A DTC baby formula startup is caught in the center of a supply chain crisis

After weeks of “unprecedented growth,” Bobbie co-founder Laura Modi made a hard decision: to not accept any more new customers.

A sign stand next to a small amount of toddler nutritional drink mix at Target in Stevensville, Maryland, on May 16, 2022, as a nationwide shortage of baby formula continues due to supply chain crunches tied to the coronavirus pandemic that have already strained the countrys formula stock, an issue that was further exacerbated by a major product recall in February. (Photo by Jim WATSON / AFP) (Photo by JIM WATSON/AFP via Getty Images)

Parents unable to track down formula in stores have been turning to Facebook groups, homemade formula recipes and Bobbie, a 4-year-old subscription baby formula company.

Photo: JIM WATSON/AFP via Getty Images

The ongoing baby formula shortage has taken a toll on parents throughout the U.S. Laura Modi, co-founder of formula startup Bobbie, said she’s been “wearing the hat of a mom way more than that of a CEO” in recent weeks.

“It's scary to be a parent right now, with the uncertainty of knowing you can’t find your formula,” Modi told Protocol.

Parents unable to track down formula in stores have been turning to Facebook groups, homemade formula recipes and Bobbie, a 4-year-old subscription baby formula company that sells organic, European-style formula modeled after human breast milk. The company has been “pretty massively” impacted by the shortage, said Modi, with sales and new customers spiking as demand increases. But Bobbie can’t meet that new demand amidst the shortage, and so Modi had to make a tough call: The company closed its subscription service to new customers and opened a waitlist. Current or former Bobbie customers can still purchase baby formula directly from the company or sign up for a subscription.

“I had to make a hard decision staring at supply versus demand and decide to prioritize our current customers over growing the business,” Modi said.

The baby formula shortage began in February when Abbott Nutrition, one of the largest suppliers of the product in the U.S., recalled several major brands of its powder formula after four babies suffered bacterial infections linked to products made in its Michigan factory. The company has since shut down that plant. The recall exacerbated ongoing pandemic-related supply chain issues in the baby formula market.

Photo: Bobbie

Abbott’s recall includes the leading powder formula products, including Similac, Alimentum and EleCare. Three other manufacturers, Mead Johnson, Gerber and Perrigo Nutritionals, are trying to keep up with the demand, but given the supply chain issues, there’s still a massive gap. According to Axios, 43% of baby formula is out of stock. For manufacturing, Bobbie partners with Perrigo Nutritionals, which is reportedly operating its facilities at 115% capacity and expects shortages to last through 2022, according to Reuters. Modi told Reuters that Perrigo is able to meet 100% of the company’s current needs.

“This [shortage] is a big wake-up call that we cannot ever be dependent on any one manufacturer or anyone's supplier to make sure that we always have the product on hand,” Modi said.Modi said Bobbie saw its customer count double in the first week following the recall. Weeks and weeks of “unprecedented growth” followed, she said. Limiting the company’s customer base was the best way to ensure reliability and a consistent supply of formula to those who have used Bobbie. The company’s more than 70,000 subscribers get bundles of four, eight and 10 cans of formula for between $114 and $285 per month.

“The decision was, rather than going out of supply, we’re going to give peace of mind to our current customers that if they started on Bobbie, they'll be able to continue on Bobbie,” Modi said.

The move to limit the number of customers who can buy Bobbie products is similar to policies of retail stores like Target, Kroger, Walgreens and CVS, which have placed limits on the amount that a person can buy in one transaction to prevent stockpiling.

Photo: Bobbie

Modi said the feedback to Bobbie’s decision has been overwhelmingly positive. After announcing the subscriber limit in an Instagram post last week, the company received an outpouring of support from parents who buy its products.

“I’m not even kidding when I say I cry happy tears every time that I open that can,” one customer said in an email to Bobbie shared with Protocol. “As long as I’m feeding a baby formula, I will always choose Bobbie. You have made a customer for life.”

The baby formula shortage is showing some early signs of easing: Abbott reached an agreement with the FDA on Monday that will reopen its Michigan factory. The company said baby formula could be available on shelves six to eight weeks after the production restarts, which would take two weeks, pending FDA approval. And on Wednesday, the Biden Administration invoked the Defense Production Act to boost baby formula production, as well as authorized flights to bring imports from overseas. According to the Associated Press, 98% of baby formula consumed in the U.S. is produced domestically. Bobbie didn’t say when it will reopen its sales, but plans to update its subscribers in June.

For now, Modi isn’t focused on growing Bobbie’s bottom line. Her goal is to give the company’s current customers a sense of relief knowing that Bobbie has them covered.

Correction: This story has been updated to correct the number of years Bobbie has been operating. This story was updated May 18, 2022.


Judge Zia Faruqui is trying to teach you crypto, one ‘SNL’ reference at a time

His decisions on major cryptocurrency cases have quoted "The Big Lebowski," "SNL," and "Dr. Strangelove." That’s because he wants you — yes, you — to read them.

