What on earth is going on with formula?

The formula shortage is back in the news – what’s going on? Abbott announces plans to build a new infant formula plant. And the Senate has some questions about the Kroger-Albertsons merger.


Store shelves show only some cans of Enfamil and low stocks of infant formula overall.

Seattle, WA USA - circa August 2022: Angled, selective focus on baby formula for sale inside a Target retail store

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Alright, let’s get to it –

Helena

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Today, in Food Fix: 

– The formula shortage is back in the news – what’s going on?

– Abbott announces plans to build new infant formula plant 

– Senate to hold hearing on Kroger-Albertsons merger

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What on earth is going on with formula?

The infant formula shortage is starting to creep back in the news as more reporters realize this is still an issue. In the past few days, we’ve seen headlines in the Wall Street Journal, CNN and Fox News. I also did a segment last week on Fox Business, and I’ve been answering questions for the local press about the latest developments. 

It’s interesting that the increased media attention comes as retail stocking data appears to be improving. This issue had mostly dropped out of the news after a rash of press coverage in May on growing shortages inadvertently caused more dire shortages (a natural human response). 

The White House is tracking all of this closely. The situation is not only crucial from a health and national security perspective – a majority of U.S. infants rely on formula and lack an alternative nutritional source – but it’s also extra politically sensitive weeks ahead of the midterms. House Republicans, for example, shared the WSJ story this week, pledging to “hold the Biden administration accountable for its delayed response to this crisis.”

So what’s going on right now? First, here’s a look at the latest retail stocking data from IRI, considered the gold standard for the industry:

Link to interactive chart

After the massive Abbott Nutrition recall in February, retail stocks fell substantially in the spring and then worsened over the summer, but they’ve since climbed back up. Availability still hasn’t returned to normal, but it is improving – at least at a macro level, according to IRI data.

Squaring the data: I’ve had a hard time squaring the IRI figures with what I’ve seen in every store I’ve visited over the past eight months. (And I’ve visited quite a few! Just about everywhere I go, I hop into grocery and big-box retailers to check out their formula sections.) It doesn’t matter if the store is urban, suburban or rural, formula sections are nowhere near as stocked as IRI’s data would suggest. I know anecdotes aren’t data, but I still find it puzzling. 

It’s easy to find formula sections that look bad. FDA Commissioner Robert Califf this week did an event with Health and Human Services Secretary Xavier Becerra at a Walgreens in DC and the store barely had any formula on shelves (h/t Politico’s Garrett Downs). While we’re here, Califf did an in-depth Q&A with CNN’s MJ Lee on infant formula that just posted this morning and is worth a read.

The White House has its own data, too: I’m not the only one puzzled by the gap between IRI data and what consumers often experience in stores – it’s perplexing government officials, too. To help round out this picture, the White House has been getting its own weekly data directly from retailers since May. Their figures show improvements and stabilization in retail stocks since about July, per an administration official.

“Things have been stable, with some variation,” the administration official said, noting that the relative stability was remarkable because the Abbott plant in Sturgis, Mich. – which used to make roughly 20 percent of U.S. formula – has been largely offline.

There is plenty of formula: There is still a lot we don’t understand about this ongoing saga. There is more than enough formula, and yet the problems persist. 

The retail data seems too rosy. (Seriously, if anyone can explain this gap, please get in touch.) We also know that the overall volume of infant formula manufactured in the U.S. is up – we’ve more than replaced the capacity of the Sturgis plant. In addition, the Biden administration has flown in almost 100 million eight-ounce bottle equivalents of formula from abroad to boost supplies. And the FDA has made it easier for imports from Europe and Australia to be sold in the U.S. 

Demand is down: The other thing that doesn’t add up here? Demand for formula appears to be down below 2021 levels (so before this all went haywire). This is perplexing for two reasons: First, formula stocks are still strained at the retail level – you’d think things would have eased up with less demand, right? Second, with the recent increase in the birthrate you’d again think formula demand would be up.

The human milk factor: It’s going to be a while before we have good national data on breastfeeding (or chestfeeding or bodyfeeding) rates for 2022, but it’s quite possible that more families are trying to breastfeed to avoid reliance on formula amid all the craziness.

In the first six months following the recall, the WIC program – which serves primarily pregnant women and young children – saw a shift toward breastfeeding among program participants, the National WIC Association told me this week. The total number of infants being served by the program remained relatively stable, but WIC agencies reported a 9 percent increase in breastfed infants and a 17 percent increase in exclusively breastfed infants. That’s a substantial shift – and if this is a major trend across all income levels, it makes the current formula supply issues even more confusing. 

Big picture: All of these things can be true: The formula situation is improving; there’s more than enough formula available for babies in the U.S.; and consumers are still experiencing shortages. In many places, store shelves still don’t look great. Caregivers may have to visit a few stores before finding specific types of formula, or, if they have the resources, they might have to get what they need online. 

Shelves might not look stocked because there’s less variety being produced – though there is more volume overall, as manufacturers tried to make production more efficient during the shortage. Also, many retailers appear to have kept their shelves slotted for Abbott’s Similac products, even when those supplies were short for months. (Similac was the number one formula brand in the U.S. before all of this.)

Still, I never thought we’d see disrupted supplies for this long. It’s been eight months since the big recall and more than a year since we first started to see retail stocks go down. 

How families are coping: Recent data from the U.S. Census Bureau Household Pulse Survey found that about a third of households who use formula recently had difficulty obtaining it.

