NO BROOD OF NEW ADS FOR BABY FORMULA

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It's business as usual for infant formula marketers.

Despite the Federal Trade Commission's intervention into the industry's ad practices, marketers are sticking to their non-traditional ways compared with most other food categories. For most formula companies, that means no consumer media advertising.

Most players in the $2.6 billion industry are content to market their products through healthcare professionals and hospitals.

In June 1992, the FTC alleged collusion involving pricing and agreements not to advertise to consumers. Bristol-Myers Squibb Co.'s Mead Johnson Nutritional Group and American Home Products Corp. agreed at that time to settle the case without admitting guilt.

But the market leader, Abbott Laboratories' Ross Products division, contested the action and didn't settle with the FTC until February. Abbott also didn't admit guilt.

The settlements bar the businesses from exchanging media ad information with other manufacturers and from asking competitors to refrain from advertising.

But while the rulings prohibit the companies from collusion, the FTC didn't specifically require advertising. And the infant formula marketers aren't pitching their products to consumers any more now than they did before. .

Only two currently advertise infant formula-Mead Johnson and Nestle Foods Co.

Mead Johnson spends about $6 million a year plugging Gerber formula though TV and print ads from J. Walter Thompson USA, Chicago. Other brands, like Enfamil and Prosobee, are still marketed through healthcare professionals, hospitals and new-mother clubs.

"We don't think we need to advertise the Mead Johnson brands because we have an asset in place that gives us broad awareness," said Rex Mason, VP-marketing for Mead Johnson Nutritional Group.

He was referring to the sales force that markets the company's formulas to health professionals, counting on them to recommend the products. Also, Mead Johnson and the other major marketers make and distribute hospital "discharge packs" that include samples given to mothers.

But in terms of Gerber products, "We don't have that sales force in place so we must use more traditional media," Mr. Mason said.

Mr. Mason doubted that advertising the Mead Johnson formulas would increase market share. The No. 2 infant formula maker now holds 25% of the market. No. 1 Abbott has 53%, according to Information Resources Inc.

"We would not conclude that consumer advertising itself is the answer to driving market share growth," Mr. Mason said. "Meeting consumer needs and creating innovative products are part of the answer for gaining market share."

Abbott doesn't advertise infant formula to consumers. Like Mead Johnson, Abbott promotes the Similac and Isomil brands through the healthcare circuit.

"What to feed a child is a decision made between the mother and her physician, not by the marketer," a spokeswoman said.

The American Academy of Pediatrics, a group partially funded by the leading formula companies, has taken a stand against advertising infant formula.

"We believe that advertising of infant formula has an adverse effect on breast feeding," said Keith Kampert, chief financial officer. The academy, however, has no research to back up that statement, he admitted.

Package-food giant Nestle, which entered the U.S. baby food market in 1989, has been struggling to get a foothold. Carnation Follow-Up formula and Good Start combine for 5% of the market, according to IRI.

Nestle spends about $13 million a year advertising formula through TV and print, via McCann-Erickson Worldwide, Los Angeles. Good Start, for newborns up to 6 months old, uses the ad theme "Made to be gentle." Follow-Up, for older children, carries the theme "The right formula at the right time."

"The lack of vigorous competition fostered lockstep price increases and physician control over consumer products with little product innovation and virtually no consumer choice," said a Nestle spokeswoman. "That's what led Carnation to seek the opportunity for entering the market with competitively priced quality products."

Nestle is still battling Abbott, Mead Johnson and the pediatrics academy in a lawsuit filed last May in U.S. District Court in Los Angeles. Nestle alleges competitors conspired to prevent it from entering the market through "premeditated and illegal methods" that included fixing prices and locking up exclusive sampling and couponing agreements with pediatricians and hospitals.

Nestle is seeking compensatory and punitive damages sustained in the launch of both its products.

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