The ways Zia Faruqui (right) has weighed on cases that have come before him can give lawyers clues as to what legal frameworks will pass muster.

Photo: Carolyn Van Houten/The Washington Post via Getty Images

“Cryptocurrency and related software analytics tools are ‘The wave of the future, Dude. One hundred percent electronic.’”

That’s not a quote from "The Big Lebowski" — at least, not directly. It’s a quote from a Washington, D.C., district court memorandum opinion on the role cryptocurrency analytics tools can play in government investigations. The author is Magistrate Judge Zia Faruqui.

Keep ReadingShow less
Veronica Irwin

Veronica Irwin (@vronirwin) is a San Francisco-based reporter at Protocol covering fintech. Previously she was at the San Francisco Examiner, covering tech from a hyper-local angle. Before that, her byline was featured in SF Weekly, The Nation, Techworker, Ms. Magazine and The Frisc.

The financial technology transformation is driving competition, creating consumer choice, and shaping the future of finance. Hear from seven fintech leaders who are reshaping the future of finance, and join the inaugural Financial Technology Association Fintech Summit to learn more.

Keep ReadingShow less
The Financial Technology Association (FTA) represents industry leaders shaping the future of finance. We champion the power of technology-centered financial services and advocate for the modernization of financial regulation to support inclusion and responsible innovation.

AWS CEO: The cloud isn’t just about technology

As AWS preps for its annual re:Invent conference, Adam Selipsky talks product strategy, support for hybrid environments, and the value of the cloud in uncertain economic times.

Photo: Noah Berger/Getty Images for Amazon Web Services

AWS is gearing up for re:Invent, its annual cloud computing conference where announcements this year are expected to focus on its end-to-end data strategy and delivering new industry-specific services.

It will be the second re:Invent with CEO Adam Selipsky as leader of the industry’s largest cloud provider after his return last year to AWS from data visualization company Tableau Software.

Keep ReadingShow less
Donna Goodison

Donna Goodison (@dgoodison) is Protocol's senior reporter focusing on enterprise infrastructure technology, from the 'Big 3' cloud computing providers to data centers. She previously covered the public cloud at CRN after 15 years as a business reporter for the Boston Herald. Based in Massachusetts, she also has worked as a Boston Globe freelancer, business reporter at the Boston Business Journal and real estate reporter at Banker & Tradesman after toiling at weekly newspapers.

Image: Protocol

We launched Protocol in February 2020 to cover the evolving power center of tech. It is with deep sadness that just under three years later, we are winding down the publication.

As of today, we will not publish any more stories. All of our newsletters, apart from our flagship, Source Code, will no longer be sent. Source Code will be published and sent for the next few weeks, but it will also close down in December.

Keep ReadingShow less
Bennett Richardson

Bennett Richardson ( @bennettrich) is the president of Protocol. Prior to joining Protocol in 2019, Bennett was executive director of global strategic partnerships at POLITICO, where he led strategic growth efforts including POLITICO's European expansion in Brussels and POLITICO's creative agency POLITICO Focus during his six years with the company. Prior to POLITICO, Bennett was co-founder and CMO of Hinge, the mobile dating company recently acquired by Match Group. Bennett began his career in digital and social brand marketing working with major brands across tech, energy, and health care at leading marketing and communications agencies including Edelman and GMMB. Bennett is originally from Portland, Maine, and received his bachelor's degree from Colgate University.


Why large enterprises struggle to find suitable platforms for MLops

As companies expand their use of AI beyond running just a few machine learning models, and as larger enterprises go from deploying hundreds of models to thousands and even millions of models, ML practitioners say that they have yet to find what they need from prepackaged MLops systems.

As companies expand their use of AI beyond running just a few machine learning models, ML practitioners say that they have yet to find what they need from prepackaged MLops systems.

Photo: artpartner-images via Getty Images

On any given day, Lily AI runs hundreds of machine learning models using computer vision and natural language processing that are customized for its retail and ecommerce clients to make website product recommendations, forecast demand, and plan merchandising. But this spring when the company was in the market for a machine learning operations platform to manage its expanding model roster, it wasn’t easy to find a suitable off-the-shelf system that could handle such a large number of models in deployment while also meeting other criteria.

Some MLops platforms are not well-suited for maintaining even more than 10 machine learning models when it comes to keeping track of data, navigating their user interfaces, or reporting capabilities, Matthew Nokleby, machine learning manager for Lily AI’s product intelligence team, told Protocol earlier this year. “The duct tape starts to show,” he said.

Keep ReadingShow less
Kate Kaye

Kate Kaye is an award-winning multimedia reporter digging deep and telling print, digital and audio stories. She covers AI and data for Protocol. Her reporting on AI and tech ethics issues has been published in OneZero, Fast Company, MIT Technology Review, CityLab, Ad Age and Digiday and heard on NPR. Kate is the creator of RedTailMedia.org and is the author of "Campaign '08: A Turning Point for Digital Media," a book about how the 2008 presidential campaigns used digital media and data.

Latest Stories