1, insufficient supply
The reason why the supply is in short supply is that the supply chain of milk powder is broken. Due to the COVID-19 epidemic in the United States and European countries, many milk powder factories in the United States have closed down and stopped working, so they can no longer provide milk powder. Similarly, the production of milk powder in European countries has also been affected, and their own supply has also been problematic, and their exports have also been affected, including logistics and transportation.
The importance of milk powder to infants
2, hoarding goods caused by the shortage of supply.
Affected by the epidemic, many families are used to hoarding goods, resulting in many manufacturers not knowing how to balance orders, fearing that they can't sell if they do more, and it is not appropriate to do less. These manufacturers need time to estimate the market size and arrange the production plan reasonably, which leads to the imbalance between supply and demand in the market.
The habit of hoarding goods developed by the epidemic situation
3. The market is highly concentrated, and there are several monopoly markets. Abbott's accident leads to a shortage of supply.
The unique situation of American milk powder market. The infant milk powder market in the United States is a very special market, which is different from the situation that milk powder in other countries in the world is not monopolized. Several large American companies, such as Abbott, Mead Johnson and Nestle, monopolize almost all infant milk powder, and almost all of them are produced in the United States. At the beginning of the year, due to bacterial infection, Abbott's factory in Michigan, which accounts for more than 40% of the market, stopped working for rectification and recalled several infant milk powders, which directly led to tight market supply.
Moreover, due to the special system in the United States, it is difficult for other countries, such as Europe, to sell infant formula in the United States. This is mainly because the tariff on infant formula in the United States is very high, and the tariff of nearly 18% has discouraged many enterprises. In addition, cumbersome supervision has also led to various troubles such as the need for these European manufacturers to adjust their formulas to meet FDA standards, resulting in high prices and no advantages, which directly led to the supply chain of infant formula in the United States.
To sum up, the most fundamental reason for the shortage of milk powder in the United States is the problem accumulated over the years. Its trade protectionism directly leads to the fragility and great risks of its own supply chain. I hope they can reflect on their own practices. After all, it is these innocent children who suffer.