I received the following message via the Baby Feeding Law Group monitoring project that we coordinate:
Morning, apparently I’m a criminal for trying to purchase 3 boxes of formula in Tesco today. Only 2 can be purchased at a time due to a small number of people buying in bulk and exporting. How is this process going to stop that? Why inconvenience all of their parent customers for this? Can’t they investigate those that buy in bulk properly? Can you help?
This first surfaced a couple of years ago specifically related to Danone infant formula. The level of publicity at the time made me suspicious that it was a marketing strategy. Danone cannot advertise infant formula, but thought it could press release the information that its formula was so sought after stocks were running low. Supermarkets introduced rationing. The result is mothers who might need to buy more than 2 units at a time are sometimes being challenged and made to feel like criminals – and anyone who was buying formula to export would not be dissuaded from doing so.
Are these restrictions really necessary, or is it a marketing scam? [Update 19 February: Danone seems happy to see the end of a European Directive that makes it illegal to export formula that is not labelled in the appropriate language for the destination country. Why? See final paragraph.]
If you think I am taking a cynical view of Danone to even consider it is less then genuine, consider this: during this period in 2013 in the north west of the UK stocks of Cow & Gate Comfort infant formula ran low. Danone said it had difficulty sourcing an ingredient. An NHS expert panel exists in the region to assess company information, communicating only what is accurate and necessary to health workers (it is called the Local Infant Feeding Information Board – LIFIB – and this is a model that should be implemented nationally).
LIFIB reports in its March 2013 bulletin: ‘As there have recently been some issues with the availability of the Comfort brand, we discussed this issue too, which led to the revelation that Comfort forms of both Danone’s brands Cow & Gate and Aptamil are identical apart from the packaging.’
The packaging – and the price: current prices in Tesco:
Aptamil is presented as a premium brand and sold at premium prices. People assume it is better even when the powder they are being sold is exactly the same.
So, was this ‘exports to China’ story just as cynical a marketing strategy?
Supermarkets put shelf talkers alongside the infant formula limiting customers to two items. They said it was ‘as a result of increased demand’. The example below is from ASDA, 7 May 2013.
If they were concerned about shortages due to exports to China, wouldn’t it have been more relevant to warn that it is illegal to export infant formula from the European Union if it is not labelled in the correct language for the country where it is to be sold?
That might dissuade anyone thinking of exporting formula.
The shelf talkers used were actually going to make any shortage worse, not better. Psychologists have found how words prime our responses – something well known to marketers (foods are marketed as 90% fat free, for example, not 10% fat). Danone was giving the message its product was in demand.
Perhaps more surprisingly, if you tell people they are limited to buying two products, they are more likely to buy two items than one. The limit becomes a suggestion, known to psychologists as the anchor. The following is from the book ‘Thinking, fast and slow’ by Daniel Kahneman, who was awarded the Nobel Prize in Economics in 2002:
‘Anchoring effects explain why, for example, arbitrary rationing is an effective marketing ploy. A few years ago, supermarket shoppers in Sioux City, Iowa, encountered a sales promotion for Campbell’s soup at about 10% off the regular price. On some days, a sign on the shelf said LIMIT OF 12 PER PERSON. On other days, the sign said NO LIMIT PER PERSON. Shoppers purchased an average of 7 cans when the limit was in force, twice as many as they bought when the limit was removed. Anchoring was not the sole explanation. Rationing also implies that the goods are flying off the shelves, and shoppers should feel some urgency about stocking up.’
There is currently an example in Tesco. On 8 January 2015 it launched an illegal promotion for Nestlé SMA infant formula across its chain. This was based on a price reduction. This again is a marketing ploy: purchasers feel like they are benefiting from a price cut, but formula would be much cheaper – permanently – if companies abided by international marketing standards and stopped spending a fortune on promotion.
There was an immediate outcry about Tesco breaking the Infant Formula and Follow-on Formula Regulations (2007) and it immediately said it was removing the promotion, though the example below was photographed a month later (8 February).
But Tesco has been changing over to a new marketing strategy.
The round ‘Now Cheaper at Tesco’ shelf talker is still there (in breach of paragraph 23 of the law), but the price discount shelf talker has been replaced with yellow shelf talker saying:
‘Please note, we ask that customers do not buy more than 2 units of infant formula stage per transaction. This is so we can protect availability and ensure that as many customers as possible can buy these products.’
Why replace an aggressive, get them out the door, price cut promotion by rationing? Because the aim is the same: sell more products.
It’s worth recalling that when the Department of Health met with formula manufacturers about supposed shortages due to gangs sending exports to China, Nestlé said it had no problem with supplies. Therefore the rationing of Nestlé’s SMA brand is nothing to do with China.
Interestingly, Boots is currently informing customers (14 February 2015) that Danone has placed restrictions on supplies.
Sign in Boots: ‘Due to a nationwide supply restriction applied by Danone on their ranges Aptamil and Cow&Gate, we can no longer allow purchases of more than 2 units per customer. This also includes Boots.com purchases.’
Danone’s production facilities in Ireland supply 180 countries, including the UK. Danone aims to supply 20% of all the formula used in the world from Ireland.
Any shortages in the UK and elsewhere in Europe are due to Danone prioritising its growth markets, where it is competing aggressively with Nestlé. China is one such market. (Danone has been embroiled in controversy there as its Dumex subsidiary has been accused of bribing health workers to prescribe formula).
So, where does this bring us?
Keep things simple. Stop the promotion, which will make formula cheaper permanently for mothers who use it.
Don’t put limits on sales to individuals. Trust mothers to buy what they need. Rationing is most likely a marketing ploy.
Don’t make mothers feel like criminals when companies restrict supplies. Be honest that they are prioritising other countries.
Directing supplies to growth markets is part and parcel of aggressive marketing strategies that are undermining breastfeeding. Companies should abide by the marketing requirements.
If there is concern about products being bought up and shipped to China, then publicise the fact that it is illegal to export products that are not labelled in the correct language.
Better still, if these gangs exist, then take them to court. Have you heard of anyone being prosecuted? I haven’t.
Member States shall ensure that the products referred to in Article 1 may be exported from the Community only if they comply with this Directive…. These products shall be labelled in an appropriate language and in such a way as to avoid any risk of confusion between infant formulae and follow-on formulae. [emphasis added].
This is an important Directive and we argued in favour of it because incorrectly labelled products have been a concern for many years. Mothers in China and anywhere else need to be able to read the labels.
In fact, we are calling on the European Commission to rethink its plan to scrap this Directive, which it currently plans to do on 20 July 2015.
We raised this at a meeting of civil society and industry groups with the Commission in Brussels on 17 February. The Commission representative was dismissive saying, ‘Do you really think Nutricia would send products from say Holland to China without labels in the correct language?’ Mike Brady of Baby Milk Action replied, ‘That is exactly what Danone [Nutricia’s parent company] claims is happening. It says it has to ration sales to customers in Europe because stocks are being bought up and shipped out to China. The Directive makes this illegal if the products are not labelled appropriately and should be used to stop this happening. So why repeal it?’
Danone representative, Louis Vareille, was present at the meeting, but did not support retaining the Directive. If Danone’s supply restrictions in Europe are really due to such unofficial exports, why is Danone content to see the Directive fall?