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The a2 Milk Company has been granted temporary access to sell its a2 Platinum infant formula in the United States as the country continues to face a significant shortage of baby formula after a contamination scare.

The US government has been dealing with a major crisis since February after Abbott Nutrition’s plant was closed following a contamination scare.

While multiple companies including smaller rival Bubs Australia was given special market access to help with the shortage, a2 Milk had missed out. In August, it received a letter from the US Food and Drug Administration (FDA) saying the regulator was deferring further review of its request to ship tins.

A2 Milk said on Thursday it now expects gross margins to be lower than average, and distribution costs to be higher due to potential air freight and rework costs in the near term, and incremental marketing and trade investment to enter the category.

Overnight, the FDA said a2 Milk will be able to import its a2 Platinum 0-6 months and 6 to 12-months ranges. Danone (Ireland) will also be able to import ​its Aptamil Stages 1 and 2 formulas.

“Both products will be sold at major US retail outlets,” the FDA said on its website.

The FDA added that the grant of special access follows a review of information provided “pertaining to the nutritional adequacy and safety, including microbial testing, labelling and additional information about facility production and inspection.”

The positive news sent the Kiwi company’s share price soaring on Thursday, gaining 29¢, or 5.5 per cent, to $5.56 each in afternoon trade on the ASX. It has been clawing back some ground since dipping just below $4 each in May.

The crisis continues in the US – while shipments of formula have landed, US media reports stores remain unevenly stocked, and officials in charge of the response blame hoarding, supply chain bottlenecks and manufacturers making fewer varieties.

A2 Milk chief executive David Bortolussi said on Thursday that the company has approval through to January 6, 2023 to import tins to the US.

The company can also supply Stage 3 toddler product in addition to Stages 1 and 2, which does not require enforcement discretion.

Mr Bortolussi added that the product to be supplied to the US has the same formulation as a2 Platinum but has different scoops, mixing instructions and labelling requirements to meet the FDA requirements.

This product is not currently available and will need to be manufactured as soon as possible, he said.

While the US represents a significant opportunity to develop the a2 Milk brand in the formula category over the long term, Mr Bortolussi said it is early days.

“In the near-term, and prior to confirming distribution plans, sales during FY23 are expected to be up to 1 million cans all within 2H23, assuming enforcement discretion remains in place throughout the period,” he said.

“Actual sales will ultimately depend on customer demand, consumer offtake, supply shortages and market conditions at the time.”

A2 Milk will provide an update on US distribution gains and sales outlook when it presents its first half results early next year.

Woolworths boss Brad Banducci says shoppers have returned to doing their weekly grocery shop on weekends, but must now face up to paying more as inflation makes itself felt in every aisle.

The supermarket giant revealed on Thursday that food prices across its Australian supermarkets rose 7.3 per cent in the September quarter, with fresh produce spiking even more as inclement weather and supply chain pressures hit fruit and vegetable producers.

“In the last month or so we’ve started to see Sundays become our major shopping day - which means customers have got far more routine and habit [than during COVID],” Banducci said.

But some of these shoppers have started to make tough choices about what goes in their trolleys, with signs people are trading fresh produce for frozen food, or moving to canned goods and cheaper home brand items.

The days of the $6 iceberg lettuce might be over, but the supermarket chain is still seeing price rises from producers and supply challenges across its fresh food range, Banducci added.

Challenges with corn and potato crops were also leading to issues with the supply of frozen products, and there have been delays to in-season fruits coming into stores at good prices, meaning consumers have to wait longer than usual for mangoes and cherries.

Banducci made his comments after Woolworths reported a 1.8 per cent rise in group sales to $16.3 billion for the 14 weeks to October 2 - the first quarter of its financial year. But Australian food sales weakened by 0.5 per cent compared with this period last year, when more shoppers were stuck at home due to the pandemic lockdowns.

Inflation continued to accelerate across the quarter, with the average price of food up 7.3 per cent in Australia, and 5.3 per cent higher in New Zealand.

The company did not specify the exact jump in fruit and vegetable prices during the quarter, but said there had been “double-digit” increases in this category.

Last week, Woolworths’s rival Coles confirmed it had seen inflation of 7.1 per cent across its supermarkets, with prices for fresh food up 8.8 per cent.

