Imported Formula Milk Prices Up to 4.1 Times Higher Than Import Costs

Korea Consumer Agency, Analysis Results from 2019 to June 2021

Difference between the import price and the selling price of powdered infant formula.

[Asia Economy Reporter Lim Chun-han] The domestic retail price of imported infant formula was found to be up to 4.1 times higher than the import price.

According to an analysis by the Korea Consumer Agency on the import prices and domestic retail prices of imported infant formula from 2019 to June of last year, the domestic retail price averaged 40,878 KRW per kilogram in the first half of last year, which was 2.33 times higher than the average import price of 20,625 KRW.

For the lowest-priced products, the average import price was 8,200 KRW, but the retail price was 33,750 KRW, showing a 4.11 times difference. For the highest-priced products, the average import price was 38,340 KRW, while the retail price was 69,780 KRW, a 1.82 times difference.

The average prices by quartile, calculated by dividing the total import and retail prices into four groups, showed that the import price of low-priced products (1st quartile) increased by 17.5% compared to 2020, indicating an upward leveling. The domestic retail price of 1st quartile products rose by 1.9%, whereas high-priced products (4th quartile) increased by 6.0%.

Imported infant formula is subject to a standard tariff rate of 36%, which is higher than the general rate of 8%, making it a product that benefits significantly from tariff reductions under the Korea-European Union (EU) Free Trade Agreement (FTA). However, over the past three years, the domestic retail prices of EU-origin infant formula showed varying effects of price reductions depending on the country of origin. Infant formula from Germany, France, and Austria saw price decreases of 5.0 to 10.8% in the first half of 2021 compared to 2020, while Dutch products actually increased by 6.8%.

In a survey conducted by the Korea Consumer Agency in October last year targeting 500 women nationwide aged 25 to 45 with children under three years old who had purchased domestic or imported infant formula within the previous six months, 48.4% of respondents reported purchasing imported products. Among these, the most purchased imported infant formula was from Germany (21.4%), followed by New Zealand (13.0%) and the Netherlands (4.6%).

The purchase channels were online shopping malls at 74.6%, large discount marts at 12.8%, and overseas direct purchase at 10.6%. The most common reason for choosing these products was "because the child eats well," at 44.4%, followed by nutritional content (20.6%), product safety (9.6%), and similarity to breast milk (6.8%).

Among all respondents, 65.0% had experience purchasing premium infant formula. By age group, mothers in their early 40s showed a stronger preference for premium products compared to other age groups, with higher rates of purchasing organic and goat milk formula. Complaints about infant formula included difficulties with exchanges and refunds (32.2%), safety and hygiene concerns (31.4%), and misuse or consumption due to lack of information (30.2%).

This content was produced with the assistance of AI translation services.