Consultant: Many local producers end up working only for banks

The price war fought during the crisis will turn against the Romanian producers like a boomerang, because they cannot live on almost zero profit margins and with as much as 50% indebtedness in some cases, warns Eusediu Margasoiu, former marketing manager of Pepsi, who started business advisory firm The Network in 2008. Local players in the industries seriously harmed by the consumer-spending decline have bet on a reactive strategy over the past year, cutting prices to maintain sales volumes. With a market decline of almost 20%, this strategy has now turned out to be the wrong one to take, says Margasoiu, the consultant who has supervised the marketing or business reshaping projects for such companies as Prodal, Agricover and Agricola Bacau. Margasoiu’s partner for The Network is a former P&G manager, Cristina Gheorghe, and he also worked with Mihai Ghyka in 2009, the most powerful Romanian executive in the local beer industry.

“On a market that shrank by 18% in terms of volume, poultry producers cut prices by 11% on the average last year and ended up hurting themselves in the process: profit margins are down to almost zero, and with the indebtedness of up to 50% in some cases, local producers are working only for banks,” Margasoiu says.