Woolworths’-owned discount department store Big W continued to benefit from the end of retail lockdowns, with total sales hitting $1.2 billion for the quarter, up 30.1 per cent on the same period last year. Online sales at Big W more than halved though in a sign that people have gone back to the shops rather than shopping on the internet.

UBS analysts said Woolworths’ numbers had come in below estimates, noting that Australian food sales had dropped 0.5 per cent despite inflation jumping during the quarter.

Despite the inflationary challenges, Banducci said that with 51 days to Christmas the company was focused on delivering customers an affordable festive offer.

“We are seeing strong early sell-through of seasonal lines, and we remain cautiously optimistic for the period ahead,” he said.

Woolworths shares opened lower amid a broader sell-off on the Australian sharemarket, and closed 3.5 per cent weaker at $32.05.

Dairy giant A2 Milk chief executive David Bortolussi expects to send a plane full of its custom-made infant formula to the US by late December or early January, having finally found a way into the lucrative market.

However, he is sober about how much market share and earning gains the win will deliver in the short term, given the freight and reworking costs involved.

Dual-listed A2 is preparing to manufacture infant formula made specifically to US requirements after receiving the green light on Thursday morning from the US Food and Drug Administration (FDA) to export its product.

Bortolussi said he was delighted to be able to supply its product to the US as the country continues to grapple with a national infant formula shortage sparked in February after a major infant formula plant in Michigan was forced to shut down following the discovery of a fatal bacterial infection.

“It’s an important longer-term opportunity, but the near-term impact may not be as material,” Bortolussi said. “The longer-term success of our business will depend on how well we market our product and how well that is received by consumers in the marketplace.”

Investors cheered the update, with A2’s shares rising 4.2 per cent to $5.49.

While getting its product into the US is a win for the company, it will have to make a product almost entirely from scratch. The formula inside the tins will be the same as a2 Platinum formula sold elsewhere, it must have different scoops, mixing instructions and labelling requirements to meet US rules.

“We don’t have that product in inventory at the moment. We’ll need to commence manufacturing that product as quickly as possible with [supply partner] Synlait Milk ... within the next couple of weeks,” Bortolussi said.

After the product is prepared, it will be subject to a 25-day quality assurance process before being ready to export to the US, in late December or January 2023.

US FDA’s approval comes more than five months after A2 Milk’s smaller rival Bubs Australia received the green light. On May 16, the US Food and Drug Administration (FDA) released a temporary measure that provided a fast-tracked regulatory process for global companies to help patch the shortage.

ASX-listed Bubs Australia was the first manufacturer in the world to submit its application, and secured approval from the FDA shortly after in late May. Australian brand Bellamy’s Organic secured approval on July 5.

A2 Milk submitted its application on May 26, but had to wait for months before being told by the FDA on August 10 that it had its submission delayed, along with a number of other applicants.

The company expects to sell up to 1 million tins of formula in the second half of the 2023 financial year. Despite gaining a foothold in the massive $6.1 billion baby formula market, A2 Milk expects earnings to be “incremental” as it will be offset by air freight costs, the cost of reworking the formula into new tins, and marketing and trade costs.

“We don’t underestimate the challenge in carving out a significant market share for our brand in the US market over time, but we’re up for that challenge, and we’re going to invest in that and execute the best that we can to achieve that,” Bortolussi said.

A2 Milk is awaiting to hear from the US FDA on whether it will send government-issued planes to collect product under ‘Operation Fly Formula’, through which Bubs was able to send millions of tins.

“We just haven’t received clarification from FDA,” said Bortolussi. “We would obviously like to be able to utilise that; it would be a big advantage and help expedite the process.”

Though global manufacturers have been able to enter the tightly held US baby formula market through the temporary FA measure, 95 per cent of the market is still held by the three dominant domestic players: Abbott’s, Reckitt and Nestlé.

A2 Milk is increasing production amid FDA’s approval and has assured that it would continue to meet regular supply to other markets, such as China. It will provide a market update about US earnings gains when it presents its half-yearly results or potentially earlier.

The FDA has published transition guidance that allows enforcement discretion-approved companies seeking a permanent pathway to the US to extend the temporary period until October 18, 2025.

