In the case of many product categories, prices are aligned to Western levels, though salaries are 5-6 times lower in Romania.
“In Romania smaller volumes are sold at higher prices, as the market is one of hypermarkets and supermarkets. In Germany, for instance, we are speaking of a discounter market,” Malinowski said.
Romania has two players on the discounter market, namely Rewe Romania, with Penny Market and XXL Mega Discount chains, and Lidl. The segment previously included Minimax Discount, which went bankrupt, and Profi, which turned into a supermarket chain.
Still, shelf prices have declined in recent years due to the price war fought by FMCG players. Thus, the prices of Unilever products have gone down to fall into line with rivals’ levels and to take part in the war of promotions dominating the domestic FMCG market.
“Shelf prices are falling (for several product categories i.e.) amid this war of promotions. We are doing everything it takes to stay on the market, but I believe this battle of offers is just a temporary one”.
Unilever South Central Europe boss says that should this price war continue, consumers, as well as companies are likely to stand to lose on the long term.
Unilever is present on several market segments. “Over 90% of Romanian households use one of our products at least once a year. For Dero, for instance, the penetration degree revolves around 95%. With margarine or Delikat we’re present in all the stores of Romania, hence the penetration degree stands at 100%”. In the case of other products, though, penetration is lower. The executive does not provide any figures.
Unilever South Central Europe ended 2013 with revenue of 816.1 million lei (EUR184.6 million), up 3.3% from 2012 and 16% above the 2008 level. 2008 was the last profitable year, with losses standing at RON4.8 million (EUR1.1 million) last year, 3.5 times below the 2012 level.
Anglo-Dutch giant Unilever has two plants in Romania, in Ploiesti, where it manufactures food and home care products. Over 50% of output goes abroad.
Unilever Romania, which manages the two production units, generated revenue of RON65 million (EUR14.7 million) last year, flat from 2012. However, profit rose by 42%, to RON5.4 million (EUR1.2 million).
(English version by Catalina Apostoiu)