Iceland - It's not about the parking vouchers

Iceland boss Richard Walker claims overturning UK laws is best way to help parents cope with current cost of living crisis

This week has seen Iceland boss Richard Walker take to daytime telly, telling us he intended to break the laws around marketing infant formula. Presenting himself as an advocate for desperate parents everywhere, especially those who don't breastfeed and are purchasing baby milk (so the vast majority of parents). 

We're apparently supposed to forget 2 months ago this same dood criticised the government's proposal to help the most vulnerable, saying he felt capping the price of essentials like bread and milk was a bad idea as "this would force them to apply more pressure on producers to reduce costs".

The ultimately aim of his media interview it seems, from the misinformation about parking vouchers to lamenting he couldn't accept reward points, was to create an emotive response from viewers. 

Why? 

Apparently to urge parents to try and provoke changes to the very laws designed to protect them, ironically from companies like Iceland.  

His statement on Iceland's website is titled:

"It's time to change the laws on Infant formula"

The laws have nothing to do with the price of infant formula and everything to do with marketing and exploitation. Parents don't need the law to change, they just need the price cut - but supermarkets do if they want to engage in a price war. Infant formula is up there with essentials like bread and milk (so high, consistent demand) and it's become unaffordable.

Of course the majority of the British public and it seems even some media reporters, don’t understand the very basics of The Code - and that’s pretty understandable for parents.

So let’s check some facts.

First cutting the price of formula by 20% is entirely legal, providing it’s a long term discount and not a promotion. So Iceland can completely legally reduce the price at which they sell it.

But from a business perspective, to make the same profit they now need to either reduce their buy price, or sell more tins.

What normally happens as Richard himself highlighted in The Guardian, is when supermarkets cut prices, they put pressure on the producer to cut buy price. A report in Dec 2022 found UK farmers were making tiny profits as supermarkets boast record takings.

Except formula companies are owned by multi billion pound conglomerates, the industry dominated by a handful of key players and with a shortage of infant formula, the producers hold all the cards. They aren't going to buckle to demand from UK retailers.

Richard highlighted in his statement that indeed infant formula manufacturers have increased their prices as much as 45% in the last two years. Let's also note the formula industry report profit margins have jumped from 11.6% in 2021 to an estimated 14.2% in 2022, the highest point since 2015, according to new IBISWorld data provided to Axios.

This leaves retailers then with only one option, to market, advertise and sell more tins - and here's Richard's problem:

"What the law prohibits us from doing is telling anyone that we have done so. Which makes it pretty hard for us to get the message out to desperate parents that Iceland can now offer big savings on the products they need."

Pretty difficult? Has Richard forgotten social media exists? A 20% price reduction would likely go viral purely from parents sharing this, but this doesn't solve his actual problem.

So they take a 20% hit on profit, offset initially by more customers, but pretty soon other supermarkets are likely to follow suit, and how to engage in a price war, promote sales, deals and compete if you're not legally allowed to advertise and market to customers long-term?

As the price they're selling at reduces across the board, if they can't reduce buy price, they now need more consumers overall, more people using the product to make the same profit - and both formula manufacturers and retailers know this. It's precisely why the laws exist.

Protecting Consumers

The laws aren't there to try and force people to breastfeed or feel guilty if they don’t. They’re not there to try and force you to pay more for formula as a punishment - far from it. Retailers could reduce their formula to £1 per tin and providing this was a long term price change, it would be perfectly legal.

What we do know is without these laws, and often even with them, consumers aka parents, are bombarded with misleading, inaccurate information and promotions which have a significant impact on feeding outcome. Every single breastfeed is a loss of a formula milk sale and thus their profit.

Retailers frequently violate these rules and are fined, at the time of writing the latest being Boots just 6 days ago.

In April 2022, a report by the World Health Organisation revealed the shocking extent of exploitative formula milk marketing. The second report in a series, showed parents, particularly mothers, were being insidiously and persistently targeted online. 

They were “paying social media platforms and influencers to gain direct access to pregnant women and mothers at some of the most vulnerable moments in their lives.”

The global formula milk industry were targeting new mothers with personalized social media content that was often not recognizable as advertising.

Through tools like apps, virtual support groups or ‘baby-clubs’, paid social media influencers, promotions and competitions and advice forums or services, formula milk companies can buy or collect personal information and send personalized promotions to new pregnant women and mothers. The report found evidence of how misleading marketing reinforces myths about breastfeeding and breast milk and undermines women’s confidence in their ability to breastfeed successfully.

A 2023 study in the Lacet entitled “Marketing of commercial milk formula: a system to capture parents, communities, science, and policy” found:

“This Series paper describes the CMF marketing playbook and its influence on families, health professionals, science, and policy processes - we report how CMF sales are driven by multifaceted, well resourced marketing strategies that portray CMF products, with little or no supporting evidence, as solutions to common infant health and developmental challenges in ways that systematically undermine breastfeeding. Digital platforms substantially extend the reach and influence of marketing while circumventing the International Code of Marketing of Breast-milk Substitutes.”

They engage in the above because it works. And now suddenly in the face of several reports such as this, a giant like Iceland wants to call for us to scrap these laws under the guise this helps parents learn about price reductions?

Most of us can agree, permanently reducing the price of infant formula yes - permitting companies to circulate inaccurate information proven to negatively affect the likelihood of breastfeeding. No. This is what Richard is proposing.

So let’s be clear, this argument isn’t about being able to claim reward points on your formula or using food bank vouchers to pay for milk - it’s about massive changes to the law. This paves the way not to help parents, we know without doubt this marketing harms - but to protect and increase the profit margins of multi-million and billion pound companies by overturning laws that currently restrict them.