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Monday, October 3, 2022

Posted by Tamila Deniece Harris 7:51 AM No comments

The baby formula is worth over $4 billion and has been dominated by the same three industries for decades. The top three players Abbott, Mead-Johnson, and Nestlé supply about 98% of all formula domestically.

But when baby formula shortages struck America, newer brands found the market opening up to them.

best baby formula The baby formula market in the US saw the emergence of new players during the formula crisis. (A woman with child checks out baby formulas in a supermarket; Image Credit – Shutterstock)Changing the game with baby formula

In 2016, Laura Modi found herself facing an ethical dilemma while trying to get her infant to eat. As she was having trouble breastfeeding, she had turned to baby formula to feed her child. But reading the list of ingredients at the back of the can made her feel sick. Should she feed her child something she wouldn’t buy for herself? Making her child eat was considered some of the best baby formula, but in reality what was far from it, made her question the market and her choices. The mother and the businesswoman in her wanted something better.

Six years ago Ron Belldegrun and his sister, Mia Funt, looked at the baby formula market and discovered that it was ripe for disruption. However, it was not easy to shake up the most highly regulated food market in the world. They wanted to combine the benefits of baby milk by using the cleanest ingredients to make it safer for children and offer better options to parents.

Disrupting the baby formula market

Modi’s dilemma eventually led her to experiment with different ingredients before launching Bobbie, the baby formula brand named after the word her daughter used for the bottle. Bobbie is marketed as a European-style formula and costs almost three times as much as its American counterparts. But it helps do away with “mom guilt”, is made with organic milk and is delivered to your door. After three years of research and work, Bobbie was launched in 2021, targeted toward millennial parents – who are conscious about their choices and the biggest child-bearing demographic.

Brother-sister duo Ron and Mia launched their direct-to-consumer formula company ByHeart in March. It took six years for them to research, test, and win regulatory approval for their baby formula. Baby formula is the only food that requires clinical trials to launch a new product. But it was well worth it as ByHeart’s sales exceeded projections by 15 times and it had to stop taking in new customers.

Who makes baby formula in the US?

Since 1980, Abbott and Mead Johnson have controlled about 80% of the US market. They strengthened their position in the market with the federal government’s Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) that provides nutritional support for lower-income families. Every WIC contract in all 50 states have gone to Abbott, Mead Johnson, or Nestle, due to regulatory and cost-related bottlenecks that can only be afforded by large companies. Nestle is also one of the world’s largest coffee companies. 

The baby formula market is riddled with FDA regulations and guidelines on marketing. Modi and her co-founder, Sarah Hardy, faced these issues in 2019, before they relaunched in 2021. Bobbie focuses on providing a European-style formula, as most parents believe the EU has stricter regulations and better guidelines. Their research also showed that 20% of formula-feeding parents at a New York City pediatrician were importing formula from Europe. Bobbie sells cans measured by the gram and was able to establish its presence during the baby formula shortage. Although Modi is careful not to talk about such a difficult time as a business opportunity, it did help bring Bobbie into the limelight.

ByHeart, meanwhile, does not focus on having a European connection. It markets itself as a formula that is made using whole milk, rather than skim, which some pediatricians believe is a promising innovation. The company is careful to assert that breastmilk is best. One of their ads reads – Breast is best. We’re next.

Both ByHeart and Bobbie want to shape the baby formula industry and offer parents better choices. Modi and Belldegrun are hopeful that the government will domestic manufacturers instead of just allowing European imports.

The post The Disruptors of the Baby Formula Market in the US appeared first on Industry Leaders Magazine.

* This article was originally published here

* This article was originally published here


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