FDA Seeks to Bolster Formula Supply Chain Beyond Fall

The U.S. Food and Drug Administration (FDA) said it's looking to provide a path for foreign baby-formula makers to continue selling in the United States after temporary measures meant to speed internationally sourced formula products to U.S. shelves expire this fall.

Prior to the baby-formula shortage that reached crisis proportions in the U.S. this spring, the United States produced about 98% of the baby formula consumed in the country, according to the FDA. An Abbott production facility closure in February and additional supply-chain disruptions led to out-of-stock levels reaching 43% nationwide in May, according to Datasembly data, and the shortages prompted retailers including Target and CVS to institute purchase limits.

In response, the FDA streamlined its process for reviewing baby-formula products made abroad to get them to U.S. stores more quickly. The agency's "increased flexibilities" also included measures meant to increase the production and domestic distribution of U.S.-made formula products designed for foreign markets. 

On Wednesday, the FDA issued an update on additional steps it has taken increase formula availability in the U.S. over the longer term.

"The need to diversify and strengthen the U.S. infant formula supply is more important than ever," FDA Commissioner Dr. Robert M. Califf and Susan Mayne, director of the FDA's Center for Food Safety and Applied Nutrition, said in a statement. "The recent shutdown of a major infant formula plant, compounded by unforeseen natural weather events, has shown just how vulnerable the supply chain has become." 

The agency said it intends to "provide a pathway for companies that import, sell, and/or distribute formula under the FDA's temporary enforcement discretion policy to continue to supply infant formula to the U.S. past November." This summer, the agency plans to host meetings with formula makers and importers "to determine what additional steps would be needed to provide a pathway to long-term, uninterrupted marketing for safe and nutritious formula," Califf and Mayne wrote. The FDA also said it wants to establish a single technical assistance contact at the agency for any company looking to enter the U.S. infant formula market.  

Beyond product sourcing concerns, rising transportation costs and logistical concerns in moving product through the U.S. continue to challenge suppliers and retailers. A report this spring from Mazars, an audit, tax and advisory firm, found that 54% of food and beverage industry executives said their top concern was shipping and container costs and other unexpected fees they face in navigating current supply-chain disruptions while trying to grow their business.

Supply-chain disruptions also stand to pose headwinds challenging growth in other categories through the rest of the year. In the specialty food space, "growth will continue, but at a slower pace" than the industry experienced in the early months of the COVID-19 pandemic, Denise Purcell, VP of content and education for the Specialty Food Association (SFA), said in a statement. Further, she noted, that growth "will depend on supply-chain bandwidth and shifts in challenges like inflation, shipping issues, cost increases and materials shortages."

The disruptions have prompted some grocers to forge new partnerships with tech providers in an effort to get better real-time inventory information and source products from new and alternative providers based on store needs.