America is running out of baby formula because 3 companies control the market and babies aren’t that profitable
A baby food shortage sweeping the US since March has parents panicking about where and when to find the products they need to feed their children.
According to Datasembly, a provider of real-time product data for retailers and consumer packaging, the out-of-stock rate, which represents the amount of formula that is not in stock compared to what is normally available, was in the week by May 8, 43% goods (CPG) brands.
With no easy end in sight, caregivers across the country have been forced to spend their free time driving between stores in search of infant formula, prompting retailers to limit the number of cans customers can purchase. Others have turned to Facebook groups and informal support networks to source the nutritional products best suited for their children.
"I've looked online, I've looked for my mom in Boston, I've looked for my mother-in-law in Florida," Elyssa Schmier previously told Fortune of her struggles finding a formula for her 8-month-old son. "Everyone we know is looking for us and no one can find them."
How did one of the richest countries in the world have a baby food crisis? Experts say a recall by one of the industry's largest manufacturers, ongoing supply chain issues and a market dominated by just a few players have resulted in what one consumer goods expert is calling a "perfect storm" that has cut the supply of millions of essential products Formulas affected by babies in the US and the shortage could last for months.
That's how we came here.
Poisoned baby food
Abbott Nutrition is the nutritional arm of medical device and healthcare giant Abbott Laboratories, and makes products ranging from high-carb beverages that help patients recover from surgery, to energy drinks, to powders and liquid baby foods. Though it maintains a global manufacturing network, its Sturgis, Michigan facility is among the few in the United States that manufactures formulas.
On February 17, Abbott voluntarily recalled its products made at Sturgis and closed the facility after four infants reportedly contracted a bacterial infection and two died after consuming the formula made at the facility. A whistleblower report submitted to the FDA in October 2021 alleged additional health and safety issues at the facility, contributing to a formal inspection by the agency earlier this year.
Abbott is now awaiting approval to reopen. "We understand the situation is urgent -- bringing Sturgis online will help alleviate this shortage," the company said in a statement to Fortune. After conducting its own investigation, which included genomic sequencing of bacteria, the company reported that nothing on its premises matched the specific strain of bacteria that caused the illnesses and deaths.
"The Cronobacter sakazakii found during environmental testing during the investigation was located in non-product contact areas of the facility and was not associated with any known infant disease," the company said in a statement.
However, the FDA found other issues with the facility beyond the possibility of past contamination. After its own inspection, which took place from Jan. 31 to March 18, the FDA says it has observed Cronobacter sakazakii "in medium and high care areas in the manufacture of powdered infant formula" -- a problem regardless of whether whether it was the same strain or not caused specific infant death.
The agency also said in its report that the company "failed to ensure that all surfaces that came into contact with infant formula were maintained to protect infant formula from contamination from any source." According to the FDA, the company is still working to "correct" the results of its inspection. As a result, the plant has not yet been able to reopen.
The story goes on
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