A triple crisis is called upon to manage the Greek industry of surnames of standardized Food and Beverageswith the simultaneous increase in the cost of energy, the cost of raw materials due to climate change and the additional costs brought to the entire chain by regulatory interventions from national and European legislation of the green transition.

“We are in a period where the challenges are multiple and complex» reported recently, in the context of the annual general assembly of the Association of Greek Food and Beverage Industries the president I. Yotis and explained: “We experienced unprecedented situations with the pandemic and the global disruption in the supply chain. We see again a war on the borders of Europe that has turned energy upside down as well as the increase of raw materials. At the same time, the climate crisis is hitting Greek production with the consequences becoming visible every day in a range of products. A more typical example is olive oil, whose increase has exceeded 140% compared to 2020”. In this environment, the primary concern of the industry, according to Mr. Giotis, is to protect the consumer who is affected by the increase in the cost of living and to ensure sufficient and affordable food products.

At the center of the meeting of the Association was the current issue of revaluations. Mr. Iotis noted that despite the challenges, the branded food and beverage industry is not only not profiteering but is making a titanic effort to keep prices affordable. He referred to the IELKA study, recalling that if the VAT is removed, in January 2024, the Greek standard basket of products was 25% cheaper than corresponding European ones. He also referred to preliminary data of a special study on inflation in branded, standardized foods carried out by SEBT in collaboration with IOBE, where it is clearly shown that the food industry does not feed inflation, as in April the inflation of branded, standardized foods – excluding of olive oil-was just 0.6%. “The food sector has unfairly been the target of criticism,” he pointed out and added: “The climate crisis, the green transition, related European policies and increasing international competition will continue to put pressure on food production and prices.”

According to him, industries, not only did not speculate, but absorbed much of the increases; except olive oil, to protect the consumer. Examining the 2022 balance sheets of a significant part of the Association’s members and deducting extraordinary profits from acquisitions and mergers, it is found that the net profits of this significant part of the food and beverage industry companies showed a decrease of -7.5%.

“It must be made clear that accuracy is not only an enemy to the citizen, it is also to the industry. No branded industry pursues opportunistically high prices because at the end of the day that will reduce consumption.” emphasized Mr. Yotis.

A constant demand of the industry is the reduction of VAT

The same time, the reduction of VAT is a constant request of the food industry and in this context it was raised once again by the president of SEBT during the association’s meeting. “We supported the measures. We did what was asked of us. We want to have a reduction in VAT. Let us also compete with the other countries” emphasized Mr. Giotis and expressed the commitment of the Association to support every effort in order to ensure that the benefit of the reduction will be passed on to the consumer.

The Minister of National Economy and FinanceKostis Hatzidakisresponding, in the context of the general assembly of the Association, to the request formulated by Mr. Giotis, repeated the rejection of the request for a VAT reduction. “I will not put my signature on destabilizing the budget,” said the minister, while also referring to the effects this measure would have on the balance of payments without being certain that the price reduction will reach the consumer. However, he did not rule out the reduction of other taxes – in addition to those already planned such as the reduction of social security contributions in 2025 – pointing out that these interventions will depend on the results of the fight against tax evasion.

“The battle to crack down on tax evasion is ongoing, at a cost to the government because there are many who protest. However, we are making steady progress, we have completed the interface of cash registers with POS and are moving forward with ERP. This seems to be already starting to pay off, but let’s not forget that this year we also have increased fiscal targets. We will “fund” and see what scope there is for changes in tax policy. We have to get the real picture, we can’t go on guesswork. Our goal is to generally reduce taxes and strengthen social policy, but before we take any step we must be sure that we can afford it.” underlined the minister.

Regarding the issue of prices, Mr. Hatzidakis reiterated that there is no magic rubber band in any country of the cost that erases the phenomenon of inflation. “The measures taken are temporary and will be lifted when the time comes and the situation normalizes. This will not happen tomorrow morning, we are moving towards normalization gradually,” he said. He noted that the EU’s assessment of inflation in our country is more optimistic than the government’s assessment.

Market controls are being intensified

In the framework of the limitation of the phenomenon of profiteering, the Ministry of Development continues with intensive pace the checks on the market. “Checks are being carried out, there are findings and if it is established that there are violations, fines will be imposed, because our goal is to protect households” the minister recently stated Kostas Skrekas and added: “the goal is to have a healthy Greek industry with businesses limiting the profit margin to the limits imposed by law.”

Asked to comment on the Prime Minister’s letter to the President of the European Commission, the Minister stated: “The letter sent by the Greek Prime Minister, which concerns unfair commercial practices characterized as territorial restrictions of supply, and which are often used by multinational companies to maximize profit between different countries, is the first letter sent by a Prime Minister of a Member State to the President of the Commission, Mrs von der Leyen.’

In fact, he emphasized that the goal is “to protect the consumer, to tame inflation, to de-escalate prices and finally to enable households to face the great problem of accuracy that is plaguing them today” and as he said “the way to deal with multinationals is not something that only one Member State can deal with. Here there must be a central intervention in Europe because it concerns, goes beyond every country, goes beyond every government and many times goes beyond every market”.

The Minister of Development also mentioned in the consumer’s basket noting that “in Greece, compared to the corresponding baskets in Romania, Spain, Portugal, France and Germany it is cheaper on average, so it means that here the measures have started to pay off gradually”. Mr. Skrakas invited citizens to try the e-katanalotis platform that helps consumers buy products cheaper by comparing prices between supermarkets saying they can earn up to 15%. “Best practice is price comparison and transparency” said Mr. Skrekas, adding that Greece was the country that immediately took measures and obliged businesses to display the price of the product per unit of measurement in the same font size.

Consumer reaction

But how are consumers responding to inflationary pressures and the increased cost of living? The new reality consumers are experiencing and how their needs have changed was outlined in NielsenIQ’s recent Consumer Outlook survey. Specifically, 2024 continues to be a year in which the majority of Greek consumers still feel uncertain and therefore to be particularly careful in their choices, in the decisions they make, as well as in the expenditures they make. 53% of the respondents stated that they are in a worse financial situation, compared to the previous year. The specific percentage, however, is reduced compared to last year which was 60%.

With the rising cost of living remaining the primary concern, both in terms of food prices and the rising cost of living in general, Greek consumers are still looking for smart ways to shop, save as much as possible, without, however, reducing consumption as such. Private label products appear to be meeting this need, reaching an all-time high market share of 25.4% in the first quarter of 2024, and a growth rate of 5.4%.

Based on the results of NielsenIQ Advanced Analytics studies, the average Greek shopper stands in front of the shelf for only 6 seconds, remains one of the most flexible at European level, compares product prices more intensively, visits approximately 2.5 different retail chains per month, possibly looking for better promotions and in addition ultimately chooses very specific products on the shelf, which is proven by the fact that product tails for all FMCG categories reach 42% of the codebook and contribute to less than just 2% of sales, according to NielsenIQ