The first batch of formula for babies and children with special needs landed in Plainfield, Indiana, on May 22; came from Nestlé’s facilities in Switzerland and the Netherlands. The British company Kendal Nutricare has also quickly taken advantage of the US Food and Drug Administration’s measure to ease the rules on foreign imports and will transport tens of thousands of cans of cow’s milk formula from their stocks next month.
Normally, only 2% of infant formula is imported, mostly from Mexico, Ireland, and the Netherlands, due to high import tariffs and strict FDA regulations on nutritional values, labeling, and inspections. Kendal Nutricare also produces formula from goat’s milk, which, if shipped, would be the first time in the U.S.: Goat’s milk is not approved for babies there.
While it is difficult to predict how the federal government and industry will prevent a shortage of formulas from occurring again, it is very possible that there will be a shake-up of the actors involved. “It looks like more companies will be allowed to sell because of this emergency. And it’s certainly possible that they’ll be allowed to sell in the future,” says Ketels, adding that foreign suppliers who already meet FDA nutritional standards ( and who have significant production capacity) are ideal candidates.
But smaller national companies will also want a piece of the pie, and in a way, they already have it. In the past three months, ByHeart and Bobbie, two young companies that sell their products online directly to parents, have seen an increase in demand. New York-based ByHeart entered the market a few weeks after Abbott recalled; has had 15 times the number of new customers it had planned for the year.
Bobbie, which was launched in 2021 and whose “European-style” formula is made with milk from farms in the organic valley, has doubled its subscriber base to 70,000. European formulas are especially popular with parents who value organic ingredients (which are usually more common in European formulas) and want to eliminate added sugars, such as corn syrup; parents are willing to pay a premium to import them illegally.
However, due to limited production capabilities, both Bobbie and ByHeart have made a difficult call and have stopped accepting new customers. “Our only job right now is to give our own customers the peace of mind and security that the supply we make can continue to serve them,” says Modi.
But even if these young American companies managed to further increase production, they would not necessarily be able to get a larger share of the market in the long run. This is because Abbott, Mead Johnson and Gerber’s “Big Three” are linked to a wellness program known as Women, Infants and Children (WIC), which offers free formula to low-income families. About half of all U.S.-born babies are eligible for this.
The program allows the Big Three to bid for the right to become the sole provider of infant formula for participating families by offering great discounts to a state. “When a company controls the WIC program, it controls the entire market in that state,” says Steven Abrams, a professor of pediatrics and nutrition science at the University of Texas. Families select the WIC-approved infant formula on store shelves and present their benefit e-card at check-in.