Market Winners and Losers in the Baby Formula Shortage Crisis

David Keller
6 min readMay 31, 2022


Before I start, an important preface–the losers of the baby formula shortage are babies, mothers, and families whose lives’ have been thrown into disarray because of a preventable shortage of a critical asset. My angle is to explore how this serious event can be leveraged by discerning investors, so here we go.

The baby formula market is a $2.1 billion industry and, perhaps surprisingly, is controlled by a small number of manufacturers who are again in whistleblowers’ crosshairs over their outsized market share. Recently, the infant formula market was plunged into disarray when Abbott Laboratories voluntarily recalled some of its most popular powdered formulas in February and shut down its plant in Sturgis, after four babies who had consumed some of Abbott’s products became sick with bacterial infections. Abbott, which controls 48% of the US formula market, has said there was no evidence its formula caused any known infant illnesses and that none of the tests performed by regulators have directly linked the cans of formula the babies consumed to the strains of bacteria, Cronobacter sakazakii, found at the plant.

But the ripple effects from that single plant closing have been widespread, highlighting the market power of a single manufacturer and the lack of meaningful competition in an industry governed by rules and regulations designed to protect consumers. Senator Tammy Duckworth, an Illinois Democrat, urged the Federal Trade Commission last week to conduct a broad study of the infant formula industry and whether market consolidation has led to the dire shortages. Top Biden administration officials have also lamented the power of a few players. On Sunday, Transportation Secretary Pete Buttigieg said more should be done to address the industry’s “enormous market concentration.”

There are four companies making about 90 percent of the formula in this country. Today, Abbott is the biggest player. Mead Johnson, which is owned by the conglomerate Reckitt Benckiser, and Perrigo, which makes generic formulas for retailers, control another 31 percent. The lack of competition stems from simple math: Few companies or investors are eager to jump into the infant formula industry because its growth is tied to the nation’s birth rate. However, the factors that long ago led to the creation of an industry controlled by a handful of manufacturers are primarily rooted in a tangled web of trade rules and regulations that have protected the biggest producers and made it challenging for others to enter the market.

To help alleviate the shortage, the Department of Agriculture has granted states waivers that would give WIC recipients more flexibility to choose alternative formula brands and sizes. One of the steps the FDA is taking is to streamline the import entry review process for certain products coming from foreign facilities with favorable inspection records. In other words, international baby goods stocks may see a bump upwards in business thanks to unmet US demand. With that being said, investors looking to benefit from the baby formula shortage may want to look abroad.

Therefore let’s get into it and see what the best baby formula stocks to buy are during these trying days. You may have been surprised to know that some of the best baby stocks are foreign companies. For instance, Nestle (OTC: NSRGY) which is based in Vevey, Switzerland, makes famous U.S. baby formula and baby food brand Gerber. In addition, Nestle makes other international branded baby formulas. The maker of Gerber and other foreign baby formula brands like Nido and Cerelac. Nestle’s high-end branded bottled water brands include Perrier and San Pellegrino. The coffee brand, Nescafe, is made by Nestle, and they are also big in candy and snacks. You may have even eaten KitKat or Smarties made by Nestle. The company also makes ice cream brands like Haagen-Dazs and Dreyer’s and pet food brand Purina. ​​Nestle India Limited quote is equal to 17641.10 INR today, Based on analytical forecasts, a long-term increase is expected, the “NESTLEIND” stock price forecast for 2027 is 27007.50 INR. With a 5-year investment, the revenue is expected to be around +53.09%.

Danone (OTC: DANOY) is a multinational food-products corporation based in Paris and founded in Barcelona, Catalonia. It is listed on Euronext Paris where it is a component of the CAC 40 stock market index. In addition to baby formula, it sells products in other areas. Danone’s biggest segments are dairy products, such as milk and yogurt, where they sell brands like Danone, Activia, and Oikos. They also make a coffee creamer brand, International Delight. Another segment is bottled water. The company sells Evian bottled water in the US and other popular brands in international markets. Perrigo Company (NYSE: PRGO) is also a great investment at the moment, they make store-branded baby formula for big retailers like Walmart (NYSE: WMT), Target (NYSE: TGT) and (Nasdaq: AMZN).

My personal favorite however, and leader in the sector of not only baby formula but also clean label (plant-based) products is ELSE Nutrition (TSX: BABY)(OTC: BABYF). Vegan investments are at an all-time high year-over-year, driven by an increasing vegan movement and a global shifting in eating habits towards plant-based food around the world. Nowadays, for vegan businesses, private companies and publicly traded alike, to be estimated at several billion is no longer rare. The world’s first publicly listed alt-meat company Beyond Meat, and Else Nutrition, working on a plant-based infant formula.

The company develops all-natural food and nutrition products manufactured from almonds, buckwheat, and tapioca, free of hormones, antibiotics, gluten, and other toxic chemicals. Their Super Cereal for babies became the first-ever baby nutrition product to receive the Clean Label Project Purity Award Certification last April. As stated in a recent editorial analysis published on, “The company is leading the way in the plant-based nutrition market with considerable online sales growth and educates consumers on plant-based infant products’ nutritional benefits”.

Else Nutrition gained market share and was recognized as the “Best dairy alternative” at the World Plant-Based Expo in 2021. Their e-commerce and retail distribution partnerships include KeHE, United Natural Foods (NYSE:UNFI), Walmart (NYSE:WMT), and Thrive Market. They are Amazon’s top-selling baby and toddler formula, while also addressing the presence of heavy metals in infant food products, which many big baby food producers have overlooked, putting babies’ lives at risk and being the main reason for the current shortage.

The company reported revenue of C$1.6 million for the first quarter of 2022, up 26% from $1.3 million in the fourth quarter of 2021, aided by growing sales on (NASDAQ:AMZN), Else’s e-tail, and retail channels. The company also reported a decrease in operating loss, suggesting Else Nutrition is moving in the right direction to reach profitability as the company scales up. In early April, sales climbed 40% sequentially, with the number of Else Nutrition subscribers on the website passing the all-important 1,000 mark.

There is a growing demand for not just baby formula but for healthy, toxic-free formula/ baby food and government acceptance. Above are listed all great options to invest in but one sticks out in particular. ELSE’s excellent achievements have positioned the company for long-term success. According to many experts, this makes ELSE Nutrition even more impressive today given that the U.S. is possibly heading into a recession by the end of the year. ELSE is just one great option available but there are many developing formulas attempting to achieve the same clean label, and most importantly feed our children, so when looking into where to invest during this problematic period do your own research and spread the word. Disclaimer: this is not financial or investment advice, but rather a reflection of the author’s personal opinion.



David Keller

Market analyst into the intersection of technology, finance, society, politics, and macro-econ. Straddles the NY-TLV axis. Fortis Fortuna Adiuvat.