The shortage of baby formula currently gripping the US started during the Covid-19 pandemic. In 2021, there were reports that families across the country were struggling to find key baby products like diapers, wipes and formula. The shortage was mainly blamed on supply-chain issues – however, some experts pointed out that panic buying was aggravating the situation, too. During the pandemic, it was hardly a surprise that people were stocking up on products they deemed essential.
According to Datasembly, a real-time product data provider, for the first seven months of 2021, the out-of-stock percentages “were relatively stable” and fluctuated by between 2% and 8%. Then the situation started to worsen and, in January 2022, baby formula shortages hit 23%.
Abbott baby formula recall
In the US, there are four companies holding the largest market share in the formula manufacturing industry: Abbott Laboratories, Mead Johnson, Perrigo Company PLC and Nestle Sa. The country normally produces 98% of the formula it consumes. So, a disruption affecting one of the giants became a key factor to make the shortage critical.
In February 2022, Abbott – which is estimated to control over 40% of the formula market – initiated a voluntary recall of several products manufactured in Sturgis, Michigan. According to the US Food and Drug Administration (FDA), four babies were admitted to hospital after consuming formula potentially infected with cronobacter and produced at the facility in question. Two of the infants died.
According to the FDA, cronobacter bacteria is especially dangerous for newborn babies. It can cause sepsis or meningitis and bowel damage. Abbott reported that cronobacter was found in non-product contact areas of the Michigan facility.
“We believe our voluntary recall was the right thing to do. We will not take risks when it comes to the health of children,” Abbott CEO Robert Ford wrote in an op-ed for the Washington Post in May. “The data collected during the investigation, genetic sequencing, retained product samples and available product from the four complaints did not find any connection between our products and the four reported illnesses in children. However, the FDA’s investigation did discover a bacteria in our plant that we will not tolerate.”
As of April 2022, the baby formula out-of-stock rate hit 31%. For the week ending May 8, the nationwide out-of-stock percentage was at 43%.
“Inflation, supply-chain shortages, and product recalls have brought an unprecedented amount of volatility for baby formula,” Datasembly founder and CEO Ben Reich said. “We expect to continue to see the baby formula category being dramatically affected by these conditions.”
Unexpected shortage impact
It took months for the US government to realize that the crisis was serious. “I don’t think anyone anticipated the impact of the shutdown of one facility,” US President Joe Biden said during a meeting with executives of five baby-food companies at the beginning of June. “Once we learned of the extent of it and how broad it was, we kicked everything into gear.” Biden also added that he hadn’t been aware of the extent of the crisis until April.
