The Great Baby Formula Shortage of 2022 (and why you should try Bobbie)

Source: ABC WKBW

40% of Infant Formulas are Out of Stock Nationwide

Across the nation, media outlets are depicting empty shelves in the baby food aisles and reporting on the current shortage of baby formula. The shortage began in late February after the FDA recalled three brands of powdered baby formula (Similac, Alimentum, and EleCare) following Cronobacter infections that led to the hospitalization of four babies and the death of two babies. Supply chain issues stemming from the pandemic have only worsened the situation.

The product data firm Datasembly reported that 40 percent of infant formulas were out of stock across the nation the week of April 23, significantly higher than the the typical out-of-stock rate of 2%-8% (based on the first 7 months of 2021).

Keep in mind — this isn’t as trivial as your supermarket running out of your favorite snack — babies generally don’t start eating solid foods until they are between 4–6 months, so milk is the ONLY thing they can eat during this critical period of growth and development. Thus, a prolonged shortage of baby formula is a crisis.

Breast May be Best, but Most Families Rely on Formula to Some Degree

The formula shortage poses a serious conundrum for the many newborn parents (83% based on a survey by Wakefield Research) that rely on or supplement with formula. According to the Surgeon General, while 75% of mothers in the U.S. start out breastfeeding, that rate falls to 43% by the end of six months, with only 13% of babies exclusively breastfed.

I was one of the 3 in 4 moms that started out breastfeeding, and while I had hoped to exclusively breastfeed my son, my husband and I made the tough decision on Day 4 to supplement my son’s diet with formula in order to keep his weight up. In our case, it was even more critical to ensure that he was eating and gaining weight because he was at risk for jaundice and needed to eat more to prevent the buildup of bilirubin.

Although our pediatrician and lactation consultant both recommended supplementing with formula, the decision to supplement with formula was ridden with sadness and guilt. Perhaps it was irrational, but I felt like it was one of my first “failures” as a newborn parent. I was disappointed that I was unable to produce enough milk for my son and cried the first night we fed Logan with formula. In my head, I knew that it was fine…heck, I was formula-fed as a child (and turned out fine), but it was still emotionally distressing — a classic situation where your brain (logic)and heart (emotions) are at odds.

Since then, a lot of friends have shared that they too either supplemented or exclusively fed their babies with formula, and I know without a doubt that supplementing with formula was the right decision to make for our son.

A quick shout out here to all newborn moms — you are doing great and whatever you choose (even if that means exclusively feeding with formula) is the right decision for you and your baby.

Our current regimen now that I’m back at work is a mix of pumping, breastfeeding, and formula.

Europe — Known for its Handbags AND for its Baby Formula

A few months before Logan arrived, one of my best friends, Christina, wanted to throw me a baby shower so I asked my friends to help me crowdsource a spreadsheet with their recommendations for the best and most crucial baby items. One of the contributors made a comment about getting European (EU) formula instead of the popular U.S. formulas, which piqued my interest.

Why would a parent want to seek out and import formula from Europe? Turns out that although it’s technically illegal to buy EU formulas here in the U.S. (because they are not regulated by the FDA), there’s actually a robust demand (and black market) for EU formulas because of the perception that EU formulas are better.

Here are some of the commonly-cited reasons for why parents opt to buy the EU formulas:

Governed under stricter regulations (e.g. bans certain added sugars, like corn syrup, requires that at least 30% of the carbohydrates come from lactose, requires the omega-3 fatty acid DHA, and has a lower requirement for iron)

Higher quality (usually “organic” and “non-GMO,” with fewer preservatives)

Offered in more options (goat’s milk or milk from pasture-raised cows)

Designed to meet dietary needs by stage vs. the typical “one size fits all” approach found in the states

Often contain probiotics, which help with the baby’s digestion

STARTUP/PRODUCT SPOTLIGHT

Introducing Bobbie, the European-Style Infant Formula Company Founded by Moms in 2018

Part of my blog is dedicated to sharing and spotlighting cool new startups that are solving big problems and I’m happy to start by telling you all about Bobbie, the formula brand that we’ve been feeding Logan over the past few months.

