Skip to main content
Article thumbnail
Location of Repository

The Infant Formula Market: Consequences of a Change in the WIC Contract Brand

By Victor Oliveira, Elizabeth Frazao and David M. Smallwood


The Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) is the major purchaser of infant formula in the United States. To reduce cost to the WIC program, each State awards a sole-source contract to a formula manufacturer to provide its product to WIC participants in the State. As part of the contract, the WIC State agency receives rebates from the manufacturers. In this study, we use 2004-09 Nielsen scanner-based retail sales data from over 7,000 stores in 30 States to examine the effect of winning a WIC sole-source contract on infant formula manufacturers’ market share in supermarkets. We find that the manufacturer holding the WIC contract brand accounted for the vast majority—84 percent—of all formula sold by the top three manufacturers. The impact of a switch in the manufacturer that holds the WIC contract was considerable. The market share of the manufacturer of the new WIC contract brand increased by an average 74 percentage points after winning the contract. Most of this increase was a direct effect of WIC recipients switching to the new WIC contract brand. However, manufacturers also realized a spillover effect from winning the WIC contract whereby sales of formula purchased outside of the program also increased.WIC, Special Supplemental Nutrition Program for Women, Infants, and Children, infant formula, rebate, sole-source contracts, contract brand, spillover effect, ERS, USDA, Industrial Organization, Institutional and Behavioral Economics, Marketing,

OAI identifier:

Suggested articles


  1. (2006). Accountability Offi ce.
  2. (1999). American Academy of Pediatrics.
  3. (2004). An Economic Model of WIC, the Infant Formula Rebate Program, and the Retail Price of Infant Formula, FANRR-39-2, USDA, Economic Research Service,
  4. (2003). Federal Trade Commission.
  5. (2010). Food and Drug Administration, Center for Food Safety and Applied Nutrition. Website updated 5/14/2009 on “Infant Formula: Frequently Asked Questions,” accessed on
  6. (2006). Recent Trends and
  7. (2010). Rising Infant Formula Costs to the WIC Program: Recent Trends
  8. (2005). Supplemental Food Programs Division.
  9. (2008). The Infant Formula Market:
  10. (2009). WIC Contract Spillover Effects, Food Marketing Policy Center Research

To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.