Across the 8 Asian markets I work in, food and beverage importers and retailers constantly emphasise price sensitivity as one of the major constraints for imported products. While this is most definitely true, when the argument is raised during negotiations the importer will typically focus solely on the export pricing when discussing price competitiveness.
However, there are a number of factors that influence your price position and knowing about them will give you a distinct advantage when it comes to negotiating a fair deal with distributors and retailers.
- Freight and logistics costs - are you getting the most competitive LCL or FCL logistics rate available?
- Import tariffs - are your importers unknowingly paying import tariffs that they shouldn’t be with FTAs in place?
- Distributor and retailer margins - are these fair and reasonable given the product category (e.g dry product vs chilled or frozen)? Have these been declared by your importer with a basic outline of their cost model (price build)?
Often I find that there is too much focus on the suppliers export price and supply-chain margins at the export destination can balloon if they are not scrutinised by someone who understands the market norms.