Iceland Welcomes Danone's Formula Price Cut, Advocates Broader Support for Families

Danone, a major food and drink company, is set to lower prices on a significant portion of its Aptamil baby formula range by 7%, offering relief to new parents.

The reduction comes in response to concerns raised by the Competition and Markets Authority (CMA) about a 25% increase in formula prices over the past two years. Iceland supermarket, a retailer of Danone's products, has confirmed that these price cuts will be reflected in its stores. Three Aptamil products, including Aptamil First Infant Milk, Aptamil Growing Up Milk, and Aptamil Follow-on Milk, will see their prices decrease from £12 to £11.20 in Iceland stores.

In a statement, Danone acknowledged the financial challenges faced by parents due to inflation and expressed efforts to absorb cost increases while minimizing price hikes. The move is expected to provide some relief to families grappling with the rising costs of essential baby products. However, the company's decision to lower prices has not deterred calls for broader systemic support for families relying on formula feeding.

Richard Walker, executive chairman of Iceland Foods, welcomed the price reductions but emphasized the need for additional measures to support families. While supporting breastfeeding as the preferred method of infant feeding, Walker highlighted the necessity of addressing systemic issues. He urged the government to review Healthy Start vouchers, currently valued at £8.50 per week for babies up to one year old. These vouchers have not seen an increase in value since April 2021 and have fallen below the cost of the cheapest formula following recent price hikes.

Iceland's call for a government review aligns with ongoing concerns raised by the CMA, which is currently investigating the baby formula market. The regulator identified vulnerabilities in the market that allowed for higher-than-inflation price increases. With only one UK retailer, Aldi, selling its own brand of formula, the CMA found that competition was hindered by consumer reluctance to switch brands, often due to recommendations from friends and family or infants' preferences.

The ongoing investigation has also shed light on the potential for significant savings for new parents. By shopping around for formula milk products, parents could save up to £500 in the first year of a baby's life. The findings emphasize the importance of fostering a competitive market to empower consumers and address affordability concerns in the baby formula sector.

While the price cut by Danone is a step toward alleviating financial pressures on parents, it underscores the need for broader systemic changes. Iceland's stance reflects a call for a holistic approach to supporting families, encompassing not only price reductions but also a review of government assistance programs to ensure they meet the evolving needs of parents. As Danone engages with the CMA's investigation, the outcomes will likely influence not only the company's practices but also broader industry dynamics, potentially leading to more competitive pricing and enhanced consumer choice.