Gerber Products Co. has suffered an estimated 15 percent drop in sales of its baby food since complaints of glass in its products began surfacing in mid-February, Chairman William L. McKinley said today.
"There's no question we have lost some sales and have spent a lot of money to reassure parents," McKinley told a meeting of investment analysts.
Gerber, the nation's largest producer of baby food, will not know for several weeks exactly how the glass scare has affected sales in its fourth quarter, which ends March 31. McKinley said his "guess" was a drop of about 15 percent. "We have been hurt, but we don't know by how much," he said.
The company suffered a 4 percent drop in baby food sales in the fall of 1984, when reports of glass in its products prompted Gerber to recall more than 700,000 jars.
Baby food sales, which account for 54 percent of Gerber's total revenue, dropped 1.2 percent in the fiscal year that ended March 31, 1985, primarily because of that recall.
McKinley said after the meeting yesterday that the 1984 recall was a mistake, and that the company's decision not to recall any baby food this year has proven to be a successful strategy. In 1984, as in this year, the company believed that the reports of glass bits did not indicate any problem with Gerber's manufacturing processes, he said.
The 1984 recall was ordered "for public relations" and "backfired," he said. "The more we followed up on alleged glass contamination, the more it appeared that there was no real problem -- at least not in the conventional sense of a failure or flaw in our manufacturing, distribution or packaging," McKinley said of the recent reports.
The Food and Drug Administration recently inspected Gerber's three manufacturing plants and said they represent "state-of-the-art" technology. Last year, the company installed high-speed glass-handling equipment in its facility at Freemont, Mich., where the company is based.
Gerber, with the backing of FDA, believed no recall was warranted this time around and has waited for the complaints to subside.
McKinley said this strategy has worked -- that complaints are "tapering off." But he also said the problem is "ongoing," and the company's recently launched television and direct-mail campaign are designed to combat continuing consumer nervousness.
Financial analysts have praised Gerber's strategy as a strong gesture of confidence in its products. The company's stock closed yesterday at $40.25, down 75 cents, higher than its $38.62 close on Jan. 30, before the glass incidents began.