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Aggressive marketing of 'premium' formulas driving rise in baby milk powder prices in Singapore

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Aggressive marketing of 'premium' formulas driving rise in baby milk powder prices in Singapore

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Milk formula manufacturers have been trying to increase their marketing strategy by providing private hospital with sponsorship and paying the hospitals to display their products in order to increase their own company’s milk formula image.

It was reported in March 2017 that an average price of a milk formula tin of 900 gram had increased by 120% since the last decade. The current milk formula prices are about $56.06 which outstrips the increase of other dairy products and household staples.

The government also announced on 8 May 2017 that they will be tightening the rules for milk formula and this will encourage greater price competition for the milk formula industry. The government is also trying to advocate public education efforts and encourage hospitals to support breast feeding.

As milk formula manufacturers tries to increase their milk formula brand by spending more money into research and the development of new ingredients with higher nutrients that could boost mental development and vision, manufacturers could regularly increase their prices as they could tell their consumers that the ingredients inside the milk formula are premium ingredients which consumers are paying for. Consumers are often  convinced by what the manufacturer had said, and it will lead them to purchase the higher content of ingredients inside the milk formula and the most expensive one.

The Ministry of Health, Health Promotion Board and the Agri-Food and Veterinary Authority (AVA) reported that the above information was not backed up and the evidence is insufficient. AVA aims to complete the review of labeling and advertising for formula milk by the end of the year and warned manufacturers that they will be given a one-year grace period to change labels that were incorrect.

The Ministry of Health also urged all hospitals, public and private providing maternity services to target the Baby-friendly Hospital Initiative certification which encourages, and support breast feeding and avoid all conflicts of interest by prohibiting sponsorship arrangement by the manufacturer.

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SINGAPORE - Formula milk manufacturers have engaged in aggressive marketing tactics such as sponsorships and payments to private hospitals here to distribute their products, and built up "premium" images to entrench consumer loyalty, said the Competition Commission of Singapore (CCS) after a year-long inquiry.

Along with other factors, these have propelled formula milk prices in Singapore to among the highest in the world, along with Hong Kong and China.

The competition watchdog released a 87-page report on Wednesday amid rising public unhappiness over the price of baby formula millk.

The Straits Times reported in March that the average price of a 900g tin of formula has soared 120 per cent over the last decade to $56.06, outstripping the increases of other dairy products and household staples. On Monday, the Government announced it is tightening rules to encourage greater price competition, while stepping up public education efforts and encouraging all hospitals to support breastfeeding.

The report by the CCS - which engaged industry stakeholders between October 2015 and August 2016 - did not find that they engaged in anti-competitive practices, such as in price-fixing.

Instead, the manufacturers are able to regularly increase their prices, after convincing consumers they are paying for "premium" formulas.

They compete on building brand image such as by engaging research and development to continuously introduce new ingredients that purport to - among other things - boost mental development and vision, rather than on price.

"What consumers face... are the aggressive marketing and "premiumisation" messages driven by formula milk manufacturers, which perpetuate consumers' belief that the more expensive and the more ingredients there are in the formula milk, the higher quality it is," said the CCS report.

Experts say that such claims are not backed up. "The scientific evidence for this is weak," said the Ministry of Health, Health Promotion Board and the Agri-Food and Veterinary Authority (AVA) in a joint statement on Wednesday.

Plans are afoot to tighten regulations on labelling and advertising for formula milk for infants up to 12 months, prohibiting the use of nutrition or health claims and idealised images on tin cans. The AVA aims to complete the review of these by end of the year. After a consultation period, the industry members will be given one year of grace period to amend their labels accordingly.

The HPB will also kick off a multi-year campaign to educate parents on children's nutritional needs.

In its report, the CCS outlined the various strategies taken by the major manufacturers - Abbott, Mead Johnson Nutrition, FrieslandCampina, Nestle and Danone - to persuade parents to shell out for milk powder.

Between 2010 and 2014, the amount they spent on marketing increased 42.4 per cent.

Much of the money went to private hospitals, which receive sponsorships and "monetary contributions.

In return, they lengthen the length of time during which certain brands are offered to new parents and their babies as the default ready-to-feed formula.

Formula companies target hospitals to gain a "first-mover" advantage, given that the majority of parents who use formula milk in hospitals tend not to switch brands after leaving the hospital, said the report.

But public hospitals that offer maternity services - KK Women's and Children's Hospital, National University Hospital and Singapore General Hospital - are prohibited from entering into such arrangements with formula companies. They have a rotation system that ensures an equal duration for different manufacturers.

The CCS report added that the proportion of new-born babies who take formula in private hospitals, either exclusively or together with breast milk, range from 15 per cent to 60 per cent. "The majority of these cases are due to parents choosing to use formula milk as opposed to medical or physiological issues," it said.

In a response to The Straits Times, the MOH said it will "strongly encourage" all hospitals providing maternity services to achieve the Baby-friendly Hospital Initiative (BFHI) certification, which actively encourages and supports breastfeeding and prevents conflicts of interest by prohibiting sponsorship arrangements.

No private hospitals are currently BFHI-certified.

Besides targeting hospitals, manufacturers strengthen their "premium" images, by importing their products from Europe, Australia and New Zealand. They also often choose to bring in their "premium" formulation, despite the similarity in nutritional standards with other countries.

