Spring Came Sooner Than Carrefour

Naira Hayrumyan

15:53 27/03/2013
Story from Lragir.am News:

Carrefour did not open in Armenia. There is information that the
political decision is there and the supermarket will open by the end
of the year.

Vice-Prime Minister Armen Gevorgyan has recently been to the UAE and
met with the head of Majid Al Futtaim Company, which runs Carrefour in
the Middle East, Central Asia and North Africa, including Armenia. The
supermarkets will apparently open. The government needs to adopt a
political decision to limit the immense surplus profits of importers
and boost price competitiveness in the Armenian market.

In Armenia the issue of Carrefour is discussed mainly in the light
of ending Samvel Aleksanyan’s monopoly of imports of food stuffs
and competitiveness. However, even Carrefour does not solve the main
problem of price forming in Armenia.

The Fair Russia Party has introduced a bill before the Russian Duma
that could set restrictions on markup on key food stuffs. According
to this bill, the markup cannot exceed 15%. “It is not right when
milk is purchased from farmers at 12-15 rubles per liter while the
price in shops goes up to 75 rubbles, mark-up is 400%”, said one of
the members of parliament.

In the EU member states and in the U.S., according to him, the price
on this sector is under the strict control of the state. In Austria,
Denmark, Norway, Canada, Kazakhstan, China and in many other countries
there are special laws regulating maximum prices on some products,
he said. In the Soviet Union, the maximum mark-up was 12%, 8% on the
main food stuffs.

Now look at the markup on products in Armenia is. First, nobody
can count because documented prices will certainly differ from true
prices. Second, importers are free to set any markup, the government
does not restrict them, neither sets special taxes on profit.

That is why in Armenia food prices are like in Europe, though salaries
and pensions here are much lower. Carrefour’s entry into the Armenian
market won’t change the situation if the state does not exercise strict
control on production. Whether it is Carrefour or Alex Group, importers
should know that mark-up cannot be higher than 12-15% or say 20%.


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