Citi analyst Sam Teeger expects A2 Milk’s 1 million tins will add “low single digit upgrades” to the company’s 2023 earnings and said Bubs’ first quarter results demonstrated the US market may be more challenging than expected.

“Other brands that have also received enforcement discretion may have not yet made any sales in the US, suggesting execution is challenging despite product shortages,” Teeger said.

”While A2 may also face these same issues, the company’s existing US operations may be relatively better placed to oversee retail merchandising, and arguably it has a relatively more established brand in the eyes of consumers.”

A2 Milk currently sells liquid milk across major US supermarkets and retailers.

“However, A2 won’t have the same first mover advantage which essentially gave Bubs free marketing,” Teeger said.

It’s also unlikely the US will send government-issued planes to collect A2’s product, he added.

Woolworths Group sales rose 1.8 per cent in the first quarter to $16.36 billion, but turnover in its retail food business fell on both sides of the Tasman.

Across its Australian food division, sales during the 14 weeks to October 2 fell 0.5 per cent to $12.2 billion while comparable sales declined 1.1 per cent. In Woolworths Retail (both stores and e-commerce), sales fell 0.6 per cent impacted by a decline in items as well as supply chain challenges.

Australian B2B sales increased by 26 per cent to $1.19 billion driven by a 36.1 per cent increase in B2B Food.

In New Zealand, sales declined by 2.5 per cent to $2 billion while comparable sales declined by 3.3 per cent. The retailer says customers put “fewer items” in their baskets with comparable items per basket declining by 14.3 per cent. E-commerce sales growth and penetration continued to increase by 5.9 per cent in the quarter.

Big W sales increased 30.1 per cent to $1.19 billion driven by customers returning in-store. All categories performed strongly with a shift back towards everyday and home and apparel products. Online sales dipped 51.8 per cent to $112 million.

Due to inflation, average prices across its Australian Food business increased by 7.3 per cent and 5.3 per cent in New Zealand.

Brad Banducci, CEO of Woolworths Group, said customer shopping behaviour and the trading environment continued to normalise during the quarter.

“We continue to see early signs of customer purchasing habits changing but it remains unclear how much of this relates to cost-of-living pressures compared to Covid normalisation,” he said.

“Ongoing supply chain volatility and the possibility of another wet summer will be key challenges to navigate but we are seeing strong early sell-through of seasonal lines and we remain cautiously optimistic for the period ahead.”

Some of the world’s biggest consumer goods companies, including PepsiCo, Mars and Nestle, are almost certain to miss a target to make plastic packaging more sustainable by 2025, according to a new report published on Wednesday.

The study by the Ellen MacArthur Foundation and the United Nations Environment Programme also revealed that some companies – including Coca-Cola and Pepsi – are using more virgin plastic despite a pledge to reduce its use.

The report comes as U.N. members are due to meet in Uruguay this month to start negotiations on the first ever global plastics treaty, which is aimed at reining in soaring waste pollution choking marine life and contaminating food.

Some U.N. members are pushing for a pact that includes legally binding targets to increase recycled content in packaging and use less petroleum-derived virgin plastic, rules that would have financial implications for the consumer goods and petrochemical industries.

Pepsi, Coca-Cola, Nestle and Mars did not immediately respond to requests for comment.

Dozens of major brands have in recent years set targets to increase plastic recycling and reduce the use of single-use packaging in partnership with the Ellen MacAurthur Foundation, as part of efforts to burnish their green credentials.

The headline pledge was that 100 per cent of plastic packaging would be reusable, recyclable or compostable by 2025, but this goal will “almost certainly be missed by most organisations”, the environmental group’s report said.

Greenpeace said the report is evidence that voluntary corporate targets have failed and called on the U.N. to forge a treaty that forces governments and companies to use less single-use plastic packaging.

“This underlines the need for governments to ensure that the global plastic treaty … delivers major reductions in plastic production and use,” said Graham Forbes, Greenpeace’s USA Global Plastics Project Leader.

“Anything less than this is a disservice to our communities and our climate.”

McDonald’s Australia is to inject more than $130 million into opening 19 new restaurants and renovating existing stores.

The fast food giant has already opened eight new stores in NSW, Queensland, and Tasmania this year and will open 11 additional stores across the country before the end of this year.

Aside from opening new outlets, the company said it would also renovate over 80 of its existing stores, including improvements in the design, efficiency and functionality of the drive-thru, deliveries, and dining rooms to provide a better customer experience.

