Why infant formula prices have doubled every 10 to 15 years in Canada

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Breastfeeding rates more than tripled in Canada since 1965, yet the price of infant formula has not fallen for decades.

On the contrary, according to an analysis by CBC Radio Cost of life, prices seem to have only increased over the past half century and have doubled every 10 to 15 years.

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Today, parents who cannot or choose not to breastfeed can expect to spend more than $ 1,000 per year on infant formula.

Although infant formula is not one of the many foods tracked by Statistics Canada, Cost of life unearthed historical data from various provincial health authorities, as well as samples of old newspaper ads and pamphlets to paint an informal picture of how prices have changed over time for Canadians.

Old newspaper advertisements such as these samples from 1978 (left) and 1990 provide insight into the prices of infant formula over the years. (Toronto Star Archives)

Based on mixed data compiled by Cost of life, it appears that the retail price of the traditional variety of powdered infant formula milk has increased almost tenfold since the early 1970s. This estimate has been adjusted for inflation, as well as for differences in volume in packaging.

Prices vary around the world

Many factors influence the retail price of infant formula, according to Nestlé, one of the top four multinational companies that manufacture infant formula.

These factors include the costs of raw materials and packaging materials, import duties, production costs such as energy and labor, local taxes, shipping and transportation, local registration costs, warehousing and distribution; and profit margins expected by manufacturers’ business partners.

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In Canada, we can add change to this long list since we import most of the infant formula consumed in this country. Thus, the value of the loonie also plays a role in contributing to the increase in the cost of the formula in Canada in recent years, in addition to other cost fluctuations.

“All of this can change from country to country, so prices can vary widely,” wrote a Nestlé representative in an email to CBC Radio. Cost of life.

It’s more complicated than the materials and the work

A closer look at the sticker at the grocery store, however, reveals a more complicated pricing scheme.

In the United States, the most expensive infant formula is 1.8 times more expensive than the cheapest among brands such as Nestlé, Abbot, Mead Johnson and Danone.

But in China, this price gap is increasing. The most expensive brands are 2.5 times more expensive there than the cheapest products from the same four companies, according to a 2017 Changing Markets Foundation report.

A customer selects baby milk in a supermarket in Haikou, southern China’s Hainan Province, August 7, 2013. (AFP / Getty Images)

“Most parents in China still only have one child, so they are ready to invest more in nutrition,” said Nusa Urbancic, one of the report’s authors.

“They also trust foreign brands more because in 2008 there was the melamine scandal where some formulas were contaminated with this toxic chemical and many children died,” she added.

Retailers tend to charge what consumers are willing to pay.

And some markets are much more tolerant of high prices, due to scarcity or security concerns.

Inelastic demand: when you need it, you NEED IT

Breastfeeding is now the norm in Canada. Nine in ten mothers breastfeed their babies, according to Statistics Canada.

Yet only 26 percent of parents breastfeed exclusively in the first six months.

This leaves many families turning to the bottle.

No matter what price you are looking for. You are likely to buy it once you get hooked.– Sylvain Charlebois, director of the Agri-Food Analysis Laboratory at Dalhousie University

In that sense, infant formula is a lot like gasoline – when you need it, you really need it. And if you can’t find a substitute, you’ll pay the price listed.

“Retailers know you need it and you will buy it,” said Sylvain Charlebois, director of the Agri-Food Analysis Laboratory at Dalhousie University.

“It doesn’t matter what price you look at. You’re likely to buy it once you’re hooked,” he said.

Dalhousie University professor Sylvain Charlebois says the price of formula doesn’t matter, because you’ll buy it if you need it. (Radio-Canada)

As a father of twins, Charlebois said he could understand the sense of helplessness of juggling many priorities and stresses, and perhaps not prioritizing looking for a cost below the cash register. from the grocery store.

“The price won’t necessarily repel parents,” he said.

In economics, when price fluctuations have little or no impact on the quantity of consumer purchases, we speak of inelastic demand. And this is also the reason why infant formula is rarely offered for sale.

Retailers will sometimes sell an item at a loss in order to stimulate buying and attract new customers. But Charlebois said only a fool would rule out infant formula as a “lead product.”

” Oh no ! No way ! »Said Charlebois.

“If a grocer decides to run infant formula as a lead product, he either goes or leaves money on the table!


Produced and written by Falice Chin.
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