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In early 2022, the temporary closure of an infant formula manufacturing plant triggered one of the largest food shortages in our nation’s modern history, leaving half of the United States without a sole source of nutrition for their babies.
For parents who cannot or do not want to breastfeed – a group that includes 80% of American families during a baby’s first year of life – formula is the only other suitable complete food for babies. It literally sustains life as a baby’s important systems develop: immune system, gut, brain, digestion and metabolism. No parent should experience the fear and heartache of driving from state to state to find empty shelves of their baby’s only source of nutrition. Yet the country’s infant formula supply chain is vulnerable to such catastrophic disruptions because we rely on so few infant formula manufacturers and innovators.
We cannot accept the inertia that has characterized this industry over the last half century. We are in the most exciting era of nutritional science and breast milk research – the understanding of breast milk has evolved significantly in recent years, with breakthroughs at the academic level. Yet very few companies have the motivation and ability to translate new advances into better products for baby health.
The illusion of the shelf
Picture this: You’re standing in front of a crowded shelf in the recipe section of a grocery store – the colorful cans labeled “Benefits” seem endless. One assumes there are dozens of companies making these formulas across the country, right? Wrong – it’s an illusion.
I’d like to let you in on a little industry secret: 90% of the formulas manufactured in this country come from the same two companies that have dominated the market virtually unchallenged for decades, plus a single contract manufacturer. Until ByHeart, every new infant formula brand that came to market in the last 15 years used that one contract manufacturer to make infant formula for brands using the same standard recipe it had used for years—a common manufacturing practice called white labeling. Because this manufacturer makes minimal changes to an existing recipe (such as swapping out standard ingredients for organic versions), they can skip the step of conducting a new clinical trial for FDA registration and quickly use the high-priced brand using a recipe bring to market reflects much of what is already on the shelves.
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Who doesn’t love shortcuts?
The reason for this stagnation is that developing a new and advanced product is lengthy, risky and expensive. Infant formula is the most heavily regulated food in the world, as it should be – but new entrants to the industry are systematically discouraged from innovating because of friction at multiple touchpoints (such as the significant investments required to build new factories). Parents and babies pay the price. No wonder these industry giants remained unchallenged for so long – the path to true innovation is daunting.
What should I do?
Option A: Create a new infant formula from scratch. Time to market: 7-10 years
Truly innovating a new infant formula that has a better impact on babies requires a fundamental approach to scientific research, global ingredient sourcing, innovative product development, clinical testing, establishing state-of-the-art manufacturing and distribution, and a comprehensive FDA registration process – all the way to commercialization takes years and significant financial investment.
Option B: Launch a new brand with a white label formula. Time to market: 1 year
First, contact the only contract manufacturer in the country. Skip product development and white label an existing product product, outsource the manufacturing, bypass the clinical trials, create a logo and a new marketing approach, and you’re in business.
It’s not surprising that so few companies chose Option A. Investors asked us if there were parents Strictly speaking Do your research and understand the difference between the options and the answer is clearly “yes” – we see it with our customers every day.
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How can we fix this?
Relaxing regulations or shortening the infant formula development process is not a solution. To see a truly diversified formula space with better options for parents, we need to encourage companies to prioritize innovation and infrastructure.
Here’s how:
1. Raise the bar for complaints and require clear packaging labeling. Benefit claims should only be allowed for marketing purposes if a company has conducted a clinical trial that has provided tangible evidence. Setting stricter parameters for the use of advertising claims as well as improved label transparency will encourage companies to invest in product innovation as parents can easily see the differences between options.
2. Protect private label generics by creating a clearer regulatory pathway to bring affordable infant formula to market quickly. Lower-cost, private-label generics play a critical role in providing access to families across the country, and the added competition ultimately puts pressure on market leaders to innovate and tout product differentiation.
3. Establish a financial incentive program to build additional domestic manufacturing facilities. As long as the number of FDA-registered facilities remains the same, the country will continue to face the threat of further shortages. Infrastructure development requires significant financial investment, and without clear pathways to securing funding, the lack of supply chain diversification will remain a dangerous bottleneck.
The industry needs to recognize the importance of infant formula as a staple food for babies at a crucial stage of development. It’s time to incentivize companies to do the hard work needed to diversify our supply chain and advance scientific discovery. If we don’t do that, we’ll just be waiting for the next plant shutdown that will plunge us back into scarcity. Our babies deserve better.