Here is why Hungarian salami is cheaper in Germany than in Hungary
For some reason, certain Pick salami products tend to be more expensive in Hungary than in Germany, despite the fact that the brand is Hungarian and the production takes place domestically.
A recent report by the Hungarian television channel RTL featured an interviewee from Germany who recalled how startled he was when he first saw the price of Pick Salami in Hungary. According to the interview, the same salami in the same portion costs almost double in Hungary compared to the German price tag. But how can a Hungarian product be more expensive in Hungary than abroad? The Hungarian business news portal Pénzcentrum took a closer inspection.
Response from the manufacturer
In order to find out who is responsible for the price difference, Pénzcentrum contacted the manufacturer of the salami, Pick Szeged Ltd. First of all, the manufacturer stated that they sold a wide variety of salami under the brand name Pick. For this reason, the products being compared may be of different types and qualities.
They noted, however, that for the same type of Pick Salami, there may have been a price difference when comparing countries. According to them, this price difference is partly due to the difference in VAT rates applied to the products.
Currently, the VAT on salami is 7 percent in Germany, 10 percent in Austria and 27 percent in our country.
Also, price differences may occur due to the fact that pricing practices can vary from country to country. Pick Szeged Zrt. added that the manufacturer had no influence on the pricing practices of retailers.
This is what determines the price of salami
Pénzcentrum also wondered what the exact influencing factors were that determined the price of Pick Salami. The company replied to their inquiry that the main factors that influenced their prices were the manufacturing costs, logistics costs, the margins applied by retailers and the taxes on the product.
The company also added that the production and logistical costs of the product had risen a great deal in the last year. In addition, there have also been increases in the cost of energy, packaging material and machine parts. Besides, wages were also subject to growth.
However, the manufacturer does not incorporate the increased costs into its transfer prices instantly, but only gradually.
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Source: rtl.hu, penzcentrum.hu
2 Comments
Again. Who pays VAT? The end user / consumer. We have the highest rate in Europe to fund those low taxes for the Corporations our Politicians keep on telling us are indispensible (“NO to the 15% Global Minimum Tax!”). Beautiful.
Double the price is a 100% difference. Trying to explain it away with a VAT difference of around 17% doesn’t explain anything. Also the manufacturer states logistical costs, which is odd, considering the logistical costs of getting the product to Germany must be far more. So essentially there is no explanation and it’s a mystery? Or could the truth and reality be very simple and obvious?