Nestlé-owned Wyeth Nutrition and Danone Dumex are slashing the price of their infant formula products in China in response to the launch of an investigation into their pricing practices and suspected anti-monopoly violations.
In a statement sent to DairyReporter.com, Wyeth Nutrition revealed plans to implement a price reduction of between 11% and 20% across China from next Monday (8 July 2013). These cuts will remain in place into 2014, the statement added.
The company has also vowed not to increase the price of any new products over the next year.
Paris-based Danone has also confirmed that its Asian child nutrition business, Danone Dumex, is “preparing a price reduction proposal.”
The cuts come in response to the launch of an investigation by the Chinese National Development and Reform Commission (NDRC) into high infant formula prices in the country and suspected anti-trust law violations.
Wyeth “assessed its pricing practices”
“Wyeth Nutrition respects all Chinese laws and regulations,” said Wyeth Nutrition in a statement. “Following this investigation, Wyeth Nutrition assessed its pricing practices and decided to improve certain sales and marketing practices.”
“In order to meet the NDRC concerns with respect to the affordability of infant formula to the Chinese consumer, and provide quality products at appropriate and affordable prices, Wyeth Nutrition decided to implement a price reduction of key products from 8 July 2013 through 2014. The average reduction will be at 11% with the biggest single product price reduction at 20%,” the statement added.
Meanwhile, Danone has reiterated that it has been “actively cooperating” with the NDRC.
In a statement, the Paris-based firm said that it hopes to “provide consumers with high quality products at a good price” through the planned reduction.
“The detailed price reduction proposal will be disclosed later,” the statement added.
Manufacturers “cooperating” with NDRC
DairyReporter.com understands that the NDRC is reviewing evidence that suggests several infant formula manufacturers - Danone, Mead Johnson Nutrition, Abbott Laboratories, FrieslandCampina, Nestlé-owned Wyeth, and Chinese firm, and Biostime International Holdings – drove up the retail price of their products.
Wyeth Nutrition, Danone, and Dutch dairy processor FrieslandCampina confirmed on Tuesday (2 July) that they are among the several manufacturers under investigation.
All declined to comment extensively, but said that they are “cooperating” with authorities in China.
In a statement sent to DairyReporter.com since, Illinois-based Mead Johnson Nutrition confirmed that its pricing practices are under scrutiny by the NDRC.
“The company is fully cooperating with the recently reported Chinese government antitrust review of resale prices in the infant formula market and will provide information in response to inquiries received from government officials,” said the statement.