Recalls, inflation, supply issues drive baby formula shortage

America is running out of baby formula as strained supply chains and labor shortages along with concerns about inflation have delayed the replacement of inventory lost in two recalls at a contaminated manufacturing plant in Michigan.

About 40% of popular baby formula brands were sold out during the last week of April, up from 31% in early April and an average of 2% to 8% during the first half of 2021, according to retail data collection firm Datasembly, which tracked baby formula stock at more than 11,000 U.S. sellers.

Stock shortages began mounting in November, but the biggest shortages have appeared over the past two months, Datasembly said.

In February, the Food and Drug Administration recalled Abbott Nutrition’s Similac, Alimentum and EleCare powdered infant formulas after babies died from ingesting bacteria-laden products manufactured at the company’s facility in Sturgis, Michigan.

Economist Daniel Sutter said the Abbott Nutrition recalls have come at the worst time possible for the pandemic-strained U.S. economy because baby formula companies have avoided hiring the workers needed to ramp up production because of the price increases that would ensue.

“Formula makers were already dealing with cost increases for the supplies used to make formula,” said Mr. Sutter, director of the Manuel H. Johnson Center for Political Economy at Troy University in Alabama. “Trying to order more to ramp up production would have led to even higher prices.”


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With companies eager to avoid the appearance of price-gouging, it’s impossible to predict the length of the shortage, which has emptied the shelves of half of all retail stores in some cities, the economist said.

That could encourage parents to stockpile baby formula the way some people hoarded toilet paper during the pandemic, he said.

“Once shortages start appearing, people purchase more and stock up,” Mr. Sutter said. “The effort and stress of trying to get enough formula to feed a baby is the pain we are suffering because prices are not rising enough to clear markets.”

Datasembly reported that Connecticut, Delaware, Montana, New Jersey, Rhode Island, Texas and Washington had out-of-stock rates above 40% during the week of April 3.

Metro areas in Des Moines, Iowa, Minneapolis and San Antonio had out-of-stock rates of 50%, 55% and 56%, respectively.

“The baby formula out-of-stock issue continues to be a major problem for the industry, and we see no indication of improvement,” Ben Reich, Datasembly CEO, said in an email Monday.

According to media reports, some retailers have started keeping baby formula behind their checkout counters, requiring customers to ask for the products. Walgreens is limiting customers to four formula purchases per transaction, and CVS and Target have limits of three products, according to USA Today.

Daniel Lacalle, chief economist at financial service firm Tressis, said it’s hard to increase production of baby formula because of the FDA‘s tight controls of production facilities and limits on supply.

“In an environment of high inflation and supply chain issues, this is a product that sees all the problems compounded as the ingredients are carefully selected and the production process does not allow for a rapid increase in output,” Mr. Lacalle said in an email.

Abbott Nutrition’s plant in Michigan remains closed even though “no problems were found in the analysis of the facility and its output,” Mr. Lacalle said.

The FDA‘s investigation of Abbott found four reports of Cronobacter sakazakii infections in babies and one complaint of a salmonella newport infection, all of which resulted in hospitalizations.

Premature babies and infants with weakened immune systems are most vulnerable to Cronobacter sakazakii, a germ found naturally in the environment that causes a rare but often fatal infection of the blood and central nervous system. Symptoms include fever, poor feedings and low energy.

Babies with weak immune systems are vulnerable to salmonella newport, which can be deadly if it reaches the bloodstream. Symptoms include diarrhea, stomach cramps and fever.

Parents running short on supply should avoid watering down formula or “purchasing imported formula through online sales,” the FDA said in a February press release.

“If your regular formula is not available, contact your child’s health care provider for recommendations on changing feeding practices,” the agency said.

The FDA‘s investigation of Abbott‘s metabolic and specialty formulas cites a need for “enhanced testing” that will keep the formula off shelves for an extended period.

Reached Monday for comment, Abbott responded by challenging the need to keep its Michigan plant shut during testing.

“Abbott tests products prior to distribution, and no Abbott formula distributed to consumers tested positive for Cronobacter sakazakii or salmonella,” the company said in an email. “Testing of retained products by Abbott and FDA for Cronobacter sakazakii and/or salmonella all came back negative.”

The company is one of five key players in the U.S. infant nutrition market alongside Nestle, Danone, Mead Johnson & Co. and the Kraft Heinz Co.

According to marketing data collection firm Statista, Abbott‘s Similac Advance accounts for 21.2% of the powdered baby formula market.

Dr. Steven Abrams, a pediatrician, recommends in an online Q&A that parents consider alternatives such as borrowing a can or ordering domestic formula online during the shortage.

“For most babies, it is OK to switch to any available formula, including store brands, unless your baby is on a specific extensively hydrolyzed or amino acid based formula such as Elecare,” Dr. Abrams wrote in an article posted on the American Academy of Pediatrics website.

The academy recommends that parents keep a 10-day to two-week supply at home. It discourages making homemade formula with plant-based milk substitutes.

Sen. Tom Cotton, Arkansas Republican, called on federal officials Monday to develop a plan for restocking the formula.

“The FDA needs to immediately step up, be transparent, explain how it will get production restarted, and give parents a timeline,” Mr. Cotton tweeted. “And the Biden Administration needs to take this seriously.”

White House press secretary Jen Psaki said there is no national stockpile of baby formula.

But she said the FDA is “working around the clock” with the industry to increase production, optimize supply lines, increase capacity and prioritize the products of greatest need.

“What they are trying to do is increase supply by working with a range of manufacturers and what their capacity is to ensure that the kinds of formula that was recalled is on the shelves,” Ms. Psaki told reporters.

Jeff Mordock contributed to this story.

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