There is a smell of duties in the air – Business – Kommersant

In response to restrictions on the supply of Russian cosmetics to the EU countries, Russia is imposing a 35% duty on hygiene and household chemicals from the US, Canada, the UK, Australia, New Zealand and Poland. The measure should be valid until the end of 2023 and will affect shampoos, toothpastes and brushes, shaving products, deodorants and household chemicals. The Ministry of Industry and Trade assures that the restrictions will affect 8-15% of imports in the narrow premium segment.

Russia introduces an import duty of 35% on certain types of cosmetics, perfumes and household chemicals from countries that take measures that violate the economic interests of the Russian Federation. The relevant government decree is posted on the portal of legal information. The list includes: shampoos and other hair products, dentifrices, products used before, after and during shaving, deodorants and antiperspirants, as well as detergents and cleaners. The Resolution enters into force five days after its publication. The duties must be valid until December 31, 2023.

The Ministry of Industry and Trade specified that products from the USA, Canada, Great Britain, Australia, New Zealand and Poland will be subject to duties. According to the ministry, the list of goods has been determined jointly with business and associations.

According to the estimates of the Ministry of Industry and Trade, about 60% of the total volume of imports of these products falls on the EU countries.

And six countries, for products from which it was decided to introduce an increased duty, form about 8-15% of deliveries in the narrow main premium segment, they say.

As noted in the Ministry of Industry and Trade, the capacities of local enterprises block imports from the proposed list of “unfriendly countries” several times. And some international brands (Nivea, Rexona, Lady Speed ​​Stick, Ax, Chirton) have been produced in Russia for many years, they noted. The ministry added that a complete ban on the supply of perfumes and cosmetics from unfriendly countries, as well as an increase in duties on goods for which the range of local brands cannot fully satisfy consumer demand, is not yet planned.

According to the RSHB review, Russia is a net importer of key cosmetic products, and the total volume of supplies from unfriendly countries is estimated at $2.5 billion. Analysts recorded the most favorable situation in the oral hygiene segment, where the presence of countries with partnerships is high.

And in the segment of deodorants and antiperspirants, unfriendly countries account for more than 85% of the total imports of $320 million, the study notes.

After the outbreak of hostilities in Ukraine, Unilever (brands Dove, Timotei, Axe, Rexona, Cif, Domestos, etc.) announced the suspension of investments in the Russian Federation, but local enterprises of the corporation for the production of cosmetics and household chemicals continue to work. In P&G (Gillette, Head & Shoulders, Pantene, Blend-a-med), in addition to the suspension of investments, they planned to reduce the local portfolio, leaving the main positions. Two Russian P&G plants also continue to operate. 60% of products sold here are produced in the Russian Federation: brands Fairy, Mr. Proper, Discreet, Gillette, etc.

According to Kommersant’s interlocutor in the market, duties are likely a response to EU restrictions on the supply of certain types of cosmetic products from Russia, which could adversely affect the business of individual local companies. And Poland, for example, imposed sanctions against the structures of the Faberlic perfumery and cosmetics company, State Duma deputy Alexei Nechaev. A Kommersant source in the industry said that Faberlic had factories in Poland that produced products for the Russian Federation. This summer, at a meeting between President Vladimir Putin and the leadership of the State Duma, Mr. Nechaev said that Poland “simply took away business” from about 50 companies from Russia and suggested imposing an embargo on goods produced in Poland for those groups that are also produced in the Russian Federation.

According to a Kommersant source, limiting the supply of perfumes, cosmetics and household chemicals from unfriendly countries could lead to an increase in imports from Turkey and South Korea.

Although many local companies are also now trying to actively increase production, he adds. The Association of Retail Companies (includes X5 Group, Magnit, Lenta, etc.) has already noted that the share of South Korea this year in the segment of cosmetics and household chemicals has doubled, up to 2% of the imported assortment. The Kommersant source does not exclude that closer to the spring of 2023, before March 8, the restriction can be revised if necessary in order to prevent interruptions in the shelves.

Anatoly Kostyrev, Alina Savitskaya