The sample size is somewhat limited here, but to my knowledge it’s the only national survey on how families with infants handled the shortage. Here’s a look at how they responded:

Link to interactive chart

The most popular responses to the shortage were changing to a different brand or going to a different store (both 21 percent). Next up: purchasing online (15 percent) and increasing breastfeeding (13 percent). 

Most alarming, from a public health perspective, is the small slice of respondents who said they responded by watering down or making their own formula (3.4 percent). Health officials and doctors strongly warn against doing both. 

The survey also gives us a sense of how much formula households keep on hand. I’m not sure what would be normal in the before-time, but this seems somewhat high to me: Nearly four in ten households have more than two weeks’ formula on hand. 

But it makes a lot of sense, if you think about it like a parent or caregiver. If you’ve seen poorly-stocked store shelves for months, you’re probably going to buy extra when you do find the type of formula you need. (This also won’t surprise you: The share of households with more than two weeks of formula on hand goes up dramatically for higher-income households.)

Link to interactive chart

A note about special medical needs: We often focus on infant formula because that’s the largest scale issue here, but I want to note that the supply disruption is still a major problem for children and adults with special medical needs. The Sturgis plant was a mega manufacturer of key specialty and metabolic formulas that keep thousands of children and adults alive – there are so many people who quite literally cannot live without these products. This Twitter thread from Sarah Chamberlin of PKU News offers some perspective on how dire this has been for folks.

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Abbott announces plans to build new infant formula plant 

In other formula news, there was a big announcement in Abbott’s earnings report this week: The pharmaceutical giant is planning to build a new $500 million formula manufacturing plant, location TBD. 

“We’re moving forward with plans for a half-billion-dollar investment in a new U.S. nutrition facility for specialty and metabolic infant formulas,” Abbott Chairman and CEO Robert Ford told investors Wednesday, per CNN. “We’re currently in the final stages of determining the site location and will work with regulators and other experts to ensure this facility is state-of-the-art and sets a new standard for infant formula production. We recognize there’s more to do but feel confident in the progress we’re making.”

Big picture: This will take years to get online, but everyone I’ve talked to sees this as welcome news. Many of the dozen or so U.S. plants making infant formula are aging – and some of them are quite old. 

Future-proofing formula: The Biden administration is hoping that Abbott’s old Sturgis plant will soon fill out all remaining gaps on store shelves. (The plant recently began producing Similac again.) Officials also see the new Abbott plant as a way to make the system more resilient, even if it is still largely controlled by two companies (Abbott and Mead Johnson).  

“We have to make more diverse supply chains,” the administration official said. “If a hurricane or a flood or a tornado or even a large, strong rainstorm can take out 20 percent of our country’s production – that can’t happen. It’s good to see them making those decisions.” (These are not theoretical concerns. For those keeping track, a rainstorm did take the Sturgis plant out of commission for a bit last summer.)

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Hearing next month on Kroger-Albertsons merger 

Leaders of a key Senate Judiciary subcommittee focused on antitrust issues, Sens. Amy Klobuchar (D-Minn.) and Mike Lee (R-Utah), announced this week they will hold a hearing in November to “examine the proposed merger between Kroger and Albertsons, the two largest grocery chains in the country.”

“We have serious concerns about the proposed transaction between Kroger and Albertsons,” Klobuchar and Lee said in a joint statement. “The grocery industry is essential, and we must ensure that it remains competitive so that American families can afford to put food on the table. We will hold a hearing focused on this proposed merger and the consequences consumers may face if this deal moves forward.” 

In case you missed it, brush up on why Washington is so nervous about this merger.

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What I’m reading

The fast-food stars of TikTok (The New Yorker). Hat tip to Jacob Sweet for this delightful and fascinating look at the booming world of fast-food TikTok. From Subway to Coldstone, frontline workers are attracting huge followings and making real money showing us all behind the scenes. 

Snow crab is no longer on the menu amid a massive population collapse (TIME). A major population crash led Alaska to cancel its 2022 Bering Sea snow crab harvest for the first time in history – something that captured a ton of headlines this week. Fishery officials believe the crab population dropped 87 percent, from 8 billion in 2018 to 1 billion last year, with climate change as a potential factor. 

Will ‘carbon neutral’ claims land brands in legal hot water? (Food Navigator). The explosion in climate-related terms on food packaging could also spark lawsuits, reports Elaine Watson in this interesting piece. Evian is already facing a proposed class action lawsuit for using the term “carbon neutral.” 

The lettuce outlasts Liz Truss (New York Times). In some loosely food-related news …The Daily Star, a tabloid in the UK, hosted a 10-day live stream of a head of lettuce to pose the question: Will Prime Minister Liz Truss outlast the 10-day shelf life of a head of lettuce? This was in response to an Economist article earlier this week that bluntly predicted her career would have “roughly the shelf-life of a lettuce.” With her resignation yesterday, the lettuce won out and lettuce puns flooded the internet. 

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Who’s who

Jacqlyn Schneider is joining FGS Global as a partner in the firm’s food and agriculture practice. Schneider was previously deputy staff director and the longtime lead on nutrition issues for the Senate Agriculture Committee.

Steve Solomon will retire at the end of the year from his role as director of FDA’s Center for Veterinary Medicine, per Agri-Pulse. He has been with the agency for 32 years. 

Linsey Crowell has joined JBS as a director for government affairs. She was previously director of government affairs at Combest, Sell & Associates.

Ilya Sheyman recently stepped into the role of CEO for GFI U.S., leading all U.S. programs and operations. GFI founder and president Bruce Friedrich is “moving into a more global strategic, thought leadership, and relationships-focused role.”

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