Competition watchdog flags tie-ups with private hospitals, as high prices cause concernBy Tiffany Fumiko Tay, The Straits Times, 11 May 2017
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.
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."
Spotlight on tie-ups between formula milk firms, private hospitals
Firms engage in sponsorships, payments to have brands as default formula for longer time: Competition watchdog
By Tiffany Fumiko Tay, The Straits Times, 11 May 2017
Whether it is by paying for hospitals' dinner-and-dance functions, or sponsoring the running of their shuttle buses, formula milk companies have waltzed their way into hospital maternity wards.
Some go further, giving hospitals outright monetary contributions in periodic lump sums.
In return, they get greater access to new parents and their babies, in the form of having their brands being offered as the default formula milk in maternity rooms for a longer period.
An inquiry report by the Competition Commission of Singapore (CCS) released yesterday said such deals have been on the rise, possibly reflecting hospitals' increasing needs and the importance of the hospital channel to the manufacturers as a form of marketing and brand outreach.
This first-mover advantage is key, given that many parents do not switch brands after their babies have got used to them.
To get that foot in the door, the manufacturers ensured their products stayed on the rotation schedules for longer periods, by providing sponsorship to the hospital or paying "rotation fees".
They also sponsor activities at public hospitals, but this does not influence their milk rotation schedule, said the CCS.
According to the hospitals it contacted, such payments and "in kind" monetary sponsorships by formula milk manufacturers help reduce the cost of running such activities, and defray the cost of nursing education and training.
Manufacturers sponsor a range of activities targeted at parents and parents-to-be, as well as hospital staff. They also underwrite hospital activities such as the printing of maternity brochures, as well as corporate dinner-and-dance events.
Some manufacturers also give sums of money, computed by how long they want their brands to be on rotation. If they give, for instance, twice as much as the standard fee, their brands can be on rotation for twice as long.
There are seven private hospitals in Singapore offering maternity services. Two responded to queries last night.
A Thomson Medical spokesman said brands are rotated on a monthly basis, and all suppliers contribute the same sum to be included in the rotation. He added: "We work with each milk company to a different extent, depending on how they can contribute towards our objectives of education and preparing parents for parenthood."
The companies do not sponsor the supply of baby milk formula to the hospital.
Thomson Medical is actively moving towards Baby-friendly Hospital Initiative certification, he said, with a 96 per cent breastfeeding rate at the time of discharge. For those who cannot breastfeed, they have access to all major brands of milk. Only when mothers do not have a preference are they given the default formula.
Mount Alvernia Hospital also said it does not accept milk powder sponsorship from manufacturers, and that it accepts sponsorship from formula milk manufacturers only if they are related to expanding patients' knowledge in baby care and nutrition. It did not say whether it receives rotation fees.
Parkway Pantai - which Gleneagles, Mount Elizabeth, Mount Elizabeth Novena and Parkway East hospitals are under - and Raffles Hospital did not respond to queries at press time.
Private hospitals reviewing formula-milk arrangements
By Tiffany Fumiko Tay, The Straits Times, 12 May 2017
Mount Alvernia Hospital yesterday said that it does not accept sponsorships or payments from infant formula milk makers to offer their brands to new mothers.
It does, however, allow these companies to sponsor activities which educate patients on baby care and nutrition.
The hospital's response came a day after a Competition Commission of Singapore (CCS) report on rising prices for infant milk powder found that manufacturers had been paying or sponsoring private hospitals to distribute their products.
While parents at most hospitals are free to choose a formula milk for their children if it is required, most do not have a preference and are provided with a brand.
Hospitals typically rotate brands throughout the year.
Formula milk companies invest significant marketing resources in hospitals to gain a "first-mover" advantage, the report said, noting that most parents do not switch formula brands later.
Meanwhile, Thomson Medical said suppliers pay the same amount each for their brands to be part of its monthly rotation, and most of the money is channelled to support activities that benefit patients.
Other private hospitals offering maternity services - Raffles and Parkway Pantai, which Mount Elizabeth, Mount Elizabeth Novena, Gleneagles and Parkway East hospitals are under - said that they will review their policies and practices, but did not say whether they accept sponsorships or fees for their milk rotation programmes.
Parkway Pantai said that milk companies sponsor and support nursing education, and it will review and align its practices, given the CCS recommendations.
