Modi got the idea to start her own business because she couldn't breastfeed her own child. Modi hopes that her company will disrupt the formula industry in the same way that startups like Elvie and Willow, which came out of nowhere in the breast pump industry, did. Formula has been heavily marketed to moms who don't need it, and shamed by those who do use it. Modi told Fortune magazine in 2019, "The current reality of feeding children is unacceptable to us. 15 to 20 percent of women are unable to produce enough breast milk to breastfeed exclusively."

More than a year after the FDA issued its warning, Bobbie has regained its footing. In a letter to customers, the company assured them that it would not criticize the FDA's decision. In a letter to subscribers, the company said, "We acknowledge that our labeling and marketing may have been misleading, and we sincerely apologize to all of our customers for this. We know it's hard to do this, but we have to do it. Safety is a top priority, it's about our next generation, and as parents, we deserve a promise of peace of mind when shopping for products for our children."

Bobbie's message drew the attention of multiple parties who have played a key role in Bobbie's resurgence. bobbie's goal has always been to manufacture in the U.S., but facilities capable of producing infant formula have minimum order quantities that are far higher than the startup can achieve. Manufacturer Perrigo specializes in the retailer's own brand of formula and nutritional drinks for children. Although the company is also interested in making products for millennial parents, Perrigo turned down a request just a few months ago when Bobbie sent a "cold email" to Perrigo asking for help with formula. Currently, Paragon is producing formula for Bobbie's in Vermont. Adrian Sherigan, a Paragon executive, said, "We noticed that there was a need for an FDA-regulated product as a way to meet consumer preference [for EU formula]. I reached out to Laura again because I was struck by the way they handled the FDA warning; they were very transparent in their communications with consumers and communicated a clear message."

The previous product recall also caught the attention of a new investor, Sarah Adler of Wave Capital. Adler had known Modi when she was at Audemars Piguet, but she did not participate in Bobbie's initial $2.4 million seed round because she had questions about the feasibility of introducing a new formula to the U.S. market and the demand for such a product. But the company's response to the recall made her change her mind. Speaking of her final decision to invest in Bobbie, Adler said, "The company's response to the FDA demonstrated the maturity of its managers, and it was clear that investing in this company was the right decision."

A new manufacturer and a new investor instilled confidence in Bobbie, so the company invested resources in developing a product that would not upset the FDA and built a good relationship with the department. Under the guidance of new regulatory chief Christina Burbrick, the company visited the FDA's office in Silver Spring, Maryland, in November 2019 and discussed with officials the adjustments the company had made to its U.S. supply chain. Burbrick had previously been in charge of infant formula regulatory investigations at Abbott.

Bobbie's revised infant formula received FDA approval and became available nationwide on Jan. 5. Photo credit: Courtesy of Bobbie

Now, Bobbie is selling its $24 "European Formula" infant formula nationwide starting Jan. 5. This generation of formula is believed to be very different from the one that drew the previous warning; an FDA spokesperson confirmed that the previous generation "has not re-entered the market.

A consumer goods startup rarely encounters regulatory challenges, and Bobbie's new investor, Adler, compared the company's approach to regulators to the model Modi saw at Audemars Piguet. While still sometimes circumventing government restrictions, Audemars Piguet is more likely to cooperate with regulators in its growth phase than Uber, to which it is often compared. They could have tried to fight back and continue to sell the product they were trying to promote to the market," Adler said. But instead they reflected on it this way: What are our long-term goals from a business perspective?"

Bobbie has 12 employees who have a total of 19 children, including six babies, and they are excited to be able to use their company's products again. Modi and her team believe the company is now in a better position than if they had stuck with the "formula" promotion. Adler said, "If the FDA hadn't come to them with that news article, they wouldn't be in the good position they are today."