Most Stolen Products: Baby Formula
The business of stealing infant formula is always brisk and sometimes vicious.
They normally worked in groups of four and followed a synchronized plan: Two men would enter the store. One would put the product into a shopping cart while the other performed counter surveillance. A woman would enter and meet the man with the cart, then transfer the product into a large purse, or "boost bag." Together the gang would then escape to a getaway car where their fourth member, a driver, was waiting.
The goods would be repacked and stored in unmarked brown packaging. After hitting several shops, the criminals would have enough merchandise to take the loot out of state and unload the products on the gray market.
Such was the modus operandi of a theft ring recently apprehended in Central Florida for stealing not alcohol, drugs, or guns, but, get this, baby formula. Maybe six or a dozen cans at a time.
Indeed, several similar, albeit smaller, busts are made every year around the country, with police outfits picking up individual and groups of criminals stashing stolen packs of Similac, Enfamil (MJN), and Nestle baby formula of every lactose-free and soy-based variety.
As unlikely as it may seem, baby formula is a mainstay on the perennial list of most shoplifted items. On the surface the contradiction is striking -- who would associate a food meant for infants with hoodie-wearing, calculating thieves? But shoplifters know that powdered milk is expensive, running up to $155 for a pack of six. A can or bottle can last only a week or two depending on whether it's used a premixed formula or powder alone, and how it's used. (Many mothers use formula as a supplement to breast feeding while others choose it as a baby's main source of nourishment.)
"Hot" baby formula is most often sold at a relatively low price, hawked at local markets or at small independent stores. The parents doing the buying may believe they've stumbled upon a bargain. In fact, say anti-theft experts, shoplifting leads to a kind of "crime tax" for American families since manufacturers need to keep raising prices just to recoup lost revenues.
Drug dealers are also frequent buyers of stolen baby formula. They use the powder to cut heroin and cocaine. Thus a product created for the mouths of babes had developed ties to an underworld of thieves, drug barons, and, even more alarming, terrorists.
Five years ago, FBI Director Robert Mueller surprised Americans by linking stolen baby formula to terrorist organizations like Hamas and Hezbollah, saying the money made from black market sales have been used to support these overseas groups.
A year before that, the US saw one of its largest formula busts in recent years. In 2004, seven Honduran immigrants were arrested in North Carolina for stealing and reselling more than $14 million in baby formula and over-the-counter drugs. According to the New York Times, members of that crew were given sentences of up to 12 years in prison and ordered deported.
Around the same time, shop owners decided to get serious about protecting their baby formula assets, putting the cans in locked cabinets accessible only to staff, much to the chagrin of already harried, crunched-for-time parents.
The change led to some reduction in theft, but hasn't stopped groups like the crime ring found in Central Florida. In Atlanta, too, a pack of sophisticated shoplifters were recently caught taking several million dollars worth of infant formula, razors, and other merchandise from the city's stores and reselling them to a wholesaler in Brooklyn, New York, the US Attorney's Office said.
On the other side of the country, Los Angeles police arrested two people in August in connection with a large commercial theft ring suspected of swiping more than $6 million in baby formula and other personal care products from retailers. In that case, police spent a year investigating the so-called Hernandez organization, which traded in items that crews stole from department stores, groceries stores, and drugstores.
In Colorado, police recently captured a married couple who, as the ring leaders in a nine-person group, stood accused of stealing more than $20,000 worth of baby formula from area stores. Prosecutors told the media that the thieves used proceeds from baby formula sales for daily living expenses, gambling, and illegal drugs.
The International Formula Council, an association of formula makers, told Minyanville that it doesn't keep data on infant formula theft, but said that "the likelihood that consumers will purchase stolen infant formula is low due to improved retailer security of these products."
"However, parents and caregivers who may be concerned about purchasing stolen infant formula should only buy their formula from reputable retailers," a spokesperson said.
A closer look at the council's website shows that infant formula manufacturers are likely distracted by a different kind of battle, one to protect their product's reputation. Last May, the White House Obesity Task Force released comments that linked infant formula to childhood obesity. According to the council, however, the science in the report used by the task force was based on data that was 30 years out of date.
Infant formula, they say, has evolved to keep up with current nutritional science. Though even the council says it does "support the position of the World Health Organization and the American Academy of Pediatrics that breastfeeding is ideal," and is "pleased that ... recorded breastfeeding rates in the United States have increased during the past decade."
We suspect there are few thousand "boosters" in the country who would disagree, though, and that they'd argue for the continued use of artificially-sourced food --- at least until they've figured out how to steal the real thing.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.