The Baby Formula Shortage, Explained

The FDA announced a plan this week to ease some international restrictions on baby formula in an attempt to address a nationwide shortage that has intensified in recent weeks.

🍼 Background: An FDA investigation into infections in four infants – two of whom died – led to the February closure of a formula factory run by Abbott Laboratories, which has denied any link between its formula and the illnesses.

• Just four companies combine to produce ~90% of America’s baby formula. Among those, Abbott is responsible for about half.

🐪 The straw that broke the camel’s back… Abbott’s plant closure came at a time where the baby formula market was already dealing with a trio of pandemic-induced factors:

• More babies have been born so far in 2022 than in previous years.
• Formula was already in short supply due to ongoing supply-chain issues.
• Many manufacturers are producing less formula than before the pandemic after consumer hoarding in 2020 left them unable to accurately predict demand, per The Atlantic.

Altogether, these variables have led to retailers’ shelves drying up. 43% of baby formula was out of stock at US stores as of the week ending May 8, according to product data firm Datasembly.

📅 Looking ahead... Abbott reached an agreement with the feds on Monday to reopen its plant, but said it would take 8-10 weeks for baby formula to hit the shelves. 

• President Biden announced a pair of strategies yesterday to increase the supply of formula, invoking the Defense Production Act to increase domestic production and launching an initiative to import formula from overseas.