Pricing in Colombia

A Hot Tip about Business Administration in Colombia

Last updated: 10 Mar 2011

Colombian consumers buy many imported products, but the cost of importing can be high. Consumers may pay between 80 to 120 percent above the Free On Board (FOB) price of imports, including the 16 percent VAT. The landed price of most consumer goods with local production is calculated by estimating 15 percent of the FOB price for freight and insurance, warehousing, and other documentation costs, 20 percent CIF import duty, plus a 16 percent VAT (assessed on the CIF-duty-paid value of most imports), thus putting their price at an additional 60 percent over the FOB price.

 

Additional import costs for capital goods and raw materials are much less (between 33 and 53 percent) with import duties for these items of between 0 and 5 percent for capital goods, and 10 to 15 percent for raw materials.

 

Department stores and supermarkets extend concession contracts to individuals and companies by permitting promotional space in their facilities to promote and sell consumer goods. These promotions include both familiar and unknown labels, and the goods are offered at discount prices in some cases. If the products are unknown in the market, the department stores or supermarkets may place them in the stores on a demonstration basis for a given period of time and will only place new orders if the products are well accepted by the public and sell relatively quickly. The largest supermarkets also carry their own labels at discount prices. Suppliers to large store chains, supermarkets, and hypermarkets must provide certain guarantees on the continuity of products offered to avoid foreign surplus stock or remnants entering the Colombian market (i.e., foodstuffs, textiles, apparel, appliances, etc.). Imports of old or used clothing, closeouts, irregulars, off-season, or expired merchandise are prohibited.

 

When buying a food product, Colombians look for three things: brand recognition, which is usually related to high quality and social status, reliable and sufficient nutritional information such as the number of portions, nutritional value, and expiration date and attractive, colorful packaging and labeling. The latter tends to be more important for children’s products. All this information should be in Spanish.

 

 

Read the full market research report


Posted: 03 May 2010, last updated 10 March 2011

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