Mount Alvernia also said it will study recommendations to review current sponsorship arrangements and make adjustments if necessary.
Raffles, Thomson and Mount Alvernia said that they are working towards Baby-friendly Hospital Initiative (BFHI) certification, which bars sponsorship arrangements with formula companies.
All three public hospitals offering maternity services - KK Women's and Children's Hospital, the National University Hospital and the Singapore General Hospital - are BFHI-certified.
Formula milk companies Danone Dumex, Abbott, Nestle and FrieslandCampina said they are studying the CCS report and are cooperating with the authorities. Mead Johnson Nutrition did not respond to queries on the report by press time.
Don't pass rising marketing costs to consumers, mums sayBy Priscilla Goy, The Straits Times, 11 May 2017
Housewife Kay Park, 41, wanted to see a paediatrician, but on three occasions, she ended up being ambushed first by a formula milk company's marketer in the hospital clinic.
The representative from Dumex was "persistent", she said.
"I saw her inside the paediatric clinic, just outside the doctor's office, and each time, she asked what formula milk brand I used, and if 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 had mixed views on the companies' marketing strategies, most said such costs should not be passed on to consumers. Those interviewed were shocked to learn that marketing expenses were a key factor in the hike in formula milk's retail prices. A report released by the Competition Commission of Singapore yesterday found that between 2010 and 2014, the amount that all major manufacturers spent on marketing increased 42.4 per cent.
The competition watchdog said that heavy spending in marketing and research likely led to the rise in the mark-up of wholesale prices.
This, in turn, was the main factor in hikes in retail prices - which have, on average, more than doubled over the past nine years.
Public servant Chiam Mei Si, 33, spends about $140 a 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. The companies might be banking on the fact that mothers don't have much of a choice and want to buy the brand that works best for their children."
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 only higher R&D costs.
"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 (profit-driven) private companies."
Most mothers said their doctors did not recommend specific milk brands, but cited instances of marketers from milk companies introducing their products at hospitals.
Lawyer M. Y. Yip, 39, who has two sons aged two and four, said: "They ask you to do a survey, get your e-mail address, put you on their mailing list and e-mail you their promotions.
"To thank you for doing the survey, they give you sachets of maternity milk and infant formula milk."
She added: "I didn't find the marketers particularly aggressive, and it doesn't bother me since I was waiting for my turn to see the doctor."
However, Ms Park has had worse experiences.
She said her older son was fed Nestle's Nan formula milk at the hospital the 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 reluctant to switch to another brand that she preferred, she said.
Meanwhile, the Government plans to tighten regulations on labelling and advertising for formula milk for infants up to 12 months.
Most mothers said this is unlikely to affect how they buy formula milk, as they rely more on word of mouth 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.
"I hope the authorities would visit the factories and research the milk products."
But while 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 some time before parents believe that.
Said Ms Lee, who spends about $190 a month on Dumex milk for her 16-month-old daughter: "I will not choose the cheaper brands... If they all meet the nutritional needs of infants, then why the price difference?"
Nutrition claims, 'idealised' images on milk tins must go
By Tiffany Fumiko Tay, The Straits Times, 11 May 2017
Infant milk powder tins will soon have to change their labels to remove nutrition and health claims and "idealised" images, under stricter advertising and labelling restrictions by the Agri-Food and Veterinary Authority (AVA).
The stricter regulations, first announced by Senior Minister of State for Trade and Industry Koh Poh Koon in Parliament on Monday, are aimed at reining in the big spending on marketing activities and passing the cost savings on to consumers.
In response to queries, the AVA said that it aims to complete the review of the regulations by the end of this year. After a consultation period, the regulations will be gazetted, and, by law, industry members will be given one year's grace period to amend the labels.
Asked for examples of idealised images that AVA wants removed, the agency indicated that these could be pictures or text that idealise the use of infant formula over breast milk.
Parents and MPs said that some of the current labels may mislead parents into thinking that they can make children smarter, pointing to Abbott's Similac Gain IQ and Mead Johnson Nutrition's Enfamil A+ as labels that are misleading and should be changed.
Gain IQ, in which "IQ" stands for "intestinal quality", has previously come under scrutiny here by the Consumers Association of Singapore for its labelling.
The brand, whose formula is for children one year and above, will not, however, come under the tightened regulations, which apply only to formula milk for zero to 12 months, as after a year, formula milk is no longer required.
