A federal investigation into the circumstances found no link between the bacteria found in the children and the facility, and, on Saturday, Abbott restarted operations at the facility.
According to CNN, it will take at least six to eight weeks for the business to begin delivering products to empty store shelves – with competing domestic formula makers having been unable to fill the gap.
Retailers around the country, such as Walgreens, Walmart, Costco and Kroger, have set purchasing limits across a number of infant and toddler formulas in an effort to smooth out demand, but many consumers are forced to “shop around” to find formula that is actually on shelves, according to GlobalData Retail managing director Neil Saunders.
“Baby formula is still available in some shops, but supply is very patchy and out of stocks arise very quickly,” Saunders told The Washington Post.
“Unfortunately, shortages encourage some people to buy in bulk and hoard, which further contributes to availability issues. This is why some retailers have put in place quantity restrictions.”
According to Reuters, Perrigo Company, which supplies Walmart and Amazon, expects the shortage to continue through to the end of the year.
One of the major issues that has caused the shortages is that the US formula market is essentially shut off to international players, according to Bubs Australia co-founder and chief executive Kristy Carr.
The US Food and Drug Administration (FDA) uses different standards of approval, safety, and labelling to other countries, making importing formula from other nations difficult.
“You’ve got the four players that occupy that market, and Abbotts, the largest player, just shuts overnight,” Carr told Inside Retail.
“All the product that was already in consumers’ hands had to be thrown out, and shelves had to be emptied. As you can imagine, infant formula has quite a long supply chain, and the other three players just couldn’t deal with that.
“This is why the Biden administration has become very involved. President Biden himself has said there is nothing more urgent right now. It’s not a luxury item, or a commodity – it’s an essential, sole source of nutrition for babies who have weaned off of breastfeeding.”
Australian companies ramp up to fill the gap
Bubs Australia is one of several international manufacturers that the Biden administration has called on to supply products to cover the gap, allowing formulas that may not meet the FDA’s standards the ability to enter the US market.
For Bubs, which had already targeted and sold in the US market with an FDA-approved toddler formula, it’s an opportunity to begin building brand recognition in the United States so that when the crisis is over, more people will be willing to buy international baby products.
In fact, Carr said, the business is already in conversation with several US retailers that are keen to stock its formula moving forward.
“[The US has been] closed to international brands up until this point because of regulatory barriers to entry – it takes anywhere from three to five years [to get approval], it’s extremely expensive, and there is a low chance of success in the end,” Carr said.
“So this is a significant opportunity for Bubs. We’re sending 1.25 million tins of formula – that’s the maximum amount we can send without impacting our existing business.”
In order to meet this obligation, Bubs’ manufacturing facility in Melbourne has been running 24/7 for three weeks, compared to around eight hours a day in normal production. The business is likely to add in a second production line on the premises, something it was already considering, but is being pulled forward in order to ramp up its ability to meet an increased level of demand.
Bubs’ first shipment is scheduled for 9 June, and will see almost 500,000 tins flown to the United States, with US retailers expected to receive the product shortly thereafter.
And Bubs isn’t the only local player looking to enter one of the world’s largest formula markets. Nature One Dairy has also applied for FDA approval to send its infant product to the US.
“We have had several requests from the major retailers in the USA and have since been working with the Federal Government and Victorian Government to assist in our application for FDA approval,” said Nature One Dairy CEO Nick Dimopoulos.
“Being both a manufacturer and brand owner, we can scale up our supply and provide our high-quality Australian-made products to support the current situation in the United States.”
Shortages’ long-lasting impacts
The United States isn’t the only country to have suffered a shortage of infant formula. In 2018, Woolworths and Coles instituted two-product limits on infant formula due to a lack of product in Australia – a situation that was, at the time, blamed on daigou shoppers buying up Australian formula to send back or sell to Chinese consumers.
This was, in part, fuelled by a shortage of infant formula in China in 2008, when several local manufacturers’ products were found to result in kidney stones and kidney damage to infants.
According to Reuters, 22 businesses had added the chemical melamine into milk and infant formula to give the appearance of higher protein content to pass quality control tests.
To deal with the shortage, Australian formula was shipped, and nearly 15 years later, Australian brands still enjoy a high level of trust among Chinese consumers and China remains one of the biggest markets for Australian baby formula.