ByHeart Formula Recall May Boost Rivals Abbott, Perrigo
An FDA botulism investigation into a private formula maker is sparking a potential 'flight to quality' in the highly sensitive infant nutrition market.
The U.S. infant formula market is facing renewed safety concerns after privately-held ByHeart Inc. voluntarily recalled two lots of its Whole Nutrition Infant Formula. The move came as the Food and Drug Administration (FDA) launched an investigation into 13 cases of infant botulism reported across ten states, potentially positioning established rivals like Abbott Laboratories (ABT) and Perrigo (PRGO) to gain market share as caregivers gravitate toward trusted brands.
The FDA has warned consumers to avoid ByHeart formula with lot numbers 206VABP/251131P2 or 206VABP/251261P2, which have a use-by date of December 1, 2026. According to a statement from federal health officials, the recalled products represent less than 1% of the total U.S. formula supply and are not expected to trigger a nationwide shortage.
While the immediate supply impact is minimal, the event strikes a nerve in a market still scarred by the 2022 nationwide shortage. That crisis, which saw out-of-stock rates climb as high as 70%, was triggered by a bacterial contamination recall and production halt at an Abbott facility in Sturgis, Michigan. The lingering anxiety from that period has made brand trust and a proven safety track record paramount for parents and caregivers.
This dynamic is fueling expectations of a "flight to quality," where any safety misstep by one company can directly benefit its competitors. Abbott, with its flagship Similac brand, remains a market leader, reporting over $1.2 billion in revenue from the product line in the last fiscal year. The company's vast distribution network and decades-long presence on retail shelves make it a default choice for consumers seeking reliability.
Meanwhile, Perrigo stands as the dominant manufacturer of store-brand formulas, commanding an estimated 8-12% of the U.S. market. For budget-conscious families who still prioritize the stringent quality controls of major producers, Perrigo's products offer a key alternative. The company's infant nutrition business is projected to generate approximately $360 million in net sales this year. In a recent development, Perrigo announced on November 5th that it would conduct a strategic review of the unit, and a potential uptick in demand could feature heavily in that assessment.
Shares of Abbott Laboratories were trading up about 1.1% at $126.36 in Friday trading, while Perrigo Company PLC saw its stock decline by roughly 3.3% to $14.44, with the broader market digesting various sector-specific news. While the immediate market reaction is not pronounced, analysts will be closely monitoring retail sales data in the coming months for any discernible shift in market share away from smaller brands.
For an industry that has spent the last few years rebuilding consumer confidence and diversifying its supply chain, the ByHeart recall serves as a stark reminder of the high stakes involved. Any perceived safety lapse provides a powerful opportunity for the market's largest players to reinforce their dominance.