The baby milk seller Danone has agreed to cut the wholesale price of its Aptamil infant powdered formula by 7% from Monday after the UK’s competition watchdog launched an investigation into high inflation in the market.
The French company, which also owns the Cow & Gate brand, accounts for 71% of the baby formula market in the UK, where manufacturers have been found by the Competition and Markets Authority (CMA) to have raised prices by 25% in two years.
The price of an 800g pack of Danone’s Aptamil formula went up 26% to about £14.50 between March 2021 and April 2023. The same size pack of Cow & Gate 1 rose 31% according to data compiled by the public health nutrition charity First Steps Nutrition Trust (FSNT).
Danone’s 7% price cut applies to all its powdered Aptamil formulas sold to UK retailers but not liquid baby milks or any of its Cow & Gate products.
Its decision to partly reverse its price rises is likely to put pressure on other major manufacturers to follow suit, including Nestlé, which owns the SMA and Little Steps brands and accounts for about 14% of the UK market.
The CMA launched an investigation late last year saying it was concerned that baby formula was vulnerable to higher-than-inflation price rises as parents were nervous of switching brands and only one supermarket own-label alternative existed – from the cut-price chain Aldi.
The watchdog found those who do switch brands could save as much as £500 a year by doing so. It added that annual costs could also be being pushed up by manufacturers’ feeding volume guides, which were “systematically higher” than those recommended by the Scientific Advisory Committee on Nutrition.
The supermarket Iceland said it would be cutting the price of three 800g Aptamil powders it sold from £12 to £11.20. Richard Walker, the executive chairman of the retailer’s parent group, hit out last month at what he called the “exploitation” of new parents, joining the FSNT in calling for a cap on baby formula prices.
He welcomed Danone’s move to reduce the price of Aptamil across the market, adding: “While we support breastfeeding as the most beneficial way of feeding infants, the millions of families who rely on formula need more support for their choice or circumstances and simply reducing the price won’t solve the systemic issues we’ve drawn attention to.”
Walker wants changes to the law to allow retailers to promote discounted formula and to allow shoppers to buy it with loyalty points, gift cards or food bank vouchers.
The FSNT has called for a price cap and a public health campaign that would highlight the nutritional equivalence of all first infant formula, the contents of which is strictly regulated no matter the price or brand.
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It also wants better enforcement of legislation designed to prevent inappropriate marketing of formula milks. Brands currently get around the limits on advertising infant formula by promoting “follow-on milk” – a type of formula targeted at toddlers who do not need a special drink to remain healthy.
A Danone UK spokesperson said: “We recognise the challenges faced by parents due to inflation. During this difficult period, we have worked very hard to absorb the significant cost increases we have faced, make savings, and minimise any price increases.”
The company said it would continue to engage with the CMA over the coming months adding: “In Danone’s experience the formula milks market is competitive.”
