Infant formula industry scrambling to address shortages

12 Apr 2022 --- The US is currently facing an acute shortage of infant formula, a result compounded by Russia’s invasion of Ukraine, the supply chain crisis, product recalls by Abbott Nutrition and post-pandemic effects.

Retailers are reporting shortages while stores are rationing product sales. Though the Infant Nutrition Council of America is seeking to reassure there is infant formula available to meet demand, stakeholders are scrambling to ensure availability and access to the product.

“In the past few months, the US has suffered from an acute shortage of infant formula, caused by a range of external factors linked to the COVID-19 crisis and post-pandemic effects,” Jakob Madsen Pedersen, head of global sales, business unit – pediatric, Arla Foods Ingredients, tells NutritionInsight.

“There has been a lack of labor and supply chain issues in various labor-intensive industries, where well-functioning logistics are fundamental.”

Manufacturers have increased production and are working with retailers and the government to help ensure continued access to infant formula.Growing global problem: US hit worse
According to Pedersen, the issue is more pronounced in the US than in Europe and Asia. However, market volatility could easily change this. 

“Many key infant formula ingredients are manufactured in Europe and shipped to the US and Asia, making Europe less vulnerable. However, an energy crisis in Europe linked to the war could change this picture.”

Additionally, infant formula players in Europe have been maintaining their production stocks and trying to mitigate volatility on the global markets by securing raw materials and supplies, he adds.

“There is also a shortage of key raw materials in Europe, driving up global prices. This is apparent when looking at whey and lactose-based ingredients and vitamins, minerals, starches and sugars. So far, supply has kept pace with demand, but global ingredient stocks have been significantly lowered.” 

Compounding shortages
Pedersen explains that an infant formula product consists of 10 to 40 ingredients mixed together to produce the formula powder.

“Several raw materials such as packaging materials, dairy ingredients, sugars, and some specialty ingredients have seen shortages due to short-term reductions in production, higher prices linked to global inflation, the Ukraine-Russia war, and disruption of global logistics and supply chains.”

A product recall by Abbott over Similac, Alimentum and EleCare powdered formulas manufactured at the Sturgis facility in Michigan has further compounded the problem. The issue began in February after the US Food and Drug Administration (FDA) announced it was investigating four consumer complaints of Cronobacter sakazakii and Salmonella Newport infections. 

An inspection at the company’s facility found five environmental subsamples were positive for Cronobacter sakazakii. 

“It seems that all players in the infant formula industry are now trying to mitigate the global supply issue by increasing production and stocks in the short term,” Pedersen underscores.

Calls for calm: FDA seeks oversight
While there has been an observed scramble for infant formula, the Infant Nutrition Council of America is urging parents and caregivers not to stockpile. 

“There is no shortage in the supply of infant formula coming from manufacturers. There have, however, been reports of an increase in demand in certain areas and – in some locations – limits on purchases. In order to help ensure all parents and caregivers are able to obtain the formula they need, please avoid unnecessary stockpiling.” 

Meanwhile, the FDA is seeking authority to require firms to notify the agency of anticipated significant interruptions in the supply of infant formula. The request is outlined in the FDA’s legislative proposals for the fiscal year 2023 budget. 

An FDA spokesperson tells NutritionInsight: “This proposal would ensure the FDA routinely receives timely and accurate information about likely or confirmed shortages in the US of infant formulas and essential medical foods for patients with certain inborn errors of metabolism to help the FDA to take steps to promote the continued availability of these foods.”

“This proposed legislation has been under development for some time and has not been responsive to any specific infant formula shortage.Diluted formula will not provide adequate nutrition and if fed for an extended period of time, may result in slower growth and risk of malnutrition.

Live with it?
Madsen underscores that currently, global consumption of infant formula is growing 2-3% per year in volume terms. 

“Ingredient supplies should be able to keep up with such growth rates, having coped with double-digit growth rates just a few years ago due to higher birth rates in China and more rapid expansion of the infant formula market in Asia.”

Nonetheless, several of these ingredients are also used in categories other than infant nutrition, such as sports nutrition and standard food products, which are seeing growing demand post-pandemic, he adds.

“We face very volatile markets now with more difficult operations linked to sudden changes of contracted volumes and fluctuating demands in various product categories. We are trying to stabilize the situation by predicting future demand and turning that into stable supplies.”

“This should lead to more efficient operations and trust among end consumers when shelves are filled with products. However, consumers will most likely have to live with higher prices for food products as the full value chain struggles to recover its historical margins.”

By Andria Kades