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The Enterprise Minister has been asked to use his powers to investigate the market where prices have soared. Alamy Stock Photo

Government urged to investigate soaring baby formula prices as families struggle

An official UK investigation found manufacturers have hiked prices more than their costs increased – and enjoyed high profit margins.

THE GOVERNMENT HAS been urged to launch an investigation into the Irish baby formula market, where prices have soared by between 18% and 22% in two years.

It comes as the Society of St Vincent de Paul told The Journal it recorded a three-fold increase in the number of callers struggling to afford formula between 2020 and 2023 to 445, with many also having difficulty with the rising price of nappies.

Labour has called on Minister for Enterprise Simon Coveney to use his powers under the Competition and Consumer Protection Act to require the consumer watchdog to investigate practices and pricing within the Irish infant formula market.

The British consumer watchdog found in November that branded suppliers of baby formula had hiked their prices more than their input costs had increased, and had maintained “high profit margins” as prices climbed 25% in two years.

Earlier this week, Britain’s Competition and Markets Authority (CMA) expanded this investigation, stating it’s concerned that suppliers may not have strong incentives to offer formula at competitive prices.

The CMA will use compulsory information gathering powers to investigate whether there are problems in its market, which like Ireland’s is overwhelmingly dominated by just two multinational firms, Danone (maker of Aptamil and Cow & Gate) and Nestlé (maker of SMA). 

Now Labour wants to see Ireland’s Competition and Consumer Protection Commission (CCPC) take action too. Senator Rebecca Moynihan said it was “really disappointing” that the CCPC had so far failed to perform even “perfunctory desk analysis” on a topic that affects so many families.

“It’s one of the most shoplifted items. In some areas people are selling it door-to-door.

It’s essential food for thousands of babies.

“There’s a reason it’s security-tagged [in supermarkets]. People need infant formula,” Moynihan said.

Formula milk costs families who use it hundreds of euro over the first year of a baby’s life.

The cheapest infant formula in most Irish supermarkets – Danone’s Cow & Gate – is now retailing for €14.99 per 800g tin in several supermarkets, with Nestlé-owned competitor SMA costing €16.49. The third dominant brand in the market, Danone’s Aptamil, costs €17.49. An 800g tin would last less than a week for a fully bottle-fed baby.

The price of these brands rose between 17.8% and 22.4% over 2021-2023 according to data from consumer research firm Nielsen supplied by Nestlé. The Irish consumer price index indicates the price of “baby food” – a category that includes infant formula – increased by 7% last year, following on from a 9.4% increase in 2022.

The Vincentian MESL Research Centre keeps track of costs for nine-month-old babies and has found a 37% increase in the cost of “follow-on” milk in Ireland between 2020 and 2023, along with an 84% increase in the cost of napies.  Taken together, baby formula and nappies can cost families €30-35 per week.

SVP said requests for help with infant formula were a small but increasing proportion of calls it received, at 0.2% in 2023, with families living in emergency accommodation and mothers who have recently left a situation of domestic violence among those seeking assistance with essential costs for babies.

Tricia Keilthy, Head of Social Justice at SVP said: “Breastfeeding is not an option for everyone and there are additional challenges for mothers who face poverty, housing insecurity and those who do not have a network of family support.”

In recent decades, Ireland has had one of the world’s lowest breastfeeding rates. The latest data shows only 40% of babies born in Ireland are exclusively breastfed at birth, falling to just 32% by three months, meaning a large majority of new parents depend on formula.

Babies can only consume breastmilk or formula for the first six months of life, and will continue to consume a large amount of breastmilk or formula after solid foods are introduced at six months.

After 12 months, babies can drink regular whole milk. However, infant formula companies market “growing up milk” for this age group, leading many parents to believe they need to continue to buy formula for their child. The HSE says babies over the age of 1 do not need formula milk.

CCPC responds

The CCPC said it was “actively monitoring” the British investigation and acknowledged that “the market in Ireland for the supply of infant formula shares some or many of the characteristics of the UK market”.

“The CCPC is very conscious of the impact of rising prices on consumers, and the consequences for the most vulnerable in our society,” it said.

However, both the Department of Enterprise and the CCPC stated the agency’s role in pricing lay in “ensuring that prices are set independently by competing businesses, and those prices are then prominently displayed at the point of sale thereby enabling consumers to make informed choices about which supplier offers the best value”.

“The CCPC does not, and cannot, tell businesses what prices to charge, but enforces laws that mean there is competitive pressure on businesses to set prices at a level that will attract customers. There are no limits to the prices that a trader can set and the level of profits they make as long as they do not mislead consumers,” the Department and the CCPC said.

They added that rules on the marketing of infant formula fell under the remit of the Food Safety Authority of Ireland. 

The British investigation may result in recommendations to government on the regulation of how infant formula is marketed or on the information provided to parents to help them choose an infant formula brand. It has found customers are not switching to cheaper brands even as prices rise, despite them all being essentially the same due to regulations.

Nestlé and Danone respond

Nestlé said it has been “working hard to keep products affordable and accessible for parents, despite significant increases in costs, while still paying fair prices to our suppliers, including farmers”.

It did not specify what these increases in costs were when asked, beyond referencing “sustained inflation levels that are still higher than pre-Covid”.

“We have been seizing all possibilities to create operational efficiencies and absorbed increasing costs before considering responsible price increases,” Nestlé said.

Danone too said it had tried to absorb costs and minimise price increases where possible.

“We understand that rising costs have affected households across the country, with many parents facing financial challenges,” it said.

Danone reported its financial results yesterday for 2023 showing its specialised nutrition division – which includes its baby formula products – is by far its most profitable, with a margin of 20.8% globally, down from 21.6% in 2022.

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