Photo of formula milk by CNA David Bottomley

Due to the lack of evidence proving that baby formula milk powder suppliers are engaged in anti-competition acts, the Singapore government agency Competition Commission of Singapore (CCS) attribute the problem of unaffordable milk powder to Singaporeans having “brand loyalty” and “a penchant for premium products”.

“Brand loyalty and a penchant for premium products among parents here have driven formula milk companies to invest heavily in marketing and research and development (R&D). And this, in turn, could reinforce such consumer behaviour.”

However there was no statistics showing how much money was pumped into R&D, and the CCS neither have any evidence to prove that production costs went up to justify a 150% price increase.

According to the CCS report released yesterday (May 10), the companies competed on marketing heavily and their sales skyrocketed due to “perception”. The CCS refuse to admit that there has been an under supply in Singapore market:

“Such ‘premiumisation’ strategies further strengthen consumer perceptions and entrench consumer purchasing behaviours, which in turn give formula milk manufacturers the market power to increase wholesale prices, in the face of limited volume growth prospect due to low birth rate and rising breastfeeding rate… Insufficient understanding of the nutritional content of formula milk and the dietary requirements of infants and young children have often led parents to perceive that the more expensive or premium products are of higher quality.”

CCS blamed the companies for making “promises” of health benefits to build a premium image, but it is unable to confirm whether the advertised “promises” are fake or not:

“Manufacturers introduce new ingredients that contribute to attributes desired by parents. Such ingredients make promises like improving overall mental function, promoting a healthy intestinal tract and aiding brain and eye development. The premium image is important to these brands because they compete against other brands and their products based on brand name, nutrition and safety, rather than on price.”

CCS also blamed the companies for making “promises” of health benefits to build a premium image, but it is unable to confirm whether the advertised “promises” are fake or not:

“Manufacturers introduce new ingredients that contribute to attributes desired by parents. Such ingredients make promises like improving overall mental function, promoting a healthy intestinal tract and aiding brain and eye development. The premium image is important to these brands because they compete against other brands and their products based on brand name, nutrition and safety, rather than on price.”

CCS then quoted anonymous anecdotal sources saying Singapore consumers for thinking better quality comes with better prices:

“Anecdotal feedback suggested that some parents perceive more expensive brands as having better quality… Some parents may find it difficult to understand the nutritional content of formula milk, a child’s nutrient requirements and the significance of the additional premium ingredient. The parents may then rely on price as a quality indicator.”

The government agency claimed that Singapore parents do not want to buy cheaper alternative and that one such supplier was forced to discontinue their products because there was not enough sales:

“Cheaper formula milk may not necessarily enjoy higher sales. Despite various marketing activities by the manufacturer, sales were weak and the product was discontinued by the manufacturer as it was not commercially viable and the manufacturer could not meet the minimum order quantity from its factories.”

At the end of the CCS report, there is still no explanation why prices inflated by 2.5 times, and why milk powder of the same type cost only less than half the price in Australia. Earlier this week in Parliament, Senior Minister Koh Poh Koon told Singaporeans to go for cheaper alternatives if they can’t buy expensive brands.

Read: Minister Koh Poh Koon: Milk powder expensive? Go for cheaper brands then

The Singapore government yesterday (May 10) announced that they will ban “misleading” advertisement on milk powder, to play down on the advertised health benefits.