An estimated 95 per cent of formula milk sales in 2015 were for "premium" and specialty milk, with just five per cent for "standard" milk, which typically costs less than half the price. Many Singapore parents perceive that the more expensive products are of higher quality, the report said.

But all infant formula milk products for those aged between 0 and 12 months sold in Singapore meet safety standards and nutrient composition requirements under food regulations, said WHO.

The aggressive marketing by incumbent manufacturers coupled with existing consumer preferences have also raised barriers to entry for new players.

Retailers such as supermarkets and pharmacies are in turn keen to stock what consumers demand. They look at the manufacturers' marketing plans when making decisions on what brands to stock, which may further reinforce consumer brand loyalty.

They also prefer to obtain formula milk supply only from local authorised distributors of manufacturers, and do not consider parallel importing a viable alternative, which gives them limited ability to counter the price increases by manufacturers and/or distributors.

Based on its findings, CCS made three broad recommendations to lower barriers to entry and improve the level of price competition, particularly between manufacturers:

1) Educate consumers on the nutritional content of formula milk and the nutritional requirements of infants and young children, and improve consumer awareness of the availability of a variety of products at different price points, which will allow for more informed decisions and increased price competition over time.

2) Encourage price competition both within the same brands by reviewing parallel importation rules while still maintaining food safety and security, and between brands by exploring the introduction of retailer house brands. These will help to widen the pool of formula suppliers in Singapore.

3) Review the sponsorships and payments that formula milk manufacturers provide and their impact on the milk rotation programmes in hospitals to reduce a barrier to entry and expansion for new and existing brands.

In a joint release, MOH, HPB and AVA said that they broadly accept CCS's recommendations.

According to market research provider Euromonitor International, Nestle, Abbott, Mead Johnson Nutrition, FrieslandCampina and Danone made up more than 99 per cent of the fortified milk formula market share in Singapore in 2016, with Abbott making up nearly half of the local market.

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Aggressive marketing of 'premium' formulas driving rise in baby milk powder prices in Singapore

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Formula milk manufacturers engaged in aggressive marketing tactics such as sponsorships and payments to private hospitals here to distribute their products, and built up "premium" images to entrench consumer loyalty, said the Competition Commission of Singapore (CCS).. Read more at straitstimes.com.

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1. The first house brand in Singapore

2. Costing between $27 and $29 for a 900 gram tin

3. Average price of a 900 gram tin had soared 120% over the last decade to $56.06, making it the most expensive in the world

4. Government has since tighten the regulations, strengthening public education, and encouraging good practices in hospitals.

5.  An estimated 95% of formula milk sales in 2015 comprised sales of "premium" and specialty milk

6. One outcome of this is that formula milk manufacturer Abbott has reduced prices by packing formula in cardboard boxes instead of tins. Instead of $45 for an 850 gram tin, Similac Gain Stage 3 will cost $95.60 for a 2.4 kilogram value deal.

7.  Dr Koh said there will be amendments to regulations, and a review of the Code of Ethics of the Sale of Infant Food Ethics Committee, Singapore.

8.  Ms Zhao Lihong said she was happy to see more variety as she choose based on discounts and the ingredients in the milk.

Based on the article, the supply of formula milk in Singapore is increasing tremendously due to a change in the number of suppliers in the market. This causes an increase in competition in the market as some brands provide cheaper options. With much options, consumers tend to choose what's affordable to them to cut cost on such expenses that is a necessity to all parents that have a child that needs to drink has that's the only source of food they could eat. Therefore, the demand for pricey formula milk may decrease since there are cheaper options available. Supply curve shift right, demand curve shifts left.

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Singapore's biggest supermarket chain launched FairPrice Gold infant formula yesterday, the fourth new arrival on the market since controversy over the high prices of formula milk rose in March.

It is the first house brand formula milk in Singapore.

Sourced from Australia, it is available in three variants, costing between $27 and $29 for a 900g tin.

The Straits Times reported in March that the average price of a 900g tin of infant milk powder in Singapore had soared 120 per cent over the last decade to $56.06, making it among the most expensive in the world.

The Government has since set up a task force to look into tightening regulations on labelling and advertising, facilitating imports of more formula milk options, strengthening public education, and encouraging good practices in hospitals.

Mr Seah Kian Peng, chief executive of FairPrice, said of the house brand it launched: "In terms of quality, it is very comparable to all the top brands. But at the same time, because of who we are, we want to make it very affordable."

An estimated 95 per cent of formula milk sales in 2015 comprised sales of "premium" and speciality milk. The authorities have advised parents against using price as a proxy for quality.

Yesterday's launch follows three recent entrants, whose prices range from $25.50 for a 900g tin of Nature One Dairy at Sheng Siong, to made-in-Singapore Einmilk at under $40 for an 800g tin.

Australia's Own, which was launched in June by FairPrice, has seen a 25 per cent increase in sales.

Senior Minister of State for Health Amy Khor, who is a member of the task force, said she was glad to see retailers being supportive.

In a Facebook post yesterday, Senior Minister of State for National Development and Trade and Industry Koh Poh Koon, who chairs the task force, said it has been "engaging retailers and companies to provide more affordable formula milk options for consumers".

