Home Money Competition watchdog to probe baby formula market as costs soar

Competition watchdog to probe baby formula market as costs soar

by Elijah
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Warning: Some supermarkets cut Aptamil prices last month, but CMA chief executive Sarah Cardell said baby formula prices remain at levels
  • CMA: Baby formula prices increased by 25% between March 2021 and April 2023
  • Sarah Cardell, chief executive of the CMA, said prices remain at “historically high” levels.
  • Danone currently dominates the UK infant formula market with a 71% share.

Britain’s competition watchdog is carrying out a market study on the infant formula market after finding that consumers could save money by choosing cheaper brands.

TO Report from the Competition and Markets Authority A study published last November on the food sector found that Britons could save more than £500 in the first year of a baby’s life by switching from a “premium” brand to alternative options.

Additionally, the investigation learned that the price of baby formula had increased by a quarter between March 2021 and April 2023.

Warning: Some supermarkets cut Aptamil prices last month, but CMA chief executive Sarah Cardell said baby formula prices remain at “historically high” levels.

Formula makers have blamed price increases on rising ingredients, energy and transportation costs and the impact of climate change on agriculture.

Some supermarkets, including Asda, Tesco and Sainsbury’s, cut Aptamil prices last month, but Sarah Cardell, chief executive of the CMA, said prices remain at “historically high” levels.

The CMA will now examine formulas sold over the counter to consumers, such as “anti-reflux” and “comfort” formulas, as well as “continuation” formulas and “growth” and “toddler” milks marketed in children at least 12 months old.

Regulators will also examine supply-side characteristics of the infant formula market, such as barriers to entry and growth, and the effect regulations have on market outcomes.

They can force companies to hand over information as part of their market research rather than relying on them to provide it voluntarily.

Aptamil owner Danone currently dominates the UK market with a 71 per cent share, followed by Nestlé, which produces SMA and Little Steps, with 14 per cent of total sales.

Other formula makers, Kendamil and HiPP, have single-digit percentage market shares, while private labels make up a small proportion of sales.

The CMA plans to collect information on how consumers behave, what drives their choices and the facts and advice used to support those decisions.

Cardell said: ‘We are concerned that parents do not always have adequate information to make informed decisions and that suppliers do not have strong incentives to offer infant formula at competitive prices.

“We are determined to ensure this market works well for the many new parents who rely on infant formula, and it is essential that any changes we propose are based on evidence and strong market knowledge.”

The CMA hopes to publish a final report on the issue sometime in September, which could include recommending a policy change to the government or applying competition law against certain companies.

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