The Competition and Markets Authority (CMA) in the UK signals a need for regulatory measures in the baby formula market.
- An interim report reveals price hikes in baby formula from December 2021 to December 2023.
- Proposed solutions aim to enhance market competition and potentially introduce a price cap.
- The difficulty for parents in selecting between formulas due to marketing tactics was highlighted.
- Main suppliers dominate the market, with an emphasis on the need for fair pricing and accessibility.
The Competition and Markets Authority (CMA) in the UK has identified significant issues in the pricing of baby formula, suggesting the need for regulatory intervention. According to the watchdog’s interim report, consumers have faced considerable price increases of 18% to 36% between December 2021 and December 2023. This rise has sparked concern about the affordability and accessibility of baby formula for parents, many of whom are making purchasing decisions under challenging circumstances.
In response to these findings, the CMA has proposed several measures designed to boost competition within the baby formula sector and curb escalating prices. These measures include allowing companies to advertise price reductions, reinforcing existing regulations, and enhancing parental education on baby formula. Moreover, the CMA has suggested that the government could consider implementing a price cap or profit margin limit to hasten the reduction of prices.
CMA chief executive Sarah Cardell expressed concerns that companies are not competing intensely on price, which leaves parents vulnerable due to a lack of clear product information. The existing advertising restrictions, which aim not to discourage breastfeeding, have contributed to parents finding it challenging to distinguish between different products. The CMA observed that the branding strategies used by companies leverage packaging similarities to foster brand loyalty, complicating parents’ choices further.
The report also underlined the disproportionate market share held by major suppliers such as Danone, Nestlé, and Kendal Nutricare, which command more than 90% of the UK baby formula market. Conversely, more affordable supermarket own-label formulas only represent less than 5% of the market. Given this imbalance, the CMA is focusing on strategies that ensure fair pricing and better accessibility for consumers.
Spokespersons from major companies like Danone and Nestlé have commented on these findings, emphasizing their commitment to delivering value and affordable options to parents while ensuring fair dealings with suppliers and farmers. Meanwhile, the CMA is set to consult on its provisional findings to gather insights that will inform its final recommendations expected early next year.
The CMA’s report underscores the pressing need for renewed focus on competition and regulatory measures in the baby formula market.
