- UK infant formula investigation launches
- Prices rose 25% in two years
- Dominated by Danone, Nestlé
An investigation has been initiated into the infant formula market in the United Kingdom following regulatory statements suggesting that parents could save £500 during the first year of their child’s life.
According to an initial report published in November, the cost of formula has increased by 25% over the past two years.
Prices, according to the Competition and Markets Authority (CMA), have remained “at historically high levels” despite a slight decline.
Danone and Nestlé, two corporations, dominate the industry.
As a result of the formal investigation, the regulator can legally compel businesses to provide information. Prior to this, it was dependent on the firms voluntarily providing information.
As the market leader in infant milk in the United Kingdom, Danone, the manufacturer of Aptamil and Cow & Gate, commands a 71% share of the sector. Nestlé, the second-largest manufacturer of SMA, holds 14% of the market.
Examining Infant Formula Market Transparency
The CMA was concerned, according to Sarah Cardell, the organisation’s chief executive officer, that parents were not being provided with the information necessary to make an informed decision about which milk to purchase and that the market was not operating in a manner that would encourage suppliers to reduce prices.
She stated, “We are committed to ensuring that this market functions effectively for the numerous new parents who rely on infant formula.”
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The inquiry may yield suggestions to the government regarding modifications to the marketing of infant formula and the information disseminated to guardians.
Nestlé expressed its approval of the industry evaluation.
A spokesperson stated, “This is a complex and serious matter, and we welcome all constructive dialogue in an effort to assist parents as effectively as possible.”
“Since our inception, our objective has been to ensure that our products remain accessible and affordable for parents, all the while conducting equitable pricing with our suppliers, which includes our farmers.” “Costs have increased substantially, but we are confident that we have achieved this by reducing expenses wherever possible and increasing prices only as a last resort,” they continued.
Danone Collaborates Amid Price Probe
Danone expressed its eagerness to maintain its collaboration with the CMA during the competition watchdog’s comprehensive market analysis.
According to the initial report published by the CMA last year, branded formula suppliers increased prices by a greater amount than their cost increases.
In most cases, consumers will choose less expensive brands when they become available. However, the CMA discovered that this has not occurred in the infant formula market.
The competition watchdog’s investigation will assess whether consumers are receiving accurate information about the products they are purchasing and what is preventing them from switching.
Additionally, the analysis will consider the obstacles that impede the entry of new suppliers into the market, given that heightened competition may contribute to price reductions.
A definitive report is anticipated to be published in September.
The regulation of the nutritional value of infant formula is rigorous. Due to this, infant milk products have similar fundamental components.
Therefore, according to the consumer organisation Which?, claims like “complete nutrition” and “closest to breast milk” are meaningless.
Furthermore, in order to safeguard the health benefits of breastfeeding for infants, regulations prohibit the advertising or discounting of formula milk.
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