Call to end formula milk firms' aggressive tactics

Competition watchdog flags tie-ups with private hospitals, as high prices cause concern

Customers looking for milk powder at a supermarket. ST PHOTO: LIM YAOHUI

The authorities are calling for a halt to formula milk companies' aggressive marketing methods, including inducements to hospitals, in response to public concern about the steep rise in prices.

In particular, sponsorship and payment arrangements between manufacturers and private hospitals are "conflict of interest" deals that should be reviewed, they say.

This follows a new report by Singapore's competition watchdog which found that formula milk manufacturers are paying private hospitals to distribute their products to newborns.

Such practices have entrenched brand loyalty and helped propel formula milk prices in Singapore to among the highest in the world, said the Competition Commission of Singapore (CCS).

It released its 87-page report yesterday after a year-long inquiry into prices of infant formula.

The CCS said formula milk companies target hospitals to gain a "first-mover" advantage, given that most parents do not switch brands later.

It recommended that such tie-ups be reviewed.

Currently, only public hospitals are disallowed from entering into such arrangements . They have a rotation system to give different manufacturers equal opportunities.

The Ministry of Health told The Straits Times that it will "strongly encourage" all hospitals providing maternity services to achieve the Baby-friendly Hospital Initiative (BFHI) certification.

This prevents conflicts of interest by prohibiting sponsorship arrangements, and actively encourages breastfeeding.

No private hospital is currently BFHI-certified, although two - Thomson Medical Centre and Mount Alvernia - told ST that they were working towards it.

The aggressive tactics by manufacturers have seen the average price of a 900g tin of formula soar 120 per cent over the last decade.

Much of this, the CCS found, was due to manufacturers hiking their prices after convincing consumers that they were paying for "premium" and improved formulas.

They continually introduce new ingredients that purport to - among other things - boost mental development and vision. Experts have said there is weak scientific evidence to back such claims.

"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.

It outlined the strategies of the major manufacturers - Abbott, Mead Johnson Nutrition, FrieslandCampina, Nestle, Danone and Wyeth Nutrition - to persuade parents to shell out for milk powder.

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

A significant share went to private hospitals, which receive sponsorships and "monetary contributions". In return, they lengthen the period during which certain brands are offered to new parents as the default formula.

The companies did not respond to queries by press time. Only one, FrieslandCampina, replied to say it is studying the report.

Lawyer M.Y. Yip, 39, who has two sons aged two and four, said of the manufacturers' marketing tactics: "I guess they are like any company that wants to win over customers. But it's worrying that the large marketing costs are passed to consumers, though I'm resigned to the high prices."

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A version of this article appeared in the print edition of The Straits Times on May 11, 2017, with the headline Call to end formula milk firms' aggressive tactics. Subscribe