Source: https://pickyeaterblog.com/

Bobbie was founded in 2018 by two moms, Laura Modi and Sarah Hardy, that aimed to develop a European-style infant formula manufactured in the U.S. that would be FDA-approved and sold legally in the U.S.

TechCrunch notes that at the time, Bobbie was the first new infant formula product to launch into the market in six years and the company targeted customers who were getting EU formulas on the black market.

Milk Drunk wrote a great article that breaks down the details on what Bobbie does to make their formula more similar to the EU formulas.

A few of the highlights are listed here:

Like popular EU formulas, Bobbie uses lactose as the only source of carbohydrates, is organic and non-GMO, is easy to digest, and meets EU standards for DHA.

In addition, Bobbie formula has added DHA and meets the EU required levels of DHA. DHA is an essential ingredient that helps with vital parts of infant development, such as the eyes and brain.

Bobbie contains added iron at a level that meets the requirements for both the EU and the U.S. range.

In addition, we note that:

Bobbie is the only U.S. formula that sources its milk from cows who meet both organic and pasture-raised criteria.

Bobbie is modeled after breast milk with a protein ratio that is similar to the protein ratio of breast milk, which should support gentle digestion while being easy on the gut.

And unlike many of the U.S. formulas, Bobbie is: Gluten-free and does not have corn syrup, palm oil, Maltodextrin, or natural or artificial flavors and colors .

TLDR: Bobbie, explained in VC/Startup Terms

Below is a quick summary of Bobbie described using language and a pitch-like framework that startups and VCs typically use.

The Problem: 83% of newborn parents in the U.S. supplement or use infant formula but cannot legally or easily purchase EU-baby formulas, which are better-regulated, higher quality, and typically organic/cleaner (fewer fillers and preservatives).

The Solution: Bobbie is a European-style infant formula that is organic and non-GMO, thoughtfully made with lactose, DHA, and iron levels that match EU standards, making it easier on digestion and more nutritious for the baby. It is FDA-approved and sold legally in the U.S. through its own DTC channel.

The Market: The global infant formula market is expected to reach $103B market by 2026, growing at a CAGR of 10.9% over the forecast period (2019–2026).

Go-To-Market Strategy: The company launched in the U.S. first, targeting parents that were seeking EU-formulas in the black market. Bobbie was very transparent in its marketing and offered a lot of education to help inform customers about their ingredients/formulation and why it was better than its competitors. The company was also unique in offering its product through DTC; most formulas are sold wholesale and need to be purchased through a supermarket or third-party retailer.

Traction: Bobbie generated 2021 Revenue of $18MM, well above its initial projection for $4MM. Sales in 2022 are expected to quadruple, with 60% MoM Growth.

Funding: On 3/15/22, Bobbie announced a $50MM Series B round that was led by Park West and included existing investors VMG and NextView and a group of over 100 new investors that are part of AirAngels, the Airbnb alumni syndicate.

This is on the heels of a $15MM Series A round that was completed in June 2021. In total, Bobbie has raised $72MM in funding. TechCrunch reports that Bobbie’s valuation has tripled over the past 10 months.

Takeaway: Bobbie has become an indispensable part of our lives as newborn parents and the stellar traction/growth demonstrates clear product-market fit. I’ve started to see other formula companies/startups that are coming down the pike, so I’m curious to see how their offering will stack up and if that will impact Bobbie’s pricing/margins since they are currently first to market with this European formulation.

In my opinion, maintaining a strong community and investing in customer loyalty will be key. In fact, that’s likely the reason for why they are currently limiting orders to existing customers that already rely on Bobbie for feeding their babies. Looks like they plan to open sales to new customer again in early June, so when they do, you can check them out here.

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Newbie mom and early stage VC investor. Sharing thoughts, lessons, tips and recommendations about life, motherhood, products/startups, food, and travel.

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Kelly Chen

Kelly Chen

Newbie mom and early stage VC investor. Sharing thoughts, lessons, tips and recommendations about life, motherhood, products/startups, food, and travel.

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