************************************************************
To follow up on the implementation progress and the effectiveness of the improvement measures for the powdered formula supply chain in Hong Kong, the Food and Health Bureau (FHB) commissioned a consultancy firm to conduct two surveys on the retail supply and prices of powdered formula this month. Results of the surveys were announced today (January 23).
For focused resource deployment and better survey efficiency, the surveys covered two brands with more serious shortage as reported by the press recently and observed during the stress test conducted last year, i.e. Mead Johnson and Friso.
The surveys concerned were conducted in January 4 to 8 and January 11 to 15, covering three stages of products of Mead Johnson and Friso. The surveys were carried out in five districts known to have experienced more serious shortage of powdered formula last year, i.e. North District, Yuen Long District, Tuen Mun District, Eastern District and Yau Tsim Mong District. A summary of the results is shown in the Annex.
The survey results reveal that shortages of the products concerned were quite serious, with the situation of Mead Johnson being more acute. An overall shortage rate of 64 per cent was observed for its stage 2 product during the first survey period. Amongst the five districts, the shortage situation of Mead Johnson was most serious in Eastern District, while the shortage situation of Friso was most serious in Yuen Long District. That said, during the second survey period, the situation improved and the shortage rates of Mead Johnson and Friso decreased by 4 to 13 percentage points and 2 to 10 percentage points respectively.
As regards retail prices, the surveys revealed that despite the shortage situation, all chain stores did not raise their retail prices to a level higher than the suppliers' recommended retail prices (RRPs). As for pharmacies, the selling prices of Mead Johnson's products were in general higher than the RRPs, but the prices dropped during the second survey period. The prices of Friso's products in pharmacies were close to or lower than the RRPs.
"The Government is very concerned about the level of shortage observed in the retail market. We have passed the survey results to the relevant suppliers, urging them to actively follow up on the findings. We have strongly requested them to keep their pledge and make every effort to ensure the sufficient supply of powdered formula for local infants and young children during the peak demand period in the run-up to the Lunar New Year. We have also requested these suppliers to keep a close watch on any unscrupulous commercial practice, and take timely and effective actions when necessary," the spokesman of the FHB said.
The spokesman added that, in the face of a tight market situation, purchasing powdered formula through the pre-order services is a preferred approach. The suppliers had also strengthened the promotion of their various pre-order services through channels including the media and the Internet.
"According to the information provided by the suppliers, with the promotion effort of the suppliers there was a substantial increase in the usage of pre-order services (including home delivery and collection at retail outlets) in the past few months. In December 2013, the seven major suppliers sold close to 70 000 cans of powdered formula through the two channels mentioned above, representing an increase of about 120 per cent when compared with the same time in 2012, and an increase of more than five-fold when compared with September 2013," the spokesman said.
The survey results will be submitted to the Committee on Supply Chain of Powdered Formula to seek their views on how to improve the supply chain.
The FHB will continue to closely monitor the supply of powdered formula and maintain close liaison with the trade to ensure sufficient supply of powdered formula for local infants and young children.
Ends/Thursday, January 23, 2014
Issued at HKT 18:30
NNNN