Big Food. How much do pricing policies vary from country to country and why do the same products in Italy also cost twice as much as in neighboring countries? The unstoppable phenomena of parallel trade and imports, in offering consumers true savings, reveal abysmal asymmetries.
Trade and parallel importation, how they work
Parallel importers are those who purchase IDM (Branded Industry) products in non-EU countries, where costs are significantly lower. A practice as old as the international notoriety of big brands, in the food industry as in various others (especially in high value-added industries, e.g., fashion and perfumes). Purchases are made in countries such as the former Yugoslavia (Serbia, Bosnia, FYROM), Moldova, Turkey, Egypt and Lebanon, as well as in Russia.
Parallel trade follows the same logic but does not cover customs operations because buying and selling transactions take place in the EU Internal Market. In that case, ‘top brands‘ are often bought in the Baltic Republics (e.g., Lithuania), rather than in Germany or Denmark, Bulgaria and Romania, Czech and Slovak Republics, and Greece.
Cash is king
. The effectiveness of import and parallel trade operations is closely linked to the fairness of trade, which is based on direct relationships and instant payments. Trust and savings are built with facts, you pay in advance (20 percent on order, 80 percent on pickup) and sell with pay-as-you-go. In a logic diametrically opposed to the unfair trade practices that only now Europe has finally decided to ban, after decades of suffering in the agrifood production chain.
Import and parallel trade, the benefits for large-scale retailers and consumers
Thanks to parallel trade, large-scale retailers (GDO) in Italy can achieve resounding savings. From as low as 20-25% on brands such as Milka and Nutella, 30% or more on Coca-Cola, over 50% on Ferrero Rocher ‘Made in South Africa,’ to 70-75% and more on Mon Cheri, Pocket Coffee, and various candies.
The distributor in Italy saves at least 4-5,000 euros per ‘platform’ (on Kinder bars, for example. A platform, or pallet, houses 7 thousand to 15 thousand sales units), up to 300 thousand euros on each truck (in the case of Tic-Tac ‘Made in Poland‘ bars, for example. A ‘full truck‘ truck, c.d. bilge, houses 33 platforms).
For the consumer, products that come from parallel trade can cost up to 50 percent less, without sacrificing either quality or freshness. (1) Parallel trade is therefore a win-win situation, especially for the end consumer who persists in buying these types of products in times of crisis such as the current one.
The ‘social pact’ between distributors and consumers is realized through guaranteeing the significant savings and the effective compliance of products with expectations. In fact, the identity between products distributed through parallel trade or import and those directly placed by Big Food in the domestic market is verified by label comparison, physical and organoleptic examination, and laboratory analysis. (3)
Value chain, the role of ConsumActors
Parallel trade helps us understand how unreasonably inflated pricing policy is in Italy compared to other European countries. This phenomenon can be attributed, at least in some cases, to the inefficiency of Big Food‘s Italian sales networks. But the most significant figure pertains to the intrinsic value of the products in question. If identical goods are sold at extraordinarily lower prices (-80% to the end consumer in other countries), who and what is the Italian consumer paying?
It is time for the consumAtor to take control of the supply chain and true awareness of the so-called ‘value chain,’ thanks to initiatives such as the #
MarcadelConsumer
, #WhoIsThePadrone, soon to be launched in Italy thanks to the nonprofit association of the same name.
Dario Dongo
Notes
(1) The concept of ‘quality,’ on products such as those mentioned, should be understood in the sense of homologation and standardization. That is, goods made in such a way as to ensure systematic compliance with the requirements set in the data sheets. Regardless of any assessment of theunsustainability of raw materials such as palm oil or the nutritional characteristics of food
(2) The nutritional quality of the above-mentioned food lines is indeed deplorable, being mostly junk food (in technical jargon HFSS, ‘
High in Fats, Sugar and Sodium’
). But until Italy introduces policies for nutritional education and prevention of diseases related to improper diet such products will continue to garner wide acceptance. And the nutritional profiles of junk-food will not be improved, until serious measures such as the NutriScore (color-coded summary nutritional information) and the ‘Sugar Tax‘
(3) The risk of any quality discrepancies ‘
in peius
‘, which the Visegrad bloc countries denounced in Brussels. The European Commission has therefore activated a special public monitoring system on the phenomenon ‘Dual Quality Foods‘. See the article https://www.greatitalianfoodtrade.it/consum-attori/dual-quality-foods-juncker-alza-la-voce
Dario Dongo, lawyer and journalist, PhD in international food law, founder of WIISE (FARE - GIFT - Food Times) and Égalité.
