Multinationals pulling premium products out of the Greek market
Greece has been ranked a “B-rate” market by several major multinational groups active in the production of goods of broad consumption in order to handle the competition from parallel imports by wholesale companies. As a result Greece has dropped one division, even though despite its small size it used to be a point of reference for the promotion of new products as consumers here were considered very loyal to their brands and yet eager to try out new products.
What are these parallel imports? Wholesale companies – some of which also own retail chains – that acquire popular products by multinational groups from other European Union countries such as Bulgaria, Romania or Italy. It is a practice more common among companies based in Northern Greece, some of which have recently opened retail outlets as well.
The purchases they make from neighboring countries come at a lower price than that at which suppliers then sell in Greece. But that is not because Bulgaria, for instance, is a cheaper market. Market experts explain that a multinational may bring its latest washing detergent to Greece while placing a similar detergent that is not the latest in its line in an Eastern European country. This means the product is cheaper and is promoted in those countries because the price corresponds to the purchasing capacity of local consumers.
Greek wholesale merchants will buy such products in large quantities and import them to Greece to be sold in prices far lower than the similar products destined for the domestic market. Of course they are not exactly the same because even though they belong to the same company and have the same brand name, the quality between the two is different.
Multinationals have virtually no way of fighting such practices. After all, not only are they legal, but in the past European competition authorities have penalized well-known firms that banned supermarkets from acquiring their products from other importers.
In view of this problem many multinationals are now resorting to revising their sale strategy in order to deal with parallel imports on a level playing field. They do so by gradually withdrawing from Greece their premium products and promoting cheaper ones instead, i.e. previous generation products, originally destined for developing and emerging markets and not for mature ones, as Greece had been considered.