Big Bottle: The Baby Formula Nightmare
Welcome to BIG, a newsletter about the politics of monopoly. If you’d like to sign up, you can do so here. Or just read on…
Today I’m writing about the nightmarish baby formula shortage. I’ll try to explain what the problem is, and how to fix it. Plus, defense attorneys for poultry executives accused of price-fixing attack Antitrust Division chief Jonathan Kanter for citing the book “The Chickenshit Club.” And the random monopoly of the day, California’s mystery gasoline surcharge.
As anyone with an infant knows, there is a major crisis in the feeding of America’s babies right now, because parents in some areas can’t get baby formula. A few months ago, a major producer of formula - Abbott Labs - shut down its main production facilities in Sturgis, Michigan, which had been contaminated with the bacteria Cronobacter sakazakii, killing two babies and injuring two others. Abbott provides 43% of the baby formula in the United States, under the brand names Similac, Alimentum and EleCare, so removing this amount of supply from the market is the short-term cause of the problem. (Abbott and Mead Johnson produce 80% of the formula in the U.S., and if you add in Nestle, that gets to 98% of the market.) The problem is not, however, that there isn’t enough formula, so much as the consolidated distribution system creates a lot of shortages in specific states.
First, it’s hard to convey what a nightmare this situation is for parents, especially those whose children require special kinds of formula because of gastrointestinal issues or food allergies. “The shortage has led us to decide to put a feeding tube in our child,” said one parent, who simply could not get the specialized formula her daughter needs.
