Why the Baby-Formula Market Is a Mess: Low Competition, High Regulation

US officials acted this week to ease a nationwide shortage of baby formula. But none of the moves will create immediate relief for parents scrambling to find stocked shelves. And none fully address the underlying flaws of the more than $ 4 billion US formula industry, in which business and government depend on one another to keep the country supplied.

Baby formula is one of the most tightly regulated food products in the country. That makes the barrier to new entrants high, and few brands have emerged as challengers to Similac and Enfamil, made by Abbott Laboratories spirit Reckitt Benckiser Group respectively, since the two entered the market in the 1950s. Abbott and Reckitt were responsible for roughly 80% of infant and toddler formula sales in the US last year, according to market-research firm Euromonitor.

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