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Yes, 4 companies control a majority of the infant formula industry in the US

Part of the reason why there is a baby formula shortage in the U.S. right now is because of how the industry is set up and regulated.

CHARLOTTE, N.C. — Families in the United States continue to scramble to find infant formula in stores, pharmacies, and at their doctors' offices.

On Tuesday, medical provider StarMed handed out more than 1,000 cans of formula outside two of their Charlotte locations. Lines wrapped around with people anxiously waiting for the product.

RELATED: Charlotte families show up hours before StarMed formula distribution

As with product shortages experienced by millions during the height of the pandemic, there are claims spreading online about the infant formula industry.

One is about how it is set up and which companies dominate the sector.

THE QUESTION

Do four companies control a majority of the United States infant formula production?

OUR SOURCES

THE ANSWER

This is true.

Yes, four companies control a majority of the United States infant formula production.

WHAT WE FOUND

The FDA regulates which infant formulas are allowed to be sold to American consumers. The products have to pass certain inspections, go through research studies, and contain pre-approved ingredients.

Fullenkamp explained it's a very expensive industry to maintain a business.

"Baby formula costs a lot of money to build the factory and to get all the processes approved by the FDA," Fullencamp said. "But then once the company is built, then the cost of making the formula is a lot lower."

RELATED: White House launches webpage to help families find baby formula

In the world of economics, Fullenkamp said he sees this sort of set-up frequently. And it lends itself to creating a "concentrated" industry of just a few companies in control of the market.

"There's still niche players out there in the market, but they're very, very small," Fullenkamp said.

According to data compiled by Allied Market Research, these four companies control about 90% of the U.S. infant formula industry:

  • Abbott Nutrition
  • Mead Johnson Nutrition
  • Nestle USA
  • Perrio Company

Fullenkamp said he doesn't anticipate many smaller companies breaking into the industry anytime soon.

"It costs a lot of money to get into this business, and you're going to think twice before stepping in and trying to be one of those competitors," said Fullenkamp.

VERIFY is dedicated to helping the public distinguish between true and false information. The VERIFY team, with help from questions submitted by the audience, tracks the spread of stories or claims that need clarification or correction. Have something you want VERIFIED? Text lus at 704-329-3600 or visit /verify.

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