After years of complaints from factory owners, the Maduro administration finally acknowledged the toll the imports are taking last week, announcing it will cut almost 600 items from the tax exemption list, including some types of pasta, milk and detergents. The country aims to gradually replace all imports with domestic products, Vice President Delcy Rodriguez said.
Nestle, one of the few remaining multinationals still operating in the country with five factories and about 2,500 employees, says it’s losing sales to the gray-market imports. It has warned about potential health risks from the non-authorized versions of its products, and says some of them are counterfeits, including fake Nido milk powder.
“Tax exemptions are putting us at a disadvantage,” said Francisco Guerrero, Nestle’s vice president of legal issues in Venezuela. “But what worries us the most are the products that don’t comply with legal and health regulations, with no traceability. Or worse, forgeries.”
While local manufacturers bemoan the situation, consumers have benefited. Store shelves barren just a few years ago are now overflowing with choices. Everything form Italian olives to Cheesecake Factory snacks are available at convenience stores, known as bodegones, some of which are so flush with goods they resemble supermarkets.
Retailers are drawn to the imported versions not only because of the price, but also to offer more variety, as local products usually come in fewer sizes due to production constraints. Of course, poverty is widespread and higher-end food products are unaffordable for many Venezuelans. According to a recent survey, the average worker’s salary is the equivalent of about $55 a month.
Although foreign items are often cheaper, stores usually offer the local version as well to satisfy customers loyal to a particular taste. They are also easier to restock.
When everyday goods were harder to find just a few years ago, consumers were happy to locate any version of the product they wanted. Now, shoppers have the luxury of seeking out other variables such as preferred brands and sizes, said local market researcher Alexander Cabrera of Atenas Consulting Group.
Iris Origuen, 58, acknowledged that goods made abroad are often of higher quality and cheaper as she took a break from her job at a nail salon to shop at a bodegon in a residential neighborhood in Eastern Caracas. But she said there’s just something about the taste of some local foods that keeps her coming back.
“With some products like mayo, I wouldn’t trade the Venezuelan one,” Origuen said.
High-quality journalism isn’t free. Please consider subscribing to Crain’s.
Originally Appeared Here