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.