Gerber Products Co. won high marks on Wall Street yesterday for filing a $150 million suit against Maryland state officials who ordered the removal of the company's strained peaches from retailers' shelves after finding glass fragments in four jars.
The company's stock price rose yesterday by 7/8 to close at $40, and financial analysts surveyed unanimously praised the move as an aggressive sign of the company's confidence in its baby-food products.
"Gerber is fighting back," said William Maguire, an analyst with Merrill Lynch Capital Markets Inc. "They are saying to the public and the investment community, 'We're not guilty of anything -- there are no glass shards in our baby food.' "
"Gerber's attitude is a reasonable one," said George V. Novello, an analyst with E. F. Hutton Group Inc. By comparison, he said, Johnson & Johnson "went overboard" last week in its reaction to the death of a woman who consumed Tylenol capsules spiked with potassium cyanide. Johnson & Johnson discontinued production of the popular capsule form of its best-selling product, took the capsules off store shelves nationwide and offered refunds for opened and unopened bottles.
Gerber, by contrast, is not recalling any products or offering any unusual refund opportunities because it contends its products are safe and challenges Maryland state officials who claim otherwise.
The company also attributes part of the sudden rash of complaints to consumer fears heightened by the most recent Tylenol scare, said Grace Durr, a Gerber spokeswoman.
"Johnson & Johnson overreacted," Novello said. "Gerber's reaction is more the way it should be."
Consumers in at least 11 states have reported finding glass fragments in jars of Gerber baby food in the last week, United Press International reported. Maryland officials said yesterday they had received 16 such complaints and had found glass in four jars and in the stool of one infant.
The Food and Drug Administration said Friday it recently investigated more than two dozen such complaints and found glass in some jars that previously had been opened by customers. But the FDA found no glass in more than 6,000 jars that previously had not been opened. The FDA said it received about 61 similar confirmed and unconfirmed complaints about Gerber's products in the past year.
Food industry analysts said that all food products packaged in glass containers suffer some breakage during shipping, shelving and selling. "The same thing happens with pickles," said Eric J. Larson, an analyst with Paine Webber Inc.
"It's out of our hands" once the baby food jars have left the factory, said Gerber's Durr.
Gerber, the nation's dominant producer of baby food, said in a statement yesterday that it "believes its products are safe and do not create a health risk." It accused Maryland's governor, attorney general and secretary of health of "unwarranted and irresponsible conduct" in ordering Gerber products to be pulled off the shelves, and said "the state's investigation was woefully incomplete . . . "
Gerber would not say yesterday how many reports of glass fragments in its products had been received and verified. The company, based in Fremont, Mich., said it was investigating each report of glass fragments, but would not say how.