One afternoon in June 2019, two Food and Drug Administration inspectors visited a warehouse in San Francisco.
The women in uniform took out of a briefcase an impression of a Fortune story headline: “Startups have disrupted breast pumps. Is infant formula next? On this piece of paper, they had highlighted every place where the words “infant formula” appeared.
FDA officials were there to talk to the people behind Bobbie, a brand new company selling formulas. In the 10 days since launching the startup’s pilot subscription program serving around 100 Bay Area customers, the founders of the company had been careful to reference their product on their website. and their packaging only as “toddler formula” or “companion formula”. however, FortuneThe story of – and a few others – has discussed starting up as part of the “infant formula” industry.
It was enough to get the attention of the FDA. The government agency keeps a close watch on infant formula, watching the product with a keener eye than most foods, or even other types of formula intended for children old enough to consume other foods as well. All products sold as infant formula in the United States must meet the requirements of the Infant Formula Act, which includes a growth monitoring study for babies who consume formula, nutritional tests and tests. food safety rules. Products manufactured outside of the United States often do not meet these exact regulations. Bobbie’s offer was made in Germany with European ingredients and was intended to approximate the type of formula sold in European Union countries. The company was marketing to ingredient-conscious American parents who sometimes bought formulas made in Europe on what Bobbie co-founder Laura Modi calls a “black market” of American distributors.
After FDA inspectors spoke to Bobbie’s team at the warehouse, the startup became, its founders suspect, one of the smallest U.S. companies to ever cross. an FDA warning and recall. The then 18-month-old company with fewer than 15 employees called its 100 subscribers, alerting them to the FDA warning and halted production. Bobbie’s founders and employees, who had new babies, even stopped using the powder formula on their own. “I have never felt more vulnerable,” says Modi, CEO of the company. “I had a feeling for a moment that it wasn’t fair… We had a pilot in a city, but we had a national encore.”
Modi says she was taken aback by the FDA’s action because several toddler formulas, companion formulas, and even “nighttime” formulas on the market had not received similar scrutiny from the FDA. The company’s biggest mistake, she says, was focusing on its online messaging and not specifying on the product packaging that it was intended for children “12 months and older” rather than ‘to infants. “It’s hard not to look back now and say, we should have seen it,” Modi says. “It was just a failure.”
It’s no surprise that the FDA reacted cautiously to a Silicon Valley startup trying to disrupt the formula space. The government agency takes seriously its responsibility to ensure that children who rely on infant formula as their sole source of nutrition receive a healthy and safe product. “When it comes to infant formula, there is no room for misinterpretation,” Modi says. Additionally, the infant formula space in the United States has been dominated for years by only a few big players – Mead Johnson’s Enfamil and Abbott Nutrition’s Similac – with no new infant formula on the market in the last five years. last years.
In large companies that produce the type of infant formula that dominate drugstore shelves, lawyers and regulatory professionals are responsible for updating the agency on any labeling or ingredient changes – a “Pre-market notification” not required for most other food products or supplements. Bobbie, with his backbone team and a few days of experience serving customers within a 15-mile radius, had no long-standing relationship by the time the FDA learned of his new entry into space.
For Modi, the startup’s mission has always been to provide a safe and healthy alternative to mothers who can’t breastfeed or express breast milk and don’t want to feed their children the formulas on American shelves; parents who buy in Europe prefer lactose, coconut oil, and regional dairy products over palm oil, corn syrup, and conventional dairy products found in many American products .
Modi, a former Airbnb hospitality manager, came up with the idea when she couldn’t breastfeed her own child. Much as startups like Elvie and Willow broke into the breast pump business, Modi wanted to disrupt the formula – a product that was both pushed on mothers who don’t need it and brought shame for many. of those who need it. “We don’t accept the realities of feeding your child in today’s world,” Modi said Fortune in 2019. “Fifteen to 20% of women cannot physically produce enough breast milk to exclusively breastfeed.”
Within a year of his FDA wake-up call, Bobbie regrouped. In its messages to its customers, the company has been careful not to criticize the FDA’s decision. “We accept that our labeling and marketing could have been misleading, and for this we sincerely apologize to all of our customers. We expected it to be difficult, and it should be, ”the company wrote in a letter to its subscribers. “When it comes to our children, safety comes first and every parent deserves peace of mind.”
This post caught the attention of a few players who proved pivotal in Bobbie’s second act. The company’s goal had always been to manufacture in the United States, but facilities capable of producing infant formula had higher minimum orders than what the startup company felt it could commit to. Manufacturer Perrigo, which makes store-brand formulas and pediatric nutritional drinks, had turned down a cold email request to make Bobbie’s formula months earlier despite being interested in producing a product. for millennial parents. “We noticed that there was a need for an FDA regulated product that met consumer preferences. [for an EU-style formula]Says Adriane Sherogan, executive at Perrigo, which now produces Bobbie’s formula in Vermont. “What prompted me to contact Laura again was the way they handled the FDA advice; they were very transparent and clear in their communications with consumers. ”
The recall also caught the attention of a new investor, Sara Adler at Wave Capital. Adler knew Modi from Airbnb, but decided not to invest in his company’s initial $ 2.4 million funding round, questioning the feasibility of bringing a new formula to market and the demand for a such product. But the company’s handling of the recall convinced her. “The level of maturity that they brought to their approach to the FDA made this evident,” Adler says of his eventual decision to invest.
With the confidence of a new manufacturer and a new investor, Bobbie invested his resources in creating a product that would not anger the FDA or create goodwill with the agency. Led by new regulator Christina Berberich – who previously managed infant formula regulatory findings at Abbott – the company visited the FDA offices in Silver Spring, Md., In. November 2019 and spoke to officials about the company’s revamped U.S. supply chain. .
Now Bobbie is ready to ship his $ 24 “European Style Recipe” infant formula nationwide starting Jan. 5. this formula “has not returned to the market,” confirms a spokesperson for the FDA.
Regulatory issues are unusual for a young consumer goods startup. Bobbie’s new investor Adler compares the company’s approach to regulators to the model Modi saw at Airbnb, which, while sometimes bypassing government restrictions, was more likely in its growth phase to cooperate with regulators as its frequent point of comparison, Uber. . “They could have tried to fight it and continue to sell the product they had been working to bring to market,” Adler says. “Instead, they said, from a business perspective, what’s our long-term goal?”
Bobbie’s 12 employees, who have a total of 19 children, including six babies, are delighted to be able to use their own product again. Modi and his team believe they are now in a more solid position than they would have been if they had advanced with their ‘companion formula’. “If the FDA hadn’t contacted them because of the press,” Adler says, “they wouldn’t be where they are now.”
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