The Competition and Markets Authority (CMA) has revealed that consumers in the UK are facing excessively high prices for baby formula, with significant price hikes recorded over recent years.
The interim report from the CMA highlights a concerning trend where prices for baby formula have surged by 18% to 36% between December 2021 and December 2023. This situation has prompted the CMA to recommend several measures aimed at enhancing market competition and reducing costs for consumers. Among these proposals is the introduction of a price cap or a cap on profit margins, which could offer a faster route to price reductions.
Sarah Cardell, CMA’s chief executive, expressed her concerns regarding limited price competition among companies. She noted that many parents, often making choices under vulnerable conditions and without adequate information, tend to opt for pricier products, mistakenly equating higher cost with better quality. The regulator identified that parents face challenges in distinguishing between various products due to restrictive marketing regulations that prohibit promotional discounts to avoid discouraging breastfeeding.
Additionally, the report exposes that extensive cross-marketing strategies, where companies utilise similar packaging to foster brand loyalty, further complicate consumer choices. Supermarket own-label baby formula, which is generally less expensive, accounts for under 5% of the market share, while major brands like Danone, Nestlé, and Kendal Nutricare dominate over 90% of the supply.
A representative from Danone asserted that the market for formula milk in the UK remains competitive and dynamic, reinforcing their commitment to offering value to parents. Similarly, a Nestlé spokesperson emphasised their efforts in supporting families with infant feeding choices, aiming to ensure affordability and accessibility alongside fair pricing for suppliers and farmers.
The CMA is now inviting feedback on its preliminary findings and proposed options from both the government and relevant stakeholders. These insights will contribute to their final recommendations, which are expected to be released early next year.
The CMA’s findings underscore the urgency to address pricing issues within the baby formula market. As measures are considered, the focus remains on ensuring fair competition and facilitating access to affordable nutrition for children.
