Why Baby Formula Prices Have Doubled Every 10-15 Years In Canada


Breastfeeding rates have more than tripled in Canada since 1965However, the price of baby formula hasn’t dropped in decades.

On the contrary, according to an analysis by CBC Radio’s Cost of living, prices appear to have risen in the last 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 a year on baby formula.

While infant formula is not among the many food products tracked by Statistics Canada, The cost of living dug up historical data from the various provincial health authorities, as well as sample advertisements and old newspaper brochures to compile an unofficial picture of how prices have changed over time for Canadians.

Old newspaper ads, such as these samples from 1978 (left) and 1990, provide information on infant formula prices over the years. (Toronto Star Archives)

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

Prices vary around the world.

Many factors influence the retail price of baby formula, according to Nestlé, one of the top four multinational companies that makes formula products.

Those factors include raw material and packaging costs, import duties, production costs such as energy and labor, local taxes, shipping and transportation, local registration costs, warehousing and distribution, and the profit margins expected by partners. manufacturers’ trademarks.

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In Canada, we can add currency to that long list, as we import most of the baby formula that is consumed in this country. Therefore, the value of the Canadian dollar also contributes to the increase in the cost of formula in Canada in recent years, in addition to other cost fluctuations.

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

It is more complicated than materials and workmanship.

However, a closer look at the label in the grocery store reveals a more complicated pricing scheme.

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

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

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

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

“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,” he added.

Retailers tend to charge what consumers are willing to pay.

And some markets are much more tolerant of high prices, due to shortages or concerns about safety.

Inelastic demand: when you need it, you NEED it

In Canada, breastfeeding is now the norm. Nine out of ten mothers breastfeed their babies, according to Statistics Canada.

Still, only 26 percent of parents exclusively breastfeed for the first six months.

That makes many families turn to the bottle.

It doesn’t matter what price you’re looking at. You will likely buy it once you are hooked.– Sylvain Charlebois, Director of the Laboratory for Agri-Food Analysis at Dalhousie University

In that sense, baby 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 what’s on the price tag.

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

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

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

As the father of twins, Charlebois said he could relate to the helpless feeling of juggling too many priorities and tensions, and perhaps not prioritizing finding a lower cost at the supermarket checkout.

“The price will not necessarily alienate parents,” he said.

In economics, when price fluctuations have little or no impact on the quantity that consumers buy, it is called inelastic demand. And that’s also why baby formula rarely goes on sale.

Retailers sometimes sell an item at a loss to stimulate purchase and attract new customers. But Charlebois said only a fool would dismiss baby formula as a “loss leader.”

“Oh no! No way!” Said Charlebois.

“If a grocer really decides to manage baby formula as a loss leader, he will walk away or she will leave money on the table!”

Produced and written by Falice Chin.
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