One outcome of this is that formula milk manufacturer Abbott has reduced prices by packing formula in cardboard boxes instead of tins. Instead of $45 for an 850g tin, Similac Gain Stage 3 will cost $95.60 for a 2.4kg value deal.

Dr Koh said there will be legislative amendments to tighten labelling regulations, and a review of the Code of Ethics of the Sale of Infant Food Ethics Committee, Singapore.

Ms Zhao Lihong, 35, an engineer who has a 15-month-old son and is pregnant with her second child, said she was happy to see more variety. "My son drinks every brand so I choose based on discounts and the ingredients in the... milk," she said.

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Singapore's biggest supermarket chain launched FairPrice Gold infant formula yesterday, the fourth new arrival on the market since controversy over the high prices of formula milk rose in March. It is the first house brand formula milk in Singapore. Sourced from Australia, it is available in three variants, costing between $27 and $29 for a 900g tin.

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Mothers shocked about formula milk companies' marketing costs

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Mothers shocked about formula milk companies' marketing costs

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Many mothers interviewed said that they did not like the marketing strategy used by formula milk manufacturers where they would send marketers to hospitals and clinics in an attempt to convince mothers to patronize their brand.

It was revealed to the mothers that the amount manufacturers spent on marketing between 2010 to 2014 increased by 42%. This increase in marketing cost was cited as being one of the main reasons behind the huge increase in price.

Mothers agreed that the marketing cost should not be passed on to consumers.

The government has plans to tighten regulation on labeling and advertising of formula milk for infants up to the age of 12. However, many feel that the measures is unlikely to affect the way mothers decide which brand to patronize.

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SINGAPORE - Housewife Kay Park, 41, wanted to see a pediatrician, but on three occasions, she ended up meeting a formula milk company's marketer in the hospital clinic first. The representative from Dumex, she said, was "persistent".

"I saw her inside the paediatric clinic, just outside the doctor's office, and each time - perhaps she did not recall that she had spoken to me before - she asked what formula milk brand I used, and whether I wanted to try her brand," said the mother of two sons aged two and four.

"This happened in a clinic, not a supermarket - I think such an approach is overdoing it. I wouldn't be that concerned if it was just brochures or posters at the clinic."

While mothers interviewed by The Straits Times gave mixed views on whether they agreed with the companies' marketing strategies, most of them said the marketing costs should not be passed to consumers.

Those interviewed were shocked and disappointed to learn that the rise in marketing expenses was a key factor for the hike in formula milk retail prices. A report released by the Competition Commission of Singapore on Wednesday found that between 2010 and 2014, the amount that all major manufacturers spent on marketing increased 42.4 per cent.

The competition watchdog found that heavy investment in marketing and research likely led to the increase in markup of wholesale prices, and this in turn, was the main factor for increases in retail prices - which have, on average, more than doubled over the past nine years.

Public servant Chiam Mei Si, 33, spends about $140 per month on formula milk for her 1½-year-old son. She said: "It's shocking that their marketing costs have gone up by so much, and that these costs are passed to consumers. They might be banking on the fact that mothers don't have much of a choice and want to buy the milk brand that works best for their children.

"What about the low-income families that need formula milk?"

Pre-school educator Ng Mingzhu, 32, who has an 11-month-old daughter, added: "The companies usually say that the price increase is due to higher R&D costs only. That may play a part, but I think it's got more to do with aggressive marketing. It's disappointing, but I guess they are profiteering private companies."

Most mothers interviewed said their doctors did not recommend specific milk brands, but cited instances of marketers from formula milk companies introducing them to their products at hospitals and clinics.

Lawyer M. Y. Yip, 39, who has two sons aged two and four, said she has been seen this happen at a hospital.

"They ask if you can do a survey for them, they get your e-mail address, put you on their mailing list, and send you e-mails about their promotions. And to thank you for completing the survey, they give you a few sachets of maternity milk for pregnant mothers and infant formula milk," she said.

"I didn't find the marketers particularly aggressive, and it doesn't bother me since I was waiting for my turn to see the gynae."

But Ms Park has had worse experiences.

She said her older son was fed Nestle's Nan formula milk at the hospital from the first day he was born, and she was not asked about her preferred brand. This may have led to him being unwilling to be breastfed and unwilling to switch to another brand that she preferred, she said.

Meanwhile, the Government has plans to tighten regulations on labelling and advertising for formula milk for infants up to 12 months, prohibiting the use of nutrition or health claims and idealised images on tin cans.

Most mothers interviewed said this is unlikely to affect the way they buy formula milk, as they rely more on word of mouth from family and friends, and online reviews.

Still, housewife Melissa Lee, 22, welcomed the move. "Some companies claim that they added ingredients mentioned in the label, but it turned out to not be true. To make consumers feel at ease, I hope the authorities would visit the manufacturers' factories and do research on the milk products."

But though Senior Minister of State for Trade and Industry Koh Poh Koon said on Monday that "cheaper (milk) options are no less nutritious", it may take a long while before parents believe that.