Pasir Ris-Punggol GRC MP Sun Xueling, referring to the prominent A+ on the labelling of the Enfamil formula, said: "Such images may create a sense of a premium brand, as parents may have the perception that their child can get A+ in their studies by consuming such products."
She added: "It is thus timely that the AVA will tighten its regulations... preventing a situation where customers are paying more so that manufacturers can then spend more on advertising and marketing, which is then charged back to consumers."
An estimated 95 per cent of formula milk sales in 2015 were for "premium" and speciality milk, with just 5 per cent for "standard" milk, which typically costs less than half the price, according to the Competition Commission of Singapore.
MacPherson MP Tin Pei Ling agreed: "Parents want the best for their children; they would rather sacrifice and go for premium brands."
Housewife and mother of two Rita Lee, 34, said: "I think the visual cues on some labels are misleading and can lead parents to subconsciously gravitate towards them."
To help parents make informed decisions, the Health Promotion Board will step up public education and embark on a multi-year campaign on the nutritional needs of children.
Parliament: Govt to boost milk formula optionsGovt will review import rules, so parents can have access to more affordable powderBy Tiffany Fumiko Tay, The Straits Times, 9 May 2017
Parents are hopeful that steps being taken by the Government to ensure access to affordable infant milk powder will put the brakes on rising prices.
The moves announced in Parliament yesterday include reviewing import requirements to facilitate more options on shelves here, and making more infant formula options available in hospitals.
The Agri-Food and Veterinary Authority will also strengthen restrictions on labelling and advertising of infant milk powder, said Senior Minister of State for Trade and Industry Koh Poh Koon.
While some infant formula companies give the impression that their particular brand of milk powder can do more for children, the scientific evidence for this is weak, he added.
He said all formula sold here, regardless of the price, meet food regulations and nutritional needs for infants to grow healthily.
"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 quality of the product," he said. Cheaper options are no less nutritious, he stressed.
There is already a range of milk formula on the shelves, with prices for a 900g tin starting from about $20 to $30, up to about $60, he said, and consumer awareness efforts will be enhanced.
Dr Koh was responding to Ms Tin Pei Ling (MacPherson) and other MPs on concerns over the rising cost of infant milk powder.
Ms Tin said this has led parents who rely on formula to feel that they are being held "ransom".
The Straits Times reported in March that the average price of a 900g tin has increased 120 per cent over the last decade to $56.06, outstripping the increases for other dairy products and household staples.
Milk powder companies have told ST that the price hikes are due to research and development, and rising overhead costs.
Nestle said in response to queries that the price of the Nan formulation increased 7 per cent last month due to the significant rise in costs of raw materials.
While the Health Promotion Board encourages breastfeeding exclusively for at least six months owing to its health benefits, the Government recognises that, in some cases, infant formula is needed, said Dr Koh.
Children above 12 months old do not require formula, however, as cow's milk, together with a balanced diet, is adequate to meet their nutritional needs, he said.
Nestle, Abbott, Mead Johnson Nutrition, FrieslandCampina and Danone made up over 99 per cent of the fortified milk formula market share here last year, according to market research provider Euromonitor International. Dr Koh said that to encourage more competition, the Government will simplify and streamline import requirements as well as remove unnecessary barriers to entry in order to bring in more options.
Supermarkets said they are supportive of the move and will work with suppliers and expand sourcing options to ensure greater variety of affordable options.
Parents said it is trial and error in finding a formula that babies will take to. Accountant Charlene Wong, 32, who spends over $200 a month on formula for her six-month-old, said: "It leaves you locked in at that price. Hopefully having more low-cost brands will push down prices."
But Mr Melvin Wu, 34, who runs a local parenting portal, said parents need to be educated on finding the most suitable formula.
New mum and marketing manager Stacy Lee, 29, said the cost of formula is just one of the expenses that come with a baby.
"I don't feel like there's a lack of choices though, so I'm not sure how much relying on supply and demand will affect prices."
RelatedCompetition Commission of Singapore's Findings From the Market Inquiry into the Supply of Formula MilkMinistry of Health (MOH) response to Competition Commission of Singapore's Recommendations on Formula MilkMTI: Senior Minister of State Dr Koh Poh Koon's oral reply to PQ on prices of formula milk