A baby formula shortage in the U.S. has parents in a panic over where and when they will be able to find the products they need to feed their kids.
Datasembly, a provider of real-time product data for retailers, reported that the out-of-stock rate was 43% for the week ending May 8.
With no easy end in sight, caregivers nationwide have been forced to devote their free time to driving between stores in search of formula, prompting retailers to limit the number of cans customers can buy. Others have turned to Facebook groups and informal support networks to find the best products for their kids.
Elyssa Schmier previously told Fortune that she had trouble finding formula for her son.
One of the world's richest countries has a baby formula crisis. A recall by one of the industry's largest manufacturers, persistent supply-chain issues, and a market dominated by only a few players have combined to form what one consumer goods expert calls a perfect storm.
How did we get here?
The food sector arm of Abbott Laboratories is called Abbott Nutrition and it makes a wide range of products, including drinks that help patients recover from surgery, energy drinks, powder and liquid baby formula. Its plant in Michigan is one of the few in the U.S. that produce formula.
Abbott voluntarily recalled its products and shut down the plant after reports of four infants falling ill and two dying from consuming formula produced in the plant. A formal inspection by the FDA was conducted earlier this year after a whistle blower report was submitted to the agency.
The company said in a statement to Fortune that getting Sturgis up and running will help alleviate the shortage. After conducting its own investigation, the company reported that there was no match for the specific strain ofbacteria that caused the illnesses and deaths.
The company said in a statement that the Cronobacter sakazakii that was found in environmental testing was in non-product contact areas of the facility.
More problems with the facility were found by the FDA. The FDA observed Cronobacter sakazakii in medium and high care areas of powdered infant formula production, regardless of whether it was a problem or not.
The company didn't make sure that all surfaces that contacted infant formula were maintained to protect it from being contaminated, according to the FDA. The plant hasn't been able to reopen yet.
Abbott will not be able to sell product from its facility in Sturgis for another six to eight weeks. If it reopens as soon as possible, that's all.
Consumer Reports, a nonprofit organization dedicated to ensuring product integrity, says there is no easy, magical answer right now.
Even after the plant reopens and begins to provide formula to families again, a larger question remains: How can a single manufacturing facility affect millions of babies?
The baby formula market is dominated by a few manufacturers.
The most recent number available is that of Abbott's market share a decade ago. Since then, little has changed. The company still maintains exclusive provider contracts in many states with the USDA's supplemental nutrition program for low-income families, which makes up nearly half of formula sales nationwide. The rest of the market is controlled by a few other manufacturers.
The baby formula market is difficult due to its concentrated structure. The market has been decreasing for years because of the nation's birth rate. The number of births has gone down every year since 2008, except for one year in 2014, according to the U.S. Census Bureau.
When a product gets in the way of a certain product getting to store shelves, repercussions are inevitable, with only a few key players whose capacities are tied to a shrinking market. Other manufacturers are bound to struggle with new demand from consumers who can't get what they want.
Patrick Penfield, a professor of supply chain management at Syracuse University, says that it is not a very lucrative market for manufacturers.
Abbott is one of the biggest players in the game, so expanding its share is not really an option.
If you can't grow your market share, you have to look at how you can reduce costs.
He cautions that he is not saying that Abbott Laboratories did that.
Scott Faber, a professor at Georgetown University and vice president of government affairs at Environmental Working, says there is plenty of blame to go around.
The FDA is responsible for the shortage. The agency should have conducted a plant inspection sooner because they did not react fast enough to the report.
The bartender who looked the other way while serving one too many drinks is partly to blame for the drunk driver causing the car crash.
The FDA reacted too slowly to the report when it was submitted last month. The report was submitted to the FDA. The FDA did not interview the person until late December. According to news reports, the FDA did not inspect the plant in person until January 31, 2022.
The agency didn't finish its inspection until March 18. The company says that it has been working to update its education and training protocols as well as its cleaning and maintenance procedures. Penfield says there is definitely some type of noncompliance.
The FDA is trying to catch up to a crisis that has been going on for months.
The FDA said in a statement to Fortune that many consumers have been unable to access infant formula and critical medical foods they are accustomed to using and are frustrated by their inability to do so.
The White House held a press conference this week to address the shortage and how it plans to get formula restocked as quickly as possible without compromising safety.
A senior administration official said that the first step was to cut red tape to get more infant formula to the shelves by urging states to provide flexibility in the WIC program, which can be a key driver of some supply disruptions. The official said that the administration wants the FTC and state attorneys general to watch out for price gouging by third-party sellers.
The US normally produces 98% of the infant formula it consumes, and trading partners in Mexico, Chile, Ireland, and the Netherlands are key sources of imports.
There is no timetable for when those formula imports will arrive in the U.S. The FDA will announce its plan next week, according to Robert Califf.
The official said there is no estimate for when Abbott's facility will resume functioning.
Penfield says there will be continued shortages in the coming weeks. You are going to see these continued shortages until they do.
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