Said Ms Lee, who spends about $190 per month on Dumex milk for her 16-month-old daughter: "I will not choose the cheaper brands. You get what you pay for. If they all meet the nutritional needs of infants, then why the price difference?"
goyshiyi@sph.com.sg

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Mothers shocked about formula milk companies' marketing costs

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SINGAPORE - Housewife Kay Park, 41, wanted to see a pediatrician, but on three occasions, she ended up meeting a formula milk company's marketer in the hospital clinic first. The representative from Dumex, she said, was "persistent".. Read more at straitstimes.com.

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Price is not the only consideration, when it comes to milk powder

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Price is not the only consideration, when it comes to milk powder

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Despite the rising milk powder prices, parents are more concerned regarding the quality assurance standards of the milk powder. Parents are influence by other factors besides price.

Other factors such as the child's temperament and preferences, fear of tainted milk products.

The more premium brand are the most well received by consumers despite having more than 150 different brands selling at the supermarkets.

All infant formula sold in Singapore must meet the standard and requirement of Sale of Food act. There actually no difference among the brands. It depends on the company's marketing strategy.

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When it comes to milk powder, price is not the only consideration

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SINGAPORE - Amid rising milk powder prices, parents TODAY interviewed admitted that they were wary of buying cheaper brands, even though they acknowledged that their concerns were likely to be unfounded, given Singapore's stringent quality assurance standards for food products. On M

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Milk powder: Matter of supply and demand

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Milk powder: Matter of supply and demand

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Infant milk powder has increased by 120% over the last decade to $56.06, making it among the highest in the world. Families can easily spend around $200/month per child on formula milk alone.

World Health Organisation (WHO) recommends strict breastfeeding in the first 6 months of a child's life.

Companies have credited the price increases to research and development in improving their products and rising overhead costs. Even though, Pricing differs from each country as operation costs and taxes vary considerably. Firms ultimately fix prices based on the perceived value of their products and consumers' spending power. Parents bear with high prices as they see it as a short term expense thus creating inelastic demand.

Competition Commission of Singapore (CCS) uncovered that companies were competing on building "premium" brand images, driven by consumer demand as rising breastfeeding rates and low birth rates constrains volume growth. They invest heavily in research and development, constantly introducing new products and ingredients to boost mental development and vision, accompanied by more spending on marketing and "aggressive" tactics, such as "first-mover" advantage, creating barriers to entry for new brands, coupled with weak price competition, giving manufacturers the market power to increase prices. 20% of Asia pacific parents said price was a top factor.

Government implemented measures to tighten regulations on production costs and importation, strengthening public education and encouraging good practices in hospitals.

FairPrice and Cold Storage are looking into creating house brands, but more options will not help if there is no demand for them.

Regulations address supply, but demand must be served by better breastfeeding support and consumer education.

Two top - selling brands in Singapore last year were ranged, for children a year and above. Children above 12 months do not require formula, but shelves are stocked with formula for older kids. Some parents were unaware that formula milk can be stopped after one, making it largely an unnecessary expense.

With the entrance of more affordable options, better consumer education and more support for breastfeeding, prices of formula milk should become more competitive over time.

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Milk is milk. But is it?

Minister in the Prime Minister's Office Josephine Teo's recent comment set off a firestorm amid public debate over the high prices of infant formula.

The average price of a 900g tin of infant milk powder has soared 120 per cent over the last decade to $56.06, making it among the highest in the world, along with those in China and Hong Kong.

A baby can go through three or four such tins a month, which means families can easily spend around $200 a month per child on formula alone.

Amid rising unhappiness, Senior Minister of State for Trade and Industry Koh Poh Koon announced in Parliament last month that the Government would be taking steps to ensure access to affordable options. He said all formula sold here, regardless of price, meets food regulations and the nutritional needs of infants to grow healthily, and the scientific evidence that some brands can do more is weak.

"Parents should therefore be careful about relying on the claims made by infant formula companies, or be misled into using price as a proxy for the quality of the product," he said.

Mrs Teo, who oversees population matters, said she had concluded, from her own experience as a mother of three, that "milk is milk, however fancy the marketing", and went for the cheapest option for her kids.

But indignant parents said that it is not always possible to do that and that it is a process of trial and error to find a formula that their babies take to, leaving them stuck with the price of the one junior chooses.

Doctors said that babies have varying tolerance levels to different brands. All ingredients in formula milk are present in breast milk, but the latter also contains antibodies and other protective substances that cannot be replicated in formula.

ST ILLUSTRATION: MANNY FRANCISCO

The World Health Organisation recommends exclusive breastfeeding in the first six months of a child's life, followed by the introduction of semi-solid foods. The Health Promotion Board (HPB) supports continued breastfeeding until one year and beyond due to its benefits for the baby.

But some mums have difficulty producing enough breast milk or need to return to work - either of these can make breastfeeding a challenge. Mums have also pointed out that Stage 1 formula for newborn babies is the costliest.

So, why are prices here so high, especially compared with those in other countries such as Malaysia, where prices can be half that of Singapore's?

Formula companies have attributed the price increases to research and development to improve their products and rising overhead costs. Pricing differs from country to country as factors such as operation costs and taxes vary considerably, some said.

But managing partner at pricing consultancy Simon-Kucher & Partners Jochen Krauss said that while import and other costs account for part of the price differences across countries, firms ultimately fix prices based on the perceived value of their products and consumers' spending power.

