Baby formula shortage is extending into late summer

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The baby formula shortage that turned into a crisis in the spring has persisted into the late summer, with out–of-stock rates hovering at about 28% for four weeks.

Nearly 26% of baby formula powder was missing from store shelves in the week leading up to Aug. 7. That rate the week prior was about 27% and 30% the week before that, according to data-monitoring from the consulting firm IRI Worldwide.

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The shortage became a national concern in May, resulting in a crush of parents panic-buying limited supplies. Powder formula sales around the week that the shortage first made major news were nearly 20% above their yearly average, according to IRI.

“This is a category that has relatively flat sales for years, so we hadn’t seen this level of sales volume. It looks like inventory is getting back to the levels of late spring — before the stockpiling began in May,” said Shelley Hughes, vice president of public relations at IRI.

IRI’s figures cover grocery and drug stores, mass markets including Walmart and Target, military commissaries, and select club stores and dollar stores across the entire United States.

Major retailers responded to the worsening shortage in the spring by limiting the number of products able to be purchased per transaction. At CVS, for instance, people were limited to just three units of powder formula at a time, while Target shoppers were limited to four.

Many stores have kept those purchasing limits in place. A Target spokesperson, for example, told the Washington Examiner that the company is keeping a close eye on the baby formula supply chain but for now will keep online and in-store product limitations intact. Available products for purchase on Walmart’s site are maxed out at five, while customers at Kroger are limited to no more than four units per transaction.

The stress of not being able to give one’s child the food they need has been a reality for many parents across the U.S. for months. The shortage had been heating up in the latter half of 2021, but it took Abbott’s plant shutdown in Michigan last February to reveal how poorly prepared for a shortage the U.S. was. Abbott, which accounted for about 40% of the formula industry, voluntarily shuttered its Sturgis, Michigan, plant in February and recalled its popular Similac formulas that were produced there due to possible contamination with a dangerous bacteria, Cronobacter sakazakii. The plant reopened on June 4 but had to shut down again less than two weeks later after severe storms in the area triggered flooding at the facility. The plant closure revealed the fragility of the baby formula industry, which is very concentrated. Four companies, Abbott, Perrigo, Nestle SA, and Mead Johnson, control 90% of the U.S. formula supply.

The Abbott plant closure was not the only driver of the formula shortage. The COVID-19 pandemic wreaked havoc on the U.S. supply chain. Worker absenteeism in manufacturing facilities and the transportation sector slowed down production and distribution of goods. People were also forced to rethink how they carry out regular business and how they show up for their jobs, which oftentimes included remote working.

The Biden administration, meanwhile, is exercising its authority during times of crisis by bringing in supplies from overseas, temporarily suspending regulatory red tape that would normally prevent European equivalent products from entering the U.S. market. The airlift efforts, named “Operation Fly Formula” by the Biden administration, have brought in nearly 64 million 8-ounce bottle equivalents to the U.S.

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The Abbott plant is up and running again, having resumed manufacturing of EleCare, its specialty baby formula, in the first week of July. While the effect of losing production at the Abbott plant was devastating (the in-stock rate prior to the closure was about 90%), getting it back online will be a huge help in replenishing supplies.

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