David Howse, chief support officer of McDonald’s Australia, said that the company is focused on opening new stores in residential growth areas close to transport and infrastructure in both metro and regional locations.

“Most new restaurants will feature a McCafe, digital ordering kiosks, dual lane drive-thrus and McDelivery partner rooms, allowing customers to continue enjoying Macca’s how and when they like,” said Howse. 

He added that the company is also working to reduce its environmental impact on new restaurants by using LED lighting, solar panels, heat recovery water systems, and recycled material for wheel stops and dining room tiles.

“The restaurants we have opened to date have received an extremely positive response from the local community, which makes us excited for our plans to continue to invest across the country,” Howse concluded.

Australians have been warned to brace for another hit to the cost of living as the floods devastating parts of Victoria and NSW drive up food prices, and require billions of dollars to be spent on assistance to those affected, Treasurer Jim Chalmers has warned.

Speaking ahead of his first budget, to be handed down next Tuesday, Dr Chalmers also opened the door to a longer-term root and branch look at the National Disability Insurance Scheme, which is spiralling in cost and is now one of the top five demands on the budget.

The NDIS, which was originally forecast to cost no more than $25 billion a year and grow at 4 per cent, now costs $29 billion a year, is growing at more than 12 per cent, and is forecast to hit $60 billion a year by 2030.

“We believe in the NDIS, and we want to make sure it’s delivering for people with a disability in this country,” Dr Chalmers said.

“Part of that means making sure that the money that’s spent on that, really quite extraordinary sums of money ... is doing the job that it’s supposed to do.

“We don’t have a lot of room in this budget to spray money around unnecessarily. Where we can make programs more efficient, we should.”

However, so-called “tough measures” to tackle the huge structural costs imposed by the NDIS, health, aged care, interest payments on debt and defence will be the focus of subsequent budgets.

Next week’s offering, Dr Chalmers confirmed, will basically be a bread and butter exercise, and will do little more than reconciling Labor’s big election promises on cheaper childcare and prescription drugs, and updating the economic forecasts.

Due to the floods that have hit some of the east coast’s major food production regions, and caused extensive property damage, the forecast deficit for this year is likely to be worse and inflation possibly higher, Dr Chalmers suggested.

“We need to brace ourselves for the impact of these natural disasters on the cost of living,” he said.

“We’re talking here about some of the best growing and producing country in Australia, and it has been seriously impacted – whether it’s the destruction of crops, or the inability to access some of these farmlands, whether it’s livestock and other consequences.

“Australians do need to brace for a cost-of-living impact from these floods. These are likely to push up the cost of living when Australians are already under the pump. It will also have obvious consequences for the budget.”

The treasurer’s office said it was too early to estimate the inflationary and budgetary impact of the floods.

Meanwhile, Prime Minister Anthony Albanese defended the decision to axe billions of dollars in Coalition discretionary grants, saying they lacked probity.

“If you want to know where my government will approach community infrastructure grants, it’ll be by delivering through local government,” he said.

“That is the way that you ensure probity, and the way that you ensure value for money is by asking local communities through their elected local representatives what their priorities are.

“I’m not a big fan of funding one private for-profit corporation, which is in competition with their neighbour next door.

“Whether that be a farm, or whether it be other produce as well, I think that gets you into real difficulty, and probity issues is the polite term to use.”

Vinomofo has admitted to a data breach where the personal information of customers has been stolen.

The online wine retailer sent customers an email about the breach on Monday evening. It revealed that some of the details that may have been stolen include customers’ names, gender, dates of birth, addresses, email addresses and phone numbers.

However, Vinomofo said no financial information was taken in the breach. Vinomofo account passwords are also apparently safe, so in theory no one can look at your order history.

“Vinomofo does not hold identity or financial data such as passports, drivers’ licences or credit cards/bank details,” the company said.

According to the retailer, the customer information was accessed from a testing platform. While it is not connected to the live Vinomofo website, it did contain real information.

“Our investigation established that customers’ and members’ information on our database on this testing platform was unlawfully accessed by a third party,” Vinomofo said in a statement.

“However, our cyber security and forensic specialists have assessed that the risk to our customers and members by this information being accessed is low.”

