Amid an ongoing baby formula shortage, direct-to-consumer brand Bobbie is positioning itself to fulfill the demand.
According to research firm IRI, retailers had about 95% of popular powdered formula brands in stock before the pandemic began. However, the past year’s supply chain issues have decreased availability down to 75% across 10 major national retailers, including CVS and Walmart. The firm also found that formula cans are increasingly harder to find in bigger cities that have increased consumer demand.
Bobbie is trying to harness this gap, focusing on growing both its digital subscription business and retail presence, according to co-founder and CEO Laura Modi. The San Francisco-based startup, founded in 2018, got off to a bumpy start when it faced an FDA recall in 2019. But Modi said Bobbie’s 2021 relaunch coincided with rising demand and larger brands facing supply crunches.
In 2021, Bobbie posted $18 million in revenue from its one flagship formula product during, growing 60% month-over-month growth throughout the year. The product is currently selling 4x more than originally forecasted, according to the company’s founders. The brand sells through its official website, online marketplaces like Babylist as well as at some specialty baby boutiques. Heading into its second year on the market, Bobbie plans to scale its subscription service while striking retail deals with more specialty shops.
According to Modi, the company’s products speak to a large swath of parents. “We lead with ingredients, which are increasingly important to parents,” said Modi. For example, we’re the only brand on the market that’s currently Clean Label Project and pesticide free certified.” Bobbie is USDA Organic, gluten free and doesn’t contain corn syrup or palm oil. This month, the European-style formula received the Clean Label Project’s Purity Award.
Bobbie launched its online business a year ago, having raised $22 million to date — including backing from Bumble founder Whitney Wolfe Herd and Gwyneth Paltrow. Prior to that, the company built a waitlist of 7,000 customers, which Modi said helped launch the product through a big word of mouth among parents.
The past year’s growth coincided with Bobbie’s ad campaign with Queer Eye star and new parent Tan France, which led to a flurry of hate messages from anti formula-feeding social media groups, Modi said. Even so, said Modi, “these initiatives had a halo effect that raised our brand’s profile.”
Capitalizing on industry headwinds
Large retailers’ baby formula sales have been dampened by complicated supply chain issues, and the root of the delays seems unclear. A Wall Street Journal report from earlier this month said that retailers like Walmart and CVS blamed brands for formula out-of-stocks. Large brands like Similac and Enfamil, however, told a different story claiming that retailers weren’t distributing and merchandising their formula deliveries.
Whatever the cause, Bobbie said it grew over the last year as a result of having its products consistently available to customers, which it credits to owning much of the supply chain. Bobbie has a partnership with dairy farmers co-op Organic Valley, which supplies its pasture-raised milk. And, in recent months, the company expanded the number of its distribution centers and added multiple carriers to avoid shipping delays.
“There’s a sense of urgency to deliver infant formula on time,” Bobbie’s co-founder and chief operating officer Sarah Hardy said. “Our product is considered an essential good, so stockpiling has become popular among parents,” said Hardy. Bobbie offers bulk orders of up to 10 cans per month. However, the brand assures customers that as long as they’re actively subscribed, they’re guaranteed to receive their orders.
Having this active subscriber base has also helped Bobbie plan inventory demand, Hardy explained. “We work to fulfill our subscribe and save promise, even if it means sitting on inventory to cover our lead time,” Hardy said.
A new focus on retail
In addition to growing its online sales, Bobbie is also trying to expand its footprint by laying out a retail strategy that focuses on educating and connecting with potential customers. Modi said having a physical presence is important in the category, especially for parents that need to pick up an extra can or two in between shipments. Currently, the majority of Bobbie’s sales come from its website.
“We don’t just distribute to any mom and pop stores and pharmacies,” said Modi. Over the past few months, the company has partnered with about 25 retailers around the country — mostly specialty kids boutiques and parents-facing stores. Bobbie is experimenting with sponsoring baby-feeding classes at these boutiques.
One example is Chicago-based shop Bumble Baby, which offers parenting workshops, and recently began carrying Bobbie formula. Owner Kate Arquilla, who’s also a NICU nurse, has been a big brand ambassador for Bobbie, Modi explained. “She’s able to rave about Bobbie to her customers while also educating parents about the different brands on the shelf,” Modi explained.
Bobbie is also testing out experiential pop-ups at retail partners, including a recent event with DTC baby brand Lalo at Lalo’s new New York City location. Another example was Bobbie handing out formula-based ice cream at a recent shop event. The idea, said Modi, was “to show that ‘if your baby is going to have it, shouldn’t you try it too?’”
Modi said these approaches are funneling parents to the company’s subscription service. This year, the goal is to add 75 more shops as Bobbie distributors.
Karen Howland, managing director at CircleUp, said that Bobbie’s positioning comes amid shifts within the formula category. “Concerns around infant formula shortage are legit,” she said. “If people were hoarding toilet paper last year, imagine what they would do at the risk of not being able to give their child a healthy meal at this very precious age.”
Howland said that exposing customers to the brand through physical locations, online forums or medical professionals all are viable options for this type of product – “so long as the economics make sense with the lifetime value of the customer.”
For Bobbie, unlike most subscription-based DTC brands, lifetime retention isn’t necessarily the goal; babies grow up and no longer need formula. For Modai, growth is coming from offering parents an alternative to the stagnant category — and the market is big enough to keep the business afloat.
“Our customer’s lifetime is short, but choosing a formula is an emotional decision,” Modi said.