Economists said that in the case of infant formula, parents bear with high prices as they see it as an expense for the short term. That, in turn, creates inelastic demand - that is, demand that does not fall when prices go up.

BRAND WARS

A report by the Competition Commission of Singapore (CCS) released last month found no evidence of price-fixing by the six major manufacturers that make up more than 99 per cent of the fortified milk formula market here.

Instead, it uncovered during its year-long inquiry that the companies were competing not on price, but on building "premium" brand images, driven by consumer demand.

They invest heavily in research and development, constantly introducing new products and ingredients that purport to - among other things - boost mental development and vision.

This is accompanied by more spending on marketing and "aggressive" tactics, such as inducements to private hospitals for participation in their milk rotation programmes, where a brand is set as the default for a given period for infants who need formula.

This helps them to gain a "first-mover" advantage, given that the majority of new parents do not have a preferred brand and tend not to switch brands after leaving the hospital, the report said.

Such practices have entrenched consumer loyalty, creating barriers to entry for new brands, which, coupled with weak price competition, has given manufacturers the market power to increase prices, the study found.

Across Asia, manufacturers increasingly focus on premiumisation to retain margins as rising breastfeeding rates and low birth rates constrain volume growth, the CCS said in its report, citing market research firm Euromonitor International.

According to the HPB, in public hospitals with maternity services, the proportion of mothers who are exclusively breastfeeding at discharge has increased from 76 per cent in 2013 to 86 per cent last year.

A 2015 Global Baby Care report by Nielsen found that price is a dominant driver in Western markets, with more than a third of respondents in North America and Europe citing "good price/value" as the most important factor in buying baby food.

In the Asia-Pacific, only 20 per cent said it was a top factor. Due to a number of food safety incidents in recent years, respondents in the region value safety more than anything else, the report said.

ADDRESSING DEMAND

In response to the CCS report, the Government has announced measures to tighten regulations on labelling and advertising, facilitate imports of more formula milk options, strengthen public education and encourage good practices in hospitals.

A task force has been formed to ensure that key measures are in place by the end of the year.

Supermarkets have also said that they are expanding their sourcing to provide more affordable options, while both FairPrice and Cold Storage are looking into creating house brands.

A made-in-Singapore range of infant milk powder, Einmilk, was recently launched with prices of under $40 for an 800g tin.

But more options will not help if there is no demand for them.

An estimated 95 per cent of formula milk sales in 2015 comprised sales of "premium" and speciality milk, with just 5 per cent of sales for "standard" milk - which costs less than half the price.

The CCS report noted that manufacturers and retailers may withdraw brands that do not perform well, such as a pharmacy that discontinued the sale of a formula brand less than a year after it started due to lack of demand.

As Pasir Ris-Punggol GRC MP Sun Xueling pointed out, both the supply and demand sides of the issue must be addressed, with entrenched brand perceptions posing an added challenge.

Regulations address supply, but demand must be served by better breastfeeding support and consumer education.

According to the last National Breastfeeding Survey, the top reasons that mothers cited for stopping breastfeeding were an inability to supply enough breast milk and the need to return to work. Thus, better breastfeeding support, beyond the hospital and in workplaces, should be provided to mothers who choose to breastfeed.

Consumer education is also key.

The two top- selling brands in Singapore last year were the Gain and Pediasure formula ranges, for children a year and above.

While children above 12 months do not require formula as cow's milk together with a balanced diet is adequate, supermarket shelves are stocked with formula for older kids, including for six years and beyond.

Some parents that The Straits Times spoke to said that they were unaware that formula milk can be stopped after one, making it largely an unnecessary expense.

The HPB, which has traditionally focused on promoting breastfeeding, has recognised the lack of awareness around formula milk. It has launched a multi-year programme aimed at educating parents on the nutritional needs of children.

Marketing efforts will cover the nutritional composition of formula milk, to help parents who rely on it to make more informed decisions, as well as weaning at six months.

With the entrance of more affordable options, better consumer education and more support for breastfeeding, prices of formula milk should become more competitive over time.

It is time for consumers to set a ceiling on what they are willing to pay, and send a signal to manufacturers that they cannot milk parents for top dollar.

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Milk powder: Matter of supply and demand

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Milk is milk. But is it? Minister in the Prime Minister's Office Josephine Teo's recent comment set off a firestorm amid public debate over the high prices of infant formula. The average price of a 900g tin of infant milk powder has soared 120 per cent over the last decade to $56.06, making it among the highest in the world, along with those in China and Hong Kong.

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KKH, SGH, NUH to use only cheaper infant milk formulas from July 1

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SINGAPORE - In the latest move to counter high infant formula milk prices in Singapore, all three public hospitals here offering maternity services will carry only two ready-to-feed (RTF) brands that are more affordable, starting next July. KK Womens' and Children's Hospital (KKH)

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Parliament: Stricter rules passed for health claims and sale of food, infant formula milk

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SINGAPORE - Stricter rules on labelling and advertising of food, including formula milk for babies, were passed in Parliament on Tuesday (Nov 7) together with provisions allowing the authorities to act more quickly on food recalls. Amendments to the Sale of Food Act (Sofa) will mean t

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Recall of Lactalis dairy products: Stocks in S'pore not affected, AVA says

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SINGAPORE - Dairy products sold here by French company Lactalis, under brands such as President, Galbani, Lactel and QBB Ghee, are not those affected by a global recall of its formula milk products, the Agri-Food and Veterinary Authority (AVA) said on Monday (Dec 11). On Sunday, Frenc

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The price of infant milk powder has skyrocketed over the last decade, increasing 120 per cent to $56.06 on average for a 900g tin.

