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Amazon sees opportunity to move into the baby formula market

By Nagasunder in US business news, posted August 8, 2022

Amazon is using its business power to address the infant formula milk shortage in America.

Bosses have identified a chance to expand into the $2 billion industry.

Executives and internal lobbyists met with politicians on Capitol Hill and federal authorities to discuss baby formula between April and June; this is the first time it has been documented doing so.

They met with representatives from the White House, FDA, and other departments of the federal government.

Amazon lobbyists also discussed online purchasing restrictions for federal nutrition benefits, which are used to purchase billions of dollars worth of other groceries in addition to at least half of the nation's infant formula.

Staff claim Monument Advocacy, a third-party company that works with Amazon, claimed to have also lobbied lawmakers in the House, Senate, and USDA on federal nutrition programs.

The e-commerce giant stands to gain from the industry upheaval that the ongoing formula shortages have sparked.

The move has the potential to draw a larger share of the billions in federal funds that go to programs designed to aid close to 50 million lower-income Americans.

It could mean Amazon can engage in more direct competition with its main online rival, Walmart.com.

The two businesses have been vying for more access to federal nutrition programs for years, particularly after Amazon bought Whole Foods in 2017.

Austin Frerick, deputy director of the Thurmond Arnold Project at Yale University, an antitrust law program said: “Formula is the perfect product for Amazon,”.

He mentioned that it's non-perishable and useful for drawing back clients, both of which the business, which presently has little over two percent of the US grocery industry, could need.

“I think they want a bigger food play and more of your food dollar,”

“Because that’s what Walmart has. You can buy your DVDs, books and TVs on Amazon but on your deodorant, you’ll go to Walmart.”

However, Amazon must deal with growing scepticism in Washington, where there is widespread worry about its alleged anti-competitive actions, as well as among experts in food safety, who point to the difficulties of supervising third-party merchants on its platform.

An Amazon spokesperson said in a statement. “We have developed industry-leading tools to prevent unsafe or non-compliant products from being listed in our stores, and remove products that do not meet our standards,”

“We have clear policies on infant formula, and require sellers of infant formula to submit documentation that reflects compliance with applicable regulations and requirements. When we learn of a product recall, we immediately remove all impacted products from our store and notify customers directly via email.”

The baby formula shortfall that surfaced this spring brought to light the few companies that make up more than 90 percent of the US formula industry, as well as how stringent government rules have enabled them to preserve their dominance.

It has spurred the federal government to re-evaluate several of those limitations, such as limits on the use of federal nutrition benefits to buying infant formula online and food safety laws.

It is thought these laws have prohibited the majority of foreign infant formula from entering the U.S. market.

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Other Amazon officials and in-house lobbyists also met with FDA and White House officials during the formula crisis this spring.

The company’s representatives encouraged the federal government to tap Amazon’s massive distribution networks to speed the delivery of formula to desperate consumers.

Amazon officials claim their expansion into food markets and federal nutrition programs have offered US consumers more access to products.

However, several politicians, nutritionists, and experts on food safety warning that the growth of this policy has drawbacks, including issues with internet connectivity and other forms of access in both rural and urban regions.

During the formula issue, lawmakers have voiced worries about price gouging by third-party sellers on Amazon and other online marketplaces, including House Education and Labor Chair Bobby Scott (D-Va.), calling for the FTC to take action.

Source: Politico

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