Margin freeze in Hungary: Who is affected and is government intervention really justified?

By: Trademagazin Date: 2025. 03. 17. 12:28

🎧 Hallgasd a cikket: Nyelv: Sebesség: 1.05×

The Hungarian government will introduce a margin restriction on certain food products from March 17 – for the time being until May 31 – according to which the margin of retail chains may not exceed 10 percent. The regulation applies exclusively to companies declared with the main activity “Food-type mixed retail trade” and whose net sales exceeded 1 billion forints in 2023. Telex covered the topic.

How big is that profit? According to data from the Opten company information system, 197 companies meet these criteria. According to government communications, retail chains operate with unreasonably high profits and artificially inflate prices. However, various government statements often confuse the concepts of margin and profit, suggesting that a 60 percent margin means a 60 percent profit. However, this does not correspond to reality. The margin is the retailer’s income, from which it must also cover its operating costs.

In the case of retail chains, operating costs, logistics, energy consumption, wage costs and other expenses are also deducted from the margin. In the development of food prices, all actors in the supply chain – producers, processors, wholesalers – add their own margin. For example, in the case of 2.8 percent UHT milk, the producer price of raw milk was 206 forints in January 2025, while retail chains sold the milk for an average of 372 forints – this difference is not just profit, but also reflects the costs of the entire supply chain.

Losses and profits in the retail sector Despite the fact that all participants on the list reached a turnover of 1 billion forints, 15 companies made losses in 2023, including three large chains. Loss-making companies include online retail companies Kifli.hu and Wolt, but also companies operating smaller rural Coops and franchise stores.

Of the companies that made a profit:

37 companies realized a profit of between 0.1 and 1 percent,
27 companies made a profit of between 1 and 2 percent,
31 companies made a profit of between 2 and 3 percent,
38 companies made a profit of between 3 and 5 percent,
39 companies made a profit of between 5 and 10 percent,
and only 10 companies were able to achieve a profit of over 10 percent, but most of them are also engaged in other activities.

Overall, two-thirds of the companies affected operate with a profit of under 5 percent, and nearly half of them do not even reach 3 percent.