Hungarian food producers may be in serious danger due to the margin freeze

Due to the maximization of the retail margin, the pricing chain has become transparent: the supplier price can be easily calculated based on the maximized 10 percent margin and the known VAT rates (5%, 18%, 27%). This information is valuable data not only for domestic competitors, but also for foreign manufacturers and retail chains – and at the same time it represents a serious competitive disadvantage for Hungarian players.

The market has become an open book – and this is dangerous

“Now they have practically stripped everyone naked, put them on display in the main square, and even told them to turn around so that they can see every part of you”

– said László Bárány, owner of Master Good, artfully expressing the vulnerability of the domestic food industry.

Retail chains are already putting strong pressure on suppliers, especially for products that do not fall under the margin freeze. According to Tamás Éder, president of the Association of Responsible Food Producers, this can already be felt in the negotiations: the chains are demanding price cuts, while the room for maneuver for domestic producers is getting narrower.

Hungarian suppliers may be blackmailed with imports

Experts fear that due to transparent pricing, retail chains will more easily turn to foreign suppliers and thus blackmail domestic producers. According to János Ruck, CEO of Gallicoop, there is a risk that domestic players will start under-promising each other, which could lead to loss of shelf space and further weakening of market position.

The situation is aggravated by the fact that foreign food processors often work with more modern technologies and can more easily offer lower prices – especially now, when sales volumes are also decreasing.