The British-Dutch multinational consumer goods giant Reckitt has announced that they would be “offloading” some of their household brands.
Some Historic Insights
Reckitt is a multinational, successful British-Dutch consumer brands company. It has spent several years in the industry, tracing its roots back to 1819 with the establishment of a corn mill business. The business would later launch a cornstarch product in 1840 and continued growing.
And So It Begins
The company has purchased the Mead Johnson brand, which became part of the Breckitt product range in 2017. According to Mead Johnson, Reckitt paid $90 per company share.
Low Profits
Furthermore, Mead Johnson had generated an estimated $12 billion, which only made up a fraction of the company’s sales. However, Reckitt pushed on and kept hopes high for the newly acquired sector.
Trouble From Within
Mead Johnson baby food is one of the brands under the Mead Johnson range, which was acquired by Reckitt and has undergone “troubling times.” The issues surrounding the newly acquired product are so bad that the parent company has decided to sell off some of the household products in the line. Reckitt had also confirmed a great possibility of letting the baby formula range go as well.
Under Fire for Baby Formula
In 2024, the Mead Johnson brands under Reckitt received backlash and were ordered to pay $60 million to a customer.
Baby Formula Posing Danger?
The mother of a premature baby sued the company after her baby had become infected with an “intestinal disease,” which is said to be the fatal cause of the infant’s death. It’s alleged that the Mead Johnson Enfamil baby formula had caused the intestinal disease.
More Cases
Even Before the $60 million case, there were reportedly other cases directed against the company regarding its baby formula range.
Consumers Don’t Trust the Brand
These allegations have lowered consumer trust in the company. The allegations have caused further issues that could lead to loss of sales later down the line.
Dealt a Bad Deal
Reckitt might not have been aware of what the company was getting itself into when acquiring the Mead Johnson brand for over $16 billion.
Not Supporting the Verdict
Reckitt said they would appeal the court’s decision based on their stringent safety protocols. The company said it would “pursue all options to get it [the ruling] overturned.”
Losses on the Rise
The Reckitt brand’s stocks fell throughout the duration of the court case and the given court ruling in the end. The brand has even reportedly lost over 20% within the same year.
Stocks Crashing
The Reckitt brand’s stocks fell throughout the duration of the court case and the given court ruling in the end. The brand has even reportedly lost over 20% within the year of the court case.
Leaders Falling Short
According to Chicargo-based law firm Kavney + Kroll, both Mead Johnson and Abbot are leading baby formula company manufacturers. However, despite leading the pack, the two are linked to some “negative” traits tied to their products.
Dangerous Ingredients
However, the companies have been found to incorporate “cow-based milk” into their baby formulas. Cow’s milk can be dangerous and sometimes fatal to infants.
Risks of NEC Are Higher
According to The Birth Injury Help Center, a study confirmed that cow-based baby formula risks the development of Necrotising Enterocolitis (NEC). Necrotising Enterocolitis is a condition that causes the intestinal tissue to necros or “die” after blood circulation is cut off.
Parting Ways
The company had announced that it was going to focus on the products that are selling well and more high-end, Morningstar reported. The decision to part ways with the troubled baby formula had come to fruition after the company was sued and the stocks plummeted.
Reinforcing a Stellar Reputation
Morning Star reported the Reckitt group wanted to exit from its Mead Johnson ownership and instead restructure the company’s priorities.
Positive Outlook on the Future
The news of the company “parting ways” with the baby formula brand has seen stocks increase slightly since the announcement. The company is looking to improve its faith among consumers.
Restructuring the Company
Reckitt said that they want to focus on the company’s big sellers like Gaviscon, Dettol, Vanish, and Lysol, to name a few.
Moving to “Greener Pastures”
A spokesperson for Reckitt said that the negative press and allegations would badly influence the product and the company’s reputation. “…there are better investment opportunities elsewhere.”
Completion Goal for 2025
The company is said to complete leaving some of its homecare products and restructuring by the end of 2025
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The content of this article is for informational purposes only and does not constitute or replace professional financial advice.