This outstrips the price increases of other dairy products and household staples over the same period.

A baby can go through three or four such tins a month, which means families can easily spend around $150 a month on milk formula.

Milk powder companies attributed the price hikes to research and development to improve formulas, and rising overhead costs.

But economists say it boils down to the inelastic demand for such a product. This gives suppliers the upper hand because parents are willing to bear such price increases for their children as it is an expense for the short term.

The market for milk formula here grew 17 per cent to $203.4 million over the last five years, and is projected to increase further to $209.2 million by 2021, according to market research firm Euromonitor International.

Some parents have cut costs by buying formula from Malaysia, where cheaper prices and a favourable exchange rate mean savings of up to half.

Pricing differs from country to country as factors such as operation costs and taxes vary considerably, said some milk formula companies.

The Health Promotion Board encourages breastfeeding exclusively for at least six months, followed by the introduction of solid foods and continued breastfeeding for up to at least a year due to its health benefits for the baby.

But for some mums, this can be a difficult task.

According to the last National Breastfeeding Survey, the top reasons that mothers cited for stopping breastfeeding were an inability to supply enough breast milk and the need to return to work.

It is the families for whom infant formula is a necessity that the price hikes hurt the most.

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The price of infant milk powder has skyrocketed over the last decade, increasing 120 per cent to $56.06 on average for a 900g tin. This outstrips the price increases of other dairy products and household staples over the same period.

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Infant milk powder labels often tout a host of ingredients that ostensibly boost brain and eye development as well as a myriad of other benefits. But they may have to become much plainer if such claims, and even more innocuous ones, like "Calcium helps to build strong bones", are outlawed.

Ms Seah Peik Ching, the Agri-Food and Veterinary Authority's (AVA) regulatory administration group deputy director, told The Sunday Times: "Under our regulations, there's a list of nutrient composition requirements where all the products need to contain these basic nutrients, so there's no reason for (brands) to highlight them."

The AVA is gathering feedback for its proposal to ban health and certain nutrition claims, as well as images that idealise formula over breast milk on labels.

It is also seeking to mandate the inclusion of a statement on the importance of breastfeeding.

Ms Seah, citing an example of an idealised image, said: "A cartoon character doing a puzzle - we take it as implying that this product can help to enhance kids' abilities."

The proposed rules would apply only to stage one and two formulas for infants up to 12 months, however, as children above a year old do not require formula.

The AVA is gathering feedback for its proposal to ban health and certain nutrition claims, as well as images that idealise formula over breast milk on labels. It is also seeking to mandate the inclusion of a statement on the importance of breastfeeding.

Last month, Parliament passed amendments to the Sale of Food Act, which empowered the AVA to specify what can or must be contained in food labels to promote public health and enable informed decisions.

Some manufacturers, such as recently launched local brand, Einmilk, are already taking steps to comply with the potential new rules.

The made-in-Singapore formula entered the local market in May, positioning itself as an affordable option amid public debate over high prices for the product.

The Government had then cautioned against using price as a proxy for quality, and vowed to crack down on misleading advertising and labelling.

Einmilk business director Chan Yong Chye disclosed that the firm decided to cover part of its product labels with stickers after receiving advice from the AVA that images such as an eye and brain accompanied by nutrient names were likely to be disallowed in the future. Nearly $20,000 was spent by the company to cover the labels of existing stock and revise the ones for new tins.

"We took the initiative to do this because we want to build trust as a Singapore brand," said Mr Chan.

Nature One Dairy, which launched its formula milk range in August, also developed its label for the local market after consulting the AVA. Mr Nick Dimopoulos, chief executive of the Australian-based Singapore company, said: "A lot of the other brands will likely have to make drastic changes because they make ridiculous claims."

Major manufacturers Nestle and Danone Dumex said that they are involved in discussions with the AVA, while FrieslandCampina added that it is reviewing the proposed amendments to ensure its products are compliant. Abbott declined to comment and Mead Johnson Nutrition did not respond to queries.

The Health Promotion Board said that the revised Sale of Infant Foods Ethics Committee Singapore code, which is being finalised, will back AVA's regulations on infant formula milk labelling.

Since the formation of a government task force in May, the AVA said it has facilitated the entry of 24 new formula milk products to the local market as part of efforts to rein in prices.

While import procedures and requirements for formula milk have been streamlined, the AVA stressed that nutrient composition requirements and food safety surveillance have not been relaxed.

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Infant milk powder labels often tout a host of ingredients that ostensibly boost brain and eye development as well as a myriad of other benefits. But they may have to become much plainer if such claims, and even more innocuous ones, like "Calcium helps to build strong bones", are outlawed..

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SINGAPORE: Formula milk manufacturers have been spending more on research and development as well as marketing, pushing the wholesale prices of their products up, and in turn resulting in the higher prices seen at retail stores, the Competition Commission of Singapore (CCS) has found.

