Food products made in Latvia are not applied with higher markup than other food products, LETA was told by interviewed retailers, commenting on results of the market study performed by Latvian Competition Council.
Elvi Latvija LLC board member Laila Vārtukapteine said the markup applied to goods sold in Elvi stores at their base price depends on the type of goods, their possible speed of circulation on the shelf and a number of other conditions related to the trading process, while during the promotional period, the mark-up for products is always reduced. “Neither the base price nor the promotional period markup are related to countries of origin,” stressed the board member.
She also mentioned that there have been situations when the markup applied to products made in foreign countries was lower than that of analogous Latvian goods, as well as situations when there reverse happened – these processes are dynamic and dictated by the retail environment, not the country of origin of the goods sold. “Elvi has had this policy for many years, and we’ve never received any complaints from supervisory institutions about pricing principles,” explained Vārtukapteine.
At the same time, she mentioned the company highly values the work the Competition Council does in monitoring the market, adding that Elvi always cooperates with council specialists. Nevertheless, in regards to the findings of the Competition Council. However, in this communication, the council notes that the differences found in the mark-up between imported and local meat, eggs and fish products are not significant. “Unfortunately, a portion of society do not have an understanding of retail processes. It is because of this people often make generalised conclusions, undermining the sector’s overall prestige,” said Vārtukapteine.
Elvi board member mentioned that it is simple to misunderstand and misinterpret the situation without studying the issue –
this is confirmed by the statements reported in recent days how the difference between the markup of products made in Latvia and other countries reaches several hundred percent. “Simply put – if the markup for one product is 1% and the markup for another is 3%, the markup of the second product is 200% higher,” she explained, adding that such interpretations result in a crooked understanding of the real situation.
When asked about one of the conclusions reached by Competition Council in regards to greater penalties for Latvian producers, Vārtukapteine mentioned that Elvi uses a standardised form with equal cooperation conditions in its contracts.
“Top!” chain store board member and marketing director Ilze Priedīte told LETA that the company disagrees with the claims about Latvian made eggs, meat and fish products are given a higher markup than the same food products made outside of Latvia.
“At the moment, the market is working in conditions of fierce competition, and the main task of both manufacturers and suppliers, and for us as retailers, is to increase sales of the product. In order to increase sales and increase turnover in such a situation, the prices of a product are often reduced both in the short and long term,” said Priedīte.
She also said there are cases when manufacturers who produce “Top!” private line of goods also produce a product of their own brand that is identical by weight and taste to “Top!” private line of goods, purchase prices are lower because the manufacturer does not have to invest in the promotion and advertising of the product.
At the same time, Priedīte says that contracts with “Top!” are not differentiated, and farmers and food products suppliers registered in Latvia are not applied with bigger penalties.
Maxima Latvia LLC communications manager Liene Dupate-Ugule told LETA that this specific study covers only a narrow range of goods from various retailers, and it does not cover a wider range of products in respective categories. This makes it difficult to make comprehensive conclusions in regards to all groups of goods.
She too said Maxima Latvia does not dictate sales prices based on the country of origin.
She also mentioned that a portion of Maxima Latvia turnover comes from promotional deals, which also include a number of Latvian products, whose prices are low. There are also several categories in which only a small portion of the price is made up of the markup. This includes necessities or fresh food.
Dupate-Ugule also mentioned that Maxima regularly organises various price drop campaigns for locally made products to promote their demand among residents.
“As for contract conditions with partners – Maxima Latvia does not apply more severe penalties for local producers,” said Dupate-Ugule.
Rimi Latvia LLC board chairman Valdis Turlais told LETA that results from the study performed by the Competition Council about egg, fish and meat products cannot be applied to Rimi, because this does not meet the company price policy or strategy. He stressed that Rimi stores have wide representation. For example, fresh food products make up 70%.
“Because the market study from the Competition Council mentions general information about the market, we believe information about specific market members should be explained to the council itself,” added Turlais.
As previously reported, in the final section of the market research on eggs, fish, milk, meat, grain and bakery products carried out by the Competition Council, it was found that retail chains apply a higher mark-up on average to goods produced in Latvia than to goods produced outside Latvia. The report also mentions deficiencies in cooperation agreements between retailers and suppliers.
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