With Baby Formula Hard to Find, Retailers and Producers Shift Blame

Manufacturers and Top Retailers Acknowledge Shortage, Point Fingers at Each Other

For the past several months, parents have reported difficulty finding baby-formula brands like Gerber, Similac (ABT), and Enfamil. Many retailers report an out-of-stock rate approaching 20% for baby formula — around 10 points above what’s considered problematic. Baby-formula makers and retail companies agree the product faces shortages but blame the issue on each other.

Retail chains like CVS (CVS) and Walmart (WMT) say baby-formula manufacturers are having issues obtaining supplies, leading to the shortages. Target is another major retailer experiencing out-of-stock issues, and there haven’t been reports of consumers stockpiling. The top formula brands counter it’s actually retailers who are struggling to deliver products to individual stores following wholesale deliveries.

Retailers May Be Struggling to Know Where Customers Are

There’s some evidence retailers are having difficulty getting baby formula to the right place. Analysts blame that on the number of people who have relocated during the pandemic. Data would seem to eliminate unexpected demand as an explanation, as market research firm IRI notes baby formula spending increased by 4.5% last year.

Still, there are signs that manufacturers face their own issues including Omicron-related staffing shortages. While many of the top formula brands are produced domestically, they rely on raw materials and packaging that’s often imported, also leaving them vulnerable to supply-chain snags. Enfamil maker Reckitt Benckiser says they have ample supply on hand, while Similac owner Abbott Labs admits there have been shipping delays.

Panicked Parents Could Be Stockpiling, Packing Pantries with Formula

While retailers haven’t reported the stockpiling of baby formula in a fashion similar to toilet paper during the pandemic, others say it’s part of the problem. An industry group representing formula makers maintains there’s no shortage of supply. Instead, they point to retail supply-chain issues as well as altered consumer behavior.

The Infant Nutrition Council of America suggests there’s evidence of baby-formula stockpiling. The co-founder of organic baby formula startup Bobbie says parents are easily rattled when brand names aren’t available, adding chatter within Facebook groups can even trigger panic buys. Some analysts predict an easing of supply-chain issues during the first quarter of 2022. Until then baby-formula shortages will have retailers and manufacturers scrambling.

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