Mead Johnson cutting China infant milk prices amid probe

Mead Johnson to cut prices by 7 per cent to 15 per cent next week, launching new promotional campaign to reassure Chinese consumers

PUBLISHED : Thursday, 11 July, 2013, 11:05am
UPDATED : Thursday, 11 July, 2013, 11:05am

Mead Johnson Nutrition said it will cut the price of its infant milk formula in China, becoming the latest company to take action in the wake of an investigation by Beijing into possible price-fixing and anti-competitive behaviour.

Mead Johnson, the maker of the Enfamil brand of baby formula, said it will reduce prices by 7 per cent to 15 per cent as of July 16. It will also launch new promotional campaigns aimed at reinforcing the trust and support of Chinese consumers.

In recent weeks, companies including Mead Johnson, Danone, Nestle, Abbott Laboratories and Hong Kong-listed Biostime International said they were being investigated by China’s National Development and Reform Commission.

Danone has since said it cut prices by up to 20 per cent, while Nestle cut prices by an average of 11 per cent and pledged to freeze prices on new products over the next year. Biostime said it would offer consumer rewards that would result in an effective discount of roughly 11 per cent.

Mead Johnson, based in Glenview, Illinois, said it is looking at its global operations for ways to offset the impact of the price cuts on its earnings. It will update its outlook for this year when it reports quarterly results on July 25.

Mead Johnson shares rose 4 per cent to US$73.12 on the New York Stock Exchange, regaining some ground after falling 13 per cent in the days following news of the probe.