Amazon opens up in baby formula industry shake-up

“Formula is the perfect product for Amazon,” said Austin Freerick, deputy director of the Thurmond Arnold Project at Yale University, an antitrust law program. Among other things, he noted that it is non-perishable and is valuable for attracting return customers — something the company currently controls. just over 2 percent Americans can use the grocery market. “I think they want to play a bigger meal and want more of your food dollars,” Freerick said. “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 will face deep mistrust in Washington, where there is widespread concern about its alleged anti-competitive behavior, and among food safety experts, who cite challenges to police third-party sellers on its platform. .

“Historically, Amazon has been slow to remove recalled food products from its platform, which pose a significant risk to consumers,” said Brian Roneholm, a former deputy deputy secretary of food safety at the USDA during the Obama administration. .

“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,” an Amazon spokesperson said in a statement. “We have clear policies on infant formula, and require sellers of infant formula to submit documentation that demonstrates compliance with applicable regulations and requirements. When we become aware of a product recall, we may contact our stores We immediately remove all affected products from the U.S. and notify customers directly via email.”

The lack of infant formula that emerged in the public consciousness this spring highlights the small handful of manufacturers who control more than 90 percent of the US formula market — and the way in which strict government regulations allow them to maintain that dominance. has helped. And it has prompted the federal government to re-examine many of those restrictions, including limits on using federal nutritional benefits to buy formula online, as well as the food safety regulations that for decades have restricted most foreign formulas. prevent them from entering the US market.

This could give online platforms like Amazon, already a major infant formula retailer, the opportunity to sell a wider range of formula products to a larger segment of American consumers. Instacart, which offers baby formula among other grocery products, also revealed lobbying on baby formula issues Its Most Recent Federal Disclosure, reporting that she met with officials from the USDA, the White House and the Centers for Medicare and Medicaid Services. The company also lists federal nutrition programs as lobbying subjects.

Amazon, which is among them Top lobbying spenders in WashingtonDefinitely weighing in on your perspective.

As a lack of thread in a political crisis for President Joe Biden in May, Food and Drug Administration Commissioner Robert Califf met Douglas Harrington, a senior Amazon executive who has since served as CEO of Worldwide Amazon Stores, Calif. took over. shows public events,

FDA spokeswoman Janelle Goodwin said the meeting was one of several California and food policy and response deputy commissioner Frank Yiannas has held with retailers, manufacturers and stakeholders “as part of the FDA’s all-hands-on-deck approach to infants.” For infant formula supply chain disturbances for responding to discussions on formula supply.”

Other Amazon executives and in-house lobbyists also met with FDA and White House officials during the formula crisis this spring. According to two people familiar with the conversation, company representatives encouraged the federal government to tap Amazon’s vast distribution network to speed up delivery of the formula to dismayed consumers. The White House and FDA eventually prioritized brick-and-mortar stores over Amazon.com for distribution.

According to a person familiar with the conversation, Amazon executives were left with the impression that the White House didn’t want to appear as if it was prioritizing the online retail giant. The company has had controversial at times with the Biden administration and progressive Democrats in Congress. A White House official, who was not authorized to speak publicly, said the reason was more simple. “They can’t take WIC,” the official said, referring to the federal Nutrition Program for Low-Income Mothers and Infants, which is used to buy nearly half of all infant formula consumed in the country.

That’s because as of now, WIC benefits can’t be used to buy food online – restrictions that have proved to be a major headache for the administration as the formula tries to address the crisis. The federal government has been working to change this in recent years, including efforts to modernize the 1980s-era payment system for WICs, as well as the Supplemental Nutrition Assistance Program, known as SNAP, which provides 40 million dollars. Provides federal food aid to more than one million Americans.

In 2019, the Biden administration launched a pilot program allowing SNAP recipients to access their benefits on Amazon.com as well as Walmart.com. Now they are in the early stages of weighing changes similar to WIC, potentially opening another pot of billions of dollars. Overall, the USDA budget for nutrition, which includes WIC and SNAP, amounts to more than $130 billion per year. Federal officials and allies in Congress say the online modernization of federal nutrition programs is the next major regulatory and legislative battle facing the food sector.

Two people familiar with talks between Amazon and White House officials confirmed that they discussed expanding Snap’s online reach.

Abdullah Hassan, Assistant Press Secretary for the White House, said, “We are engaged in regular discussions with a range of stakeholders, including industry, as part of our commitment to listen to all views and explore all options to better meet the needs of the American people.” See you kindly.”

Amazon executives argue that their expansion into food markets and federal nutrition programs have given American consumers greater access to products. But some lawmakers, nutrition advocates and food safety experts have warned that its expansion comes with drawbacks – including concerns about the Internet and other access challenges in disadvantaged rural and urban areas.

A consultant who works on nutrition and agriculture issues in D.C. said, “Amazon describes itself as a response to disadvantaged rural communities, but it’s sometimes fiction because there are so many rural communities that they’re distributed. don’t.” And if one thing goes wrong in their supply chain, suddenly you have millions of people who are not getting the basic things they need.”

Lawmakers including House Education and Labor Chair Bobby Scott (D-Va.), meanwhile, has expressed concerns about pricing by third-party sellers on Amazon and other online platforms during the formula crisis, pressing the FTC to crack down.

“We continually compare prices offered by our sales partners with current and historical prices inside and outside our stores to determine whether prices are reasonable,” an Amazon spokesperson said in a statement. “If we identify a price that violates our policy, we remove the offer and take appropriate action with the seller.”

Amazon has also become a more common target for those concerned about industry consolidation and the dominance of a handful of tech companies — a group that includes several senior Biden administration officials. President, Mr. Twitter feud with Amazon founder Jeff Bezos This spring on tax policy and inflation. Despite the sometimes strained relationship, some Biden administration officials have suggested that Amazon will remain a major player as the federal government tries to bring more federal nutrition programs online.

“I’m sure they stand to profit,” a second White House official, who was not authorized to speak publicly about the matter, said of Amazon. “But really what’s the tradeoff here, if it means a low-income mom might have better or easier options?”

Danielle Lippman contributed to this report.

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