The Infant Formula Crisis in the United States: A Cautionary Tale of Regulatory Capture

By Alexander Franco, PhD
Lecturer, CamEd Business School

The Infant Formula Crisis

In October of 2021, an infant formula plant in the state of Michigan in the United States was shut down by Abbott Nutrition after allegations that contamination in its products had caused the deaths of two children. As a result, Abbott also voluntarily recalled several of its infant formula products from the market. At the time, the company was producing approximately 40% of all infant formula in the country. This occurred as the nation was experiencing skyrocketing national out-of-stock rates in many sectors of the economy due to the COVID-19 pandemic. By June of the following year, about a fifth of the U.S. was witnessing out-of-stock rates of baby formula that exceeded 90%. Acute shortages would remain for all of 2022 and into early 2023. Panic buying and hoarding, with parents driving from supermarket to pharmacy, caused large-chain retail operations like Walmart, CVS, Target, and Walgreens to establish draconian purchase limits for customers.