Baby Formula Shortage Has Parents and Lawmakers Scrambling
Stores Impose Purchase Limits
There is a shortage of baby formula that has left both manufacturers and lawmakers scrambling. The issue originated during the pandemic and has persisted due to both supply chain issues and production halts.
Since formula must provide babies complete nutrition, parents staring at empty grocery shelves are left without a good alternative. Grocery stores like Kroger (KR) are addressing the shortage by imposing purchase limits. Meanwhile lawmakers are investigating allegations of price gouging.
Few Manufacturers
Part of the problem is that few manufacturers have cleared the strict regulatory hurdles to produce infant formula. In 2021 Reckitt Benckiser Group (RBGLY), which owns Enfamil and Abbott (ABT) sold 80% of infant formula in the US.
In February, due to contamination concerns, Abbott suspended production at a plant that produced over half of the company’s US infant formula. Meanwhile, Enfamil struggled with shipment delays tied to supply-chain snarls.
Possible Remedies
Abbott Labs, which sells the Similac line, is in discussions with the FDA to resume production at a factory in Michigan. It is also bringing in the product from its factory in Ireland. Enfamil has ramped up its factories so that formula is now being produced 24/7.
The FDA claims there should be enough supply to match current demand and is evaluating whether uneven distribution is leading to surpluses in some areas and shortages in others. They are also concerned consumers may be hoarding formula. In the meantime, some parents are asking friends and family to grab a bottle of formula if they make a rare sighting of the product.
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