Regulators have proposed sweeping changes for the baby formula industry after finding that parents could save about £300 a year by switching to lower-priced products.
The Competition and Markets Authority (CMA) today (14) said issues such as high prices and branding in the industry were leading to “poor outcomes”.
Some brands cost more than the weekly value of family benefits, leading to claims that some parents opted to forgo food to buy the product.
Baby formula should be placed in standardised packaging in hospitals while parents should be allowed to use gift vouchers and loyalty card points to buy formula milk, added CMA.
Labelling of infant formula in hospitals or other healthcare locations should be standardised.
Proposing five measures, CMA stated these will improve outcomes for parents and could allow them to save £300 a year by switching to a lower-priced brand, after a year-long study into the infant formula market.
However, the regulator has decided against recommending regulations such as a price cap on baby formula or a profit-margin cap, saying such a move would “involve significant risks” and could push up the prices of cheaper formula products to reach the ceiling, leading to some parents “missing out on cheaper options on the market”.
Sarah Cardell, the chief executive of the CMA, said many parents who “need, or choose, to formula feed, pick a brand at a vulnerable moment, based on incomplete information, often believing that higher prices must mean better quality”.
She added: “This is despite NHS advice stating that all brands will meet your baby’s nutritional needs, regardless of brand or price.”
Regulators have previously pointed to prices rising by 25 per cent over the past two years while consumers have borne the brunt of rising factory costs.
The industry is dominated by three companies: Danone, Kendal and Nestlé, which make up about 90 per cent of the market.
Baby milk brands often provide hospitals with formula below cost, because once parents start using a brand, they tend to stick with it.
Standardised packaging would "eliminate" brand influence after parents leave hospitals, the regulator said.
Retailers should also make it easier for parents to compare prices, and the ban on advertising should be extended to include follow-on formula.
Restrictions on price promotions and discounts on formula should remain in place so mothers are not discouraged from breastfeeding, it said.
But people should be allowed to use points, gift cards and vouchers to get the most for their money,
