Companies raise prices or reduce basis weight to profit more in economic crisis

The impacts of the crisis due to the unstoppable increase in foreign exchange are cannot be mended in Turkey, and some companies now raise the prices of necessary goods in people’s lives, while others act cannily by reducing the basis weights of products, keeping prices the same
Saturday, 01 September 2018 16:02


While many products at markets and grocery stores in Turkey have a mark-up, basis weights of yet as many have been reduced in multiple stores due to the increase in the exchange rate, which is considered profiteering by people. Moreover, Turkish white goods monopolies such as Vestel and Arçelik started to project the increase in the exchange rate and costs to the consumer.

It is reported that 385 of the 700 products in supermarkets and grocery stores have had a mark-up of at least 11%, including food products such as rice (33.3%), pasta (25%), cheese (30%), egg (20%), butter (23,8%), milk (14,2%), yoghurt (11,1%), and olive oil (10,3%), as well as stationery products such as 40-page notebook (87,5%), pencil (300%), and eraser (166%).

For the products whose prices could not be raised, manufacturers “rearranged” the basis weights. While many products were known by people to be 100, 200, 250, 300, 500, and 1000 grams before, they are now sold in fractional weights such as 111, 225, 130, 40, 172, 960, 1440, or 810 grams. The trick of basis weight is particularly clear in dried nuts, detergents, chocolate, and delicatessen.

Mustafa Altunbilek, Chairperson of the Federation of Retailers of Turkey, stated that companies had projected the price rises to the markets due to the increase in exchange rate, and also some companies had changed the basis weights. “They are fooling the consumer. We warned the companies who did that, we told them not to break the standards,” Altunbilek maintained.

Senior managers of white goods companies are also reported to declare that they would project the increase in exchange rate on the prices of their products. Both Hakan Bulgurlu, CEO of Arçelik, and Turan Erdoğan, Vestel’s CEO, said that they expected a shrinkage around 5% in the domestic market, which is the reason that they “had to” increase the prices in Turkey.

However, the white goods sector manufactures three quarters (73%) of its products to export, which means that most of their income consists of foreign exchange. One must also consider the increase in the number of the goods exported between 2000 and 2017: 5 million goods were manufactured a year in 2000, which has increased to more than 28 million in 2017; the export goods were around 2 million in 2000, and it has become over 20 million in 2017. Of course, the “globalisation success” of Vestel has always depended upon cheap workforce and a fragile balance that has never been independent of import goods. Yet, regarding the numbers and the fact that companies export most of their goods, it seems plausible to think that they raise the prices only because they cannot tolerate a reduction in their profits in the domestic market.