Conclusion
1/ You have to clear together with Julien what are the precise import duties for the list of products we have already offered or sold to you (95309F) and determine in advance what should be the import duries on our different ranges of products.
2/ Gross margin : you are right, in case of 10% import duties, you need 22% gross margin. However, in case of 5% import duties you need 19% gross margin.
3/ Competitiveness : Borregaard increase their price worldwide by almost 1ˆ/kg every 2 months. Therefore, you have to check very regularly what is their price. You must understand that our target is to develop sales. We know by experience that the price we give to our sole importers in countries where purchasing power is equivalent to Thailand, or even lower, is competitive. If we are not competitive we do not develop sales, and we both have to conciliate volume and value in order to sell quite significant quantities at good price for everybody rather than small quantities at high price, which should be a failure for our project (except for concentrated products, for instance those sold to flavouring houses).
4/ Temporary price conditions
For PROVANIL 1 : ˆ10.20/kg.
Selling price to customer in case of 5% import duty
Nutrition price : ˆ10.20 + net margin : ˆ1.13 + import duty 5% : ˆ0.51 + customs clearance 5% : ˆ0.51 + transportation distribution 2% : ˆ0.20 + storage 0.25% : ˆ0.03 = EUR 12.58 = THB 604.00
Selling price to customer in case of 10% import duty
Nutrition price : ˆ10.20 + ˆ1.13 + ˆ1.02 + ˆ0.51 + ˆ0.20 + ˆ0.03 = EUR13.09 = THB 628.00
In June 2007 we will discuss again to see if we can increase our price, depending on the evolution on the market.
5/ Gross margin for traders selling Borregaard or Rhodia vanillin
Please be informed that our competitors leave to their importers from 3 – max. 8% gross margin !
Best regards,
H. PRIME