Releasing findings of a market inquiry on Wednesday (May 10), the CCS said that total marketing expenditure by major manufacturers such as Abbott, Danone and Nestle increased by 42 per cent between 2010 and 2014. No figures were provided on research and development expenditure.

The average retail price of formula milk has more than doubled over the past nine years, according to the Singapore Department of Statistics.

The competition watchdog said that the rising price of formula milk provided the impetus behind its market inquiry, which was conducted between October 2015 and August 2016. The issue of high formula milk costs also came under the spotlight recently and was debated in Parliament on Monday.

The CCS report found that manufacturers spend heavily on research and development as well as marketing in order to make their products appear premium, and build consumer loyalty to their brands.

Manufacturers introduce new ingredients that contribute to attributes desired by parents, the competition watchdog said, adding that such ingredients make promises like improving overall mental function, promoting a healthy intestinal tract and aiding brain and eye development.

The premium image is important to these brands because they compete against other brands and their products based on brand name, nutrition and safety, rather than on price, CCS said.

Such strategies appear to have worked, with premium and specialty formula milk products that now cost about S$60 for a 900g tin making up an estimated 95 per cent of total sales in 2015, according to the CCS report.

"Despite the similarity in nutritional standards with other countries, manufacturers often choose to bring premium formulation into Singapore," CCS said, adding that to further build a "premium image", some manufacturers import their formula milk products from Europe, Australia and New Zealand because they believe that consumers in Singapore have a preference for products from these places. Formula milk prices were found to be higher in Singapore than in countries like Japan, Indonesia and Australia.

Anecdotal feedback suggested that some parents perceive more expensive brands as having better quality, CCS said. This could be due to manufacturers' aggressive marketing and advertising efforts and the inability of parents to accurately assess the price versus quality trade-off.

"Some parents may find it difficult to understand the nutritional content of formula milk, a child's nutrient requirements and the significance of the additional "premium" ingredient," the report said, adding that the parents may then rely on price as a quality indicator.

In terms of marketing, manufacturers have devoted more effort to selling their products to hospitals. They provide sponsorship, payment, or both to private hospitals in particular, as private hospitals here are not part of the Baby-friendly Hospital Initiative that prevents such arrangements.

The three public hospitals here that offer maternity services - KK Women's and Children's Hospital, Singapore General Hospital, and National University Hospital - have been certified as part of the scheme.
PROBLEMS WITH SELLING CHEAPER MILK
"Such features of the formula milk market can present significant barriers to entry for new brands or barriers to expansion for existing brands which do not engage in such efforts," CCS said.

In its inquiry, CCS found that cheaper formula milk may not necessarily enjoy higher sales. CCS cited a supermarket that had worked with a manufacturer to bring in a "value-for-money" formula milk product from an established brand in response to customer feedback on high prices.

"Despite various marketing activities by the manufacturer, sales were weak and the product was discontinued by the manufacturer as it was not commercially viable and the manufacturer could not meet the minimum order quantity from its factories," the watchdog said.

CCS recommended that the public be educated on the nutritional content of formula milk and the nutritional requirements of infants and young children, and that consumer awareness on the availability of a variety of formula milk, including cheaper products, be increased. It also suggested lower barriers to entry by reviewing parallel importation rules, as well as the sponsorship and payments that manufacturers provide hospitals.

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Why have infant formula milk prices risen so much over the years?

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(Updated: ) Share on Facebook Share on Twitter Share via E-Mail SINGAPORE: Formula milk manufacturers have been spending more on research and development as well as marketing, pushing the wholesale prices of their products up, and in turn resulting in the higher prices seen at retail stores, the Competition Commission of Singapore (CCS) has found.

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The price of infant milk powder continues to climb, but parents say they have little choice but to fork out for the formula.

After more than doubling between 2004 and 2014, the average price of a 900g tin has risen a further 10 per cent in the past two years, according to figures from the Singapore Department of Statistics.

Over the past decade, the average price of such a tin has gone from $25.42 to $56.06, a rise of about 120 per cent.

This outstrips the price increases of other dairy products and household staples over the same 10-year period.

The cost of fresh milk, for instance, went up 6.8 per cent to $2.81, while the price of eggs climbed 28 per cent to $2.17.

A baby can go through three to four 900g tins a month, which means families can easily spend around $150 a month on just milk for a child.

Mr Melvin Wu, 34, who runs local parenting portal Babyment, told The Straits Times that he was shocked to discover this month that he was paying about 25 per cent more for Similac's Stage 3 milk powder for his two young children, compared with four years ago when he bought it for his oldest child, now five.

He went on to check prices of other popular brands Friso, Nan H.A., S26, Mamil and Enfamil and found similar price rises, he said.

Milk powder companies Abbott, Nestle, Mead Johnson and FrieslandCampina, when asked about the price jumps, said it was down to research and development to improve formulas, and rising overhead costs. Dumex did not respond to queries.

Breast still best, says paediatrician

The Health Promotion Board (HPB) supports exclusive breastfeeding from birth to about six months and continued breastfeeding until one year and beyond, because of its benefits for the baby.

