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Retailers are free to set their own prices | 03 October 2019

Retailers are free to set their own prices

Seychelles Breweries has confirmed that retailers and shopkeepers are not obliged to sell the company’s products at the recommended price

After concerns over whether shopkeepers and retailers can set the price of Seychelles Breweries products above its recommended price, Seychelles Breweries has confirmed that they can.

In its response to Seychelles NATION, Seychelles Breweries noted that “the recommendation is not binding, and the retailers are completely free to sell at any price they choose”.

Some retailers like Kannusamy Naidoo have opted to price the 50cl soft drinks produced by Seychelles Breweries at R20 and the 1.5L bottle at R42, which made some people raise their eyebrows at the situation.

The recommended retail price (RRP) for the carbonated soft drinks in PET (50cl) is R19 for the exception of Seypearl Sparkling water, Seypearl Pineapple and Coke zero. Meanwhile the recommended retail price for the 1.5l is R40 and for Ginger Ale and Tonic (28cl) it is R14.

The idea that certain collusion had occurred for these retailers to set the price for these products higher than the recommended price did not go unremarked.

Mr Naidoo, also chairperson of the newly re-introduced Retailers’ Association, however noted that no such thing had occurred within the association.

“The issue was mentioned in our meetings but that was in relation to our profit loss given the impact of the sugar tax. At no certain point did we decide to fix our prices but rather we were looking to set up a meeting with Seychelles Breweries,” Mr Naidoo explained.

He noted that the introduction of the sugar tax makes it so that the retailers’ profits would decrease from the previous 14.7% to 11%, if they were to go by the company’s recommended retail price.

Seychelles Breweries’ reply to this was: “In regards to the retailers’ profit margin, this is also not something that Seychelles Breweries has any control over, given the above considerations. However, Seychelles Breweries has only increased our pricing to the retailers in line with the revised sugar tax. This means that, if the retailers’ price is in line with our recommendation, they would make exactly the same mark-up and absolute profit as they previously did.”

It is to be highlighted that, as per the Fair Competition Act, it is illegal for suppliers (in this instance Seychelles Breweries) to enforce a fixed retail price for their products.

An officer from the competitions department at the Fair Trading Commission further explained that a recommended retail price is just that: a recommendation.

One can suggest the preferred price a retailer can sell the item but one cannot force their hands.

This applies to any products on the market such as the Josephine water bottle, which has RRPs written on the labels of its water bottles.

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