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Retailers make higher margins on FMCG imports
Posted On: 14-10-2009 00:00:00 09

Big retailers have increased global sourcing by tying up with vendors in overseas markets to offer more options to consumers. These imported products in personal care categories such as shampoos, skincare, cosmetics and soaps and foods such as pasta, chutney, sauces, chocolates and beverages are estimated to offer 20-30% higher profit margins compared to those sourced from the domestic market. Together with private labels these imported products also help the retail chains stock up empty shelves and offer greater product variety. Multinational firms such as Kraft that do not have a strong direct presence in the country are happy as their brands get ready outlets and crucial shelf visibility in a rapidly-growing market. However, Indian arms of multinational non-durables firms, faced with erosion in market share and revenues, have taken steps to stop retailers from importing products from their international portfolios. Retailers import variants of top brands such as Sunsilk, Dove, Rexona, Axe, L’Oreal, Maggi and Pringles, among others, from similar markets such as Taiwan, Thailand, China and west Asia where the range is wide and margins significantly higher. In a bid to block these imports, Hindustan Unilever, L’Oreal, and Lancôme Perfumes, among others have invoked the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007, claiming loss of business opportunity, unfair competition and product cannibalization.

 
 
 

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