The importers of foods from the EU are expecting a surge in the number of foreign brands on the domestic market once the customs duties are dropped. They also forecast an increase in the profitability of the foreign producers with export business in Romania, who have operated at a loss in some cases until now, in anticipation of the accession.
"Foreign producers are keeping an eye on the Romanian market because it is a large and very open market. The Romanian consumer is open to new things unlike the consumer in Poland or in Serbia for instance," says Gabriela Simion, national sales manager and partner of Serpico, foods distributor. Then there is also the upcoming accession of Romania to the European Union, with all the advantages thereof for importers.
Whereas customs duties have been the main challenge for the European Union producers until now, after the EU accession they can start making bolder sales and profit plans, because the elimination of these duties will lead to lower sale costs on the Romanian market.
For instance, customs duties reach approximately 25% for beer, up to 60% for wines, and 40% to as much as 43.2% for soft drinks and chocolate.
The reduction of the customs duties will not necessarily show in the shelf prices, say FMCG distributors in Romania.
The purchase cost difference will probably go to trade marketing, to resizing advertising budgets or to increasing the profit margins due to the surge in direct and indirect distribution expenses that rally to the prices in the EU, explains Doru Atomei, Aquila Group development manager.
He says there are also foreign producers who have been operating at a loss on the Romanian market and expect the accession to break even.
Domestic foods producers anticipate tighter competition in terms of price once customs duties have been eliminated, mainly from the players that have just entered the market.
Sorin Minea, chairman of Romalimenta (an organisation that groups together the leading producers in the foods industry in Romania) has recently stated he expects huge pressure from the EU producers, attempting to gain a strong position on a very strong outlet like Romania is. He also forecast a 10-15% decline in the prices of imported foods on the average with a view to gaining market share, followed by market and price stability.
Still, domestic producers are also talking about the positive side of the accession, such as the exports to the European Union. Sweets producer Supreme Group plans to begin exports in 2007 and Nestle has scheduled an increase in the volumes exported from the factory in Timisoara.
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