It’s currently unclear when the incident occurred or how many customers were impacted.  SmartCompany has contacted Vinomofo for comment and clarity.

Vinomofo said it has reported the incident to the Australian Cyber Security Centre (ACSC) and the Office of the Australian Information Commissioner (OAIC). It also said it is now working with cyber security experts, such as IDCARE, to investigate the breach as well as strengthen its security systems.

The customer email goes on to provide customers with information on how to avoid potential scams off the back of the breach, such as fake emails and texts. They also recommend that customers change their Vinomofo account passwords as an extra precaution despite them not being part of the breach.

Major data breaches seem to be on the rise

This is just the latest in a string of data breaches across the country in recent weeks. Optus kicked things off with one of the biggest data breaches in Australian history, which affected customers’ personal and identifying information, including passports and driver’s licences.

This was swiftly followed by breaches across Telstra, Woolworths and Medibank, sparking fresh conversations around how customer data is stored by Australian companies, as well as people’s right over their data. It has also resulted in Attorney-General Mark Dreyfus calling for “urgent reforms” to the Privacy Act.

Under the Notifiable Data Breaches scheme, an Australian company must disclose a data breach if its likely to cause “serious harm”. This can include identity theft, impact to credit reports, fraud, physical and psychological harm or impact to reputation.

Superannuation giant Aware Super and a syndicate of elite Australian athletes have backed Mexican food chain Guzman y Gomez in a share sale which values the company at $1.5 billion.

Guzman y Gomez founder Steven Marks said the investments were a testament of the group’s recent past performance and plans for the future. “We’re well positioned to build and bring even more [Guzman y Gomez eateries] to life here in Australia and globally,” he said.

The investors have not disclosed the value of the secondary share sale, but the investment was led by Aware Super, which has $150 billion worth of Australians’ retirement savings under management.

The deal values the Guzman y Gomez at a fully diluted market capitalisation of $1.5 billion.

Athletic Ventures, the investment syndicate founded by recently retired Greater Western Sydney Giants player Matt de Boer, also made its third consecutive investment in Guzman y Gomez as part of the sale.

The group, which boasts 100 members including Test cricketer Mitchell Starc and Wallabies captain Michael Hooper, has been on the lookout for high-growth start-up businesses.

De Boer said the athlete group’s belief in the Guzman y Gomez business “grows stronger by the day”.

“Most importantly as an athlete community, we understand deeply what high-performance looks like, and continue to be blown away by the quality of the management team and their continued execution,” he said.

The United Nations food agency’s world price index fell for a sixth month in a row in September, receding from all-time highs posted earlier this year after Russia invaded Ukraine.

The Food and Agriculture Organization (FAO) said on Friday that its price index, which tracks the most globally traded food commodities, averaged 136.3 points last month versus a revised 137.9 for August.

The August figure was previously put at 138.0.

The index has fallen from a record of 159.7 in March. The September reading was, however, 5.5 per cent higher than a year earlier.

The latest drop was driven by a 6.6 per cent month-on-month fall in vegetable oil prices, with increased supplies and lower crude oil prices contributing to the decline.

Sugar, dairy and meat prices all slipped by less than one percentage point, relieving inflationary pressures.

By contrast, FAO’s cereal price index rose 1.5 per cent month-on-month in September, with wheat prices climbing 2.2 per cent because of concerns over dry crop conditions in Argentina and the United States, strong EU exports and heightened uncertainty over access to Ukrainian Black Sea ports beyond November.

Rice prices rose 2.2 per cent, partly because of worries over the impact of recent severe flooding in Pakistan.

In separate cereal supply and demand estimates, FAO lowered its forecast for global cereal production in 2022 to 2.768 billion tonnes from a previous 2.774 billion tonnes.

That is 1.7 per cent below the estimated output for 2021.

“A lower global coarse grain production forecast makes up the bulk of this month’s overall cutback, as adverse weather continued to curb yield prospects in major producing countries,” FAO said.

World cereal use in 2022/23 is expected to surpass production at 2.784 million tonnes, leading to a projected 1.6 per cent fall in global stocks compared with 2021/22 to 848 million tonnes.

That would represent a stocks-to-use ratio of 29.7 per cent, down from 31.0 per cent in 2021/22 but still relatively high historically, FAO said.