Opinion: Parallel import

POSTED: 05/22/12 12:04 PM

The Central Committee of parliament speaks behind closed doors with representatives if International Liquor and Tobacco about “decoded products,” according to the invitation sent out by the parliament.
These decoded products arrive in St. Maarten via the so-called parallel market. They are the real deal; the only thing is that they are not brought to the local market by the official distributor. International Liquors and Tobacco is the agent for Diageo, the number one business in the world of brand name booze like Johnnie Walker and Baileys.
The company has attempted in the past to block parallel imports, but already back in the nineties the government of the Netherlands Antilles decided that parallel imports are good for local consumers: they keep prices at a reasonable level.
What exactly the company is going to discuss behind closed doors with the central committee is of course anybody’s guess, but we bet our bottom dollar that this is about putting a stop to parallel imports.
On the one hand, it is understandable that the company wants to protect its market. But monopolies are seldom beneficial for consumers and the Netherlands Antilles has recognized that a long time ago.
At the same time, parallel imports have an interesting effect on the producer of the drinks. The parallel market is fed by distributors in other countries. They push their products through this pipeline not only to make a buck, but also to meet sales targets. Meeting these targets is usually awarded with bonuses from the producer.
Finding its own products back on the parallel market is not something that amuses producers: they’d like to find out who is cheating them. But the sellers in this market are not dumb either, so they remove identification codes from the products they sell this way.
In St. Maarten brands like Johnnie Walker and others have to go for a mitigated price to market; otherwise the parallel market would put the official distributor out of business.
Prohibiting parallel import would be bad for consumers, because they would be at the mercy of one distributor who will be able to dictate prices.
It will therefore be interesting to hear what the outcome of this central committee hearing is going to be – if there is going to come any information forward at all. Consumers better keep an eye on the price developments in the local booze market.

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