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The UK competition watchdog has set out a list of recommendations to shake up the baby formula market amid fears that prices in the category are too high.
Following an investigation into the sector kicked off in February, the Competition and Markets Authority (CMA) provisionally found that due to limited incentives to compete on price, there was little pressure on manufacturers or retailers to shelter customers from increases in manufacturing costs, which have largely been passed on quickly and in full.
The interim report published this morning also said, when combined with brand loyalty and the essential nature of the product for many families, parents had been shouldering the increasing price of formula for several years.
The CMA set out a number of potential options that could help improve the sector and reduce costs for parents, including possible measures to reduce the influence of branding and incentivising competition on price by potentially permitting prices and price reductions to be publicised.
It also proposed a strengthening of labelling and advertising rules.
“This is a very important and unique market,” CMA chief executive Sarah Cardell said.
“We’re concerned that companies don’t compete strongly on price and many parents - who may be choosing infant formula in vulnerable circumstances and without clear information - opt for more expensive products, equating higher costs with better quality for their baby.
“We have identified options for change, but now want to work closely with governments in all parts of the UK, as well as other stakeholders, as we develop our final recommendations.”
The CMA will now consult on its provisional findings and get feedback from government and stakeholders.
Morning update
It’s a quiet morning in the UK on the markets.
But yesterday there were three quarterly updates in the US from Beyond Meat, Oatly and Hain Celestial, with all three companies in varying stages of turnaround attempts.
Beyond Meat grew quarterly revenue for the first time in two years but analysts warned it was in danger of running out of cash. A story on the full Q3 results can be found here.
Oatly moved closer to breaking even in its third quarter as it continues its turnaround efforts. Read the full story here.
Finally, Hain’s turnaround strategy stuttered in its first quarter of the new financial year, with revenues, volumes and prices all lower. Click here for the full story.
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