But there are situations when infant formula is medically recommended, said Dr Yvonne Ng Peng Mei, senior consultant in the Department of Neonatology at National University Hospital.

A mother who is not able to produce enough breast milk, has HIV, is undergoing chemotherapy or radiotherapy, or is too ill to care for her baby should use infant formula.

Breastfeeding in the first two weeks after birth can also be challenging, which may be discouraging, Dr Ng said. Common issues include ineffective latching on, which makes it difficult to determine if the baby is getting enough milk, and nipple soreness.

But mothers should not give up breastfeeding as these problems can be managed, she said.

Nurses in maternity units offer guidance on breastfeeding and women can turn to other mothers and peer counsellors from community groups like Breastfeeding Mothers' Support Group and Joyful Parenting. The HPB also provides a Healthy Start For Your Baby guide to every parent.

If uncertain about whether a breastfed baby is getting enough milk, parents should seek the assistance of healthcare professionals, said Dr Ng.

To help offset rising prices, all five community development councils and the NTUC FairPrice Foundation banded together last month to fund a $1.5 million milk scheme, giving 7,500 low-income families vouchers to buy milk powder.

Supermarket chains FairPrice, Giant and Sheng Siong said that they stock a range of milk formula, including cheaper options.

While the Health Promotion Board encourages breastfeeding exclusively for at least six months, for some mothers, this is not an option. As her five-month-old son Louis was losing weight on breast milk, doctor Gail Cross began to supplement his diet with formula.

A $70-a-tin brand recommended by her paediatrician did not go down well with Louis, said Dr Cross, 36. The family settled on a Bellamy's Organic brand.

LITTLE CHOICE FOR PARENTS
It's expensive, but we don't have a choice. When he's older, we'll go to Malaysia to buy as it's cheaper there.
MS TANYA ONG, whose 10-month-old son drinks formula milk, on the high cost.

Going through three to four tins a month ran to more than $200. To save costs, she asked relatives visiting from Australia, where the powder is cheaper, to buy some over.

Administrative officer Tanya Ong, 36, said that she plans to start buying milk powder from Malaysia for her infant son, as products there are cheaper.

CIMB Private Banking economist Song Seng Wun said that while there are many factors that go into pricing, milk formula is seen as a necessity.

He added: "But because it is a product that you buy only for a limited period of time, parents just bear with it."

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Milk powder price woes: Average cost up by 120% in 10 years

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The price of infant milk powder continues to climb, but parents say they have little choice but to fork out for the formula. After more than doubling between 2004 and 2014, the average price of a 900g tin has risen a further 10 per cent in the past two years, according to figures from the Singapore Department of Statistics.

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Feeding their nine-month-old twin daughters used to cost housewife Indra Saravanan and her husband $280 a month for five tins of Similac's formula milk powder.

The family of five, who rely on a single income, have felt the pinch of rising formula milk prices in Singapore, which are among the highest in the world.

"It is difficult. We need to buy diapers and other things as well," said Mrs Indra, 37.

The couple switched to the more affordable Australia's Own range, which was introduced by FairPrice last month. The $100 they now save a month will go towards their elder son's education, said Mrs Indra.

More parents are choosing cheaper formula milk, following government efforts to increase affordable options and shift demand from "premium" formulas, which can be twice as expensive.

An estimated 95 per cent of formula milk sales in 2015 comprised sales of "premium" and speciality milk, though the authorities have urged parents against using price as a proxy for quality. Nutritional experts say cheaper brands are no less nutritious, while breast milk is best for babies.

Nearly two months after the formation of a task force to address the issue of high prices, overall demand for formula has not fallen, retailers said. But some have seen an increase in sales of cheaper brands.

$280
What it used to cost the Saravanans a month for five tins of Similac formula milk powder for their twins.

$175
What they spend each month after switching to Australia's Own, a cheaper brand of milk powder.

Supermarket chain FairPrice said it has had a 15 to 20 per cent increase in sales for brands such as Dugro and Lactogen over the last three months.

Giant said that a "handful" of shoppers have switched their purchases to standard ranges, and it has expanded its distribution of the Dugro range to an additional 10 stores. Local brand Einmilk, launched in May at U Stars supermarkets, is now also available at Giant's eight hypermarkets.

It will be on shelves at Cold Storage and Guardian stores by the end of the month, when Cold Storage will also stock Dugro and Lactogen at selected stores.

Talks are also under way with FairPrice, said Einmilk business director Chan Yong Chye. Consumer response thus far has been "positive", though sales have been curtailed by its limited distribution, he said.

Danone Dumex, which owns the Dupro, Dugro, Mamil Gold and Aptamil formula ranges, said it is intensifying in-store marketing efforts for the Dupro and Dugro brands, and looking at bringing in more affordable products from its 16 brands.

But entrenched brand loyalty may pose a barrier to the new market entrants.

Housewife Sonia Lim, 34, said that savings could not entice her to try a new brand. "The popular brands already have that reputation and trust whereas we don't know much about the new brands... parents will spare no expense for their children," she said.

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Feeding their nine-month-old twin daughters used to cost housewife Indra Saravanan and her husband $280 a month for five tins of Similac's formula milk powder. The family of five, who rely on a single income, have felt the pinch of rising formula milk prices in Singapore, which are among the highest in the world.