CHAINS HAVE 'FORMULA' TO AID KIDS' HOSPITALS

MARYELLEN LO BOSCO

SALT LAKE CITY -- Albertson's, Fred Meyer Inc. and other retailers are helping the Children's Miracle Network here in a unique private-label infant-formula program.

The CMN has partnered with PBM Nutritionals to bring store-brand infant formula to major retail chains while raising funds for CMN-affiliated hospitals.

PBM Nutritionals, Lakehurst, N.J., a marketing company, is contributing 0.5% of gross sales from all its retail accounts for a one-year period to the CMN's affiliated hospitals. The exact amount is expected to be released this month.

The formula, made by Wyeth Nutritionals, St. David, Pa., is also being stocked at Meijer, H.E. Butt Grocery Co., Food Lion, Smith's Food & Drug Centers, Target Stores and Wal-Mart Stores.

The funds will be distributed Aug. 31 to CMN-affiliated children's hospitals in the retailers' local areas.

In addition, Kroger, Meijer and Smith's have agreed to match PBM's donation and will carry the CMN logo on packages of the private-label infant formula, said Susan Roady, vice president of marketing and promotion at the CMN.

"PBM gave retailers an opportunity to match the donation, and three have taken them up on it," said Roady.

"We are proud to be associated with PBM and are grateful for their corporate good citizenship and that they are letting consumers know they can help by purchasing these products and supporting CMN," Roady told SN.

The endeavor is significant in two ways. Along with benefiting CMN hospitals, it marks the first entry of a store-brand infant formula into the market, according to Terry O'Brien, executive vice president of sales and marketing at PBM. "It's a large category, and powder is the fastest-growing segment, approaching 50% of sales in the category. Powder is more economical, it's convenient, and it has a long shelf life, even after it's been opened," he said.

Since parents usually purchase about two cans per week, "the cost savings are obvious," O'Brien said.

O'Brien noted that powdered formula has been growing by a couple of percentage points each year since about 1993.

The formula combines quality with value, at a substantial savings to customers, said Scott Jamison, executive vice president of operations.

The difference in price is more than 20%, on average, when compared with national brands, he said.

Since formula is often a loss leader and margins are very tight, he said, another benefit of the private-label brand is that retailers are realizing "better than average profit margins."

Wyeth Nutritionals is a leading pharmaceutical company that has been manufacturing baby formula for a number of years, under the SMA brand, according to Roady.

The company stopped distributing formula in the United States about two years ago, but continues to sell its product internationally.

Like all infant formula, the new private-label brand meets all the requirements and recommendations of the Food and Drug Administration and the American Academy of Pediatrics Committee on Nutrition.

The private-label formula is a substantial presence in every retail account, noted O'Brien, with about 10% of shelf space. PBM also markets store-branded adult nutritional products to retailers.

The baby-formula line, now a year old, has two stockkeeping units: 1-pound milk and soy formula for the first year. O'Brien said the company intends to add items for the development stage.

PBM helps the retailer develop the packaging for the formula.

Retailers develop the look for their label, which sometimes complements their other private-label products, such as diapers, wipes and lotion, Jamison explained.

"We work with the retailer to design the label," Jamison said. "We will do as much as they will allow us to do, but we have to make sure everything is in accordance with FDA requirements."

Albertson's, Target, H-E-B and Kroger, to some degree, have designed packaging that integrates formula into the baby line, Jamison explained.

Store-brand formula is being advertised on a regular basis, said Jamison, through circular ads and in-store merchandising, including brochures explaining the product and its quality and comparing it with leading brands.

To assist PBM in raising awareness, the CMN and its affiliated hospitals have implemented a national and grass-roots public-relations campaign, along with local retailer promotion events featuring product sampling and retail-specific coupons for hospital outpatient clinics.

The CMN is an international nonprofit organization dedicated to raising funds and increasing awareness for children's hospitals. Since it was established in 1983, CMN has helped raise more than $1 billion for 170 children's hospitals.