The price war fought during the crisis will turn against theRomanian producers like a boomerang, because they cannot live onalmost zero profit margins and with as much as 50% indebtedness insome cases, warns Eusediu Margasoiu, former marketing manager ofPepsi, who started business advisory firm The Network in2008.
Local players in the industries seriously harmed by theconsumer-spending decline have bet on a reactive strategy over thepast year, cutting prices to maintain sales volumes. With a marketdecline of almost 20%, this strategy has now turned out to be thewrong one to take, says Margasoiu, the consultant who hassupervised the marketing or business reshaping projects for suchcompanies as Prodal, Agricover and Agricola Bacau.
Margasoiu's partner for The Network is a former P&Gmanager, Cristina Gheorghe, and he also worked with Mihai Ghyka in2009, the most powerful Romanian executive in the local beerindustry.
"On a market that shrank by 18% in terms of volume, poultryproducers cut prices by 11% on the average last year and ended uphurting themselves in the process: profit margins are down toalmost zero, and with the indebtedness of up to 50% in some cases,local producers are working only for banks," Margasoiu says.
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