Behrooz Rezazadeh, CEO of Tehran-based PSDC, said there has been an increase in the number of foreign firms looking to do business with Iran, following an agreement to lift many of the international sanctions against the country. But he said there is still some caution among many companies.
“We have two groups. Some of them are coming, discussing, evaluating – and waiting. Some of them are thinking it’s much better to go to the market now, rather than waiting for a year or whatever – because the market will be saturated by then,” said Rezazadeh.
“But it’s very clear the big brands are also cautious – gradually they’re coming, but they’re waiting for everything to be officially finished. Then they will come,” he added.
Iran wants joint ventures
His advice for firms looking to enter the Iranian market is not just to sell products, but to form long-term relationships: “In Iran now, at the government and private level, people aren’t looking to buy products – they’re looking to establish cooperation with international companies, to set up joint ventures to transfer technology under licence, and things like this.”
Rezazadeh said it was also advantageous for foreign firms to set up a small in-country operation – for example, by importing products in bulk, and then doing the final consumer packaging in an Iranian free-zone. He gave the example of an olive oil importer bringing in 200-litre barrels, then bottling the oil in Iran.
“When you’re going from the free-zone to the mainland, instead of paying the full custom duty for olive oil, you will only pay around half – because you made a small investment in the country. And this investment is not a lot – just one packaging machine, a small warehouse. In this way, you expand your business,” he said.
“Iran is not a short-term market – it’s a long-term market. If a company has long-term business plans, a long-term mentality, for sure they will have a good market. There’s a population of 80 million people, about 50% are under 30 – Iranian people are after good quality, they prefer to buy international products,” added Rezazadeh.
Quality machinery is top priority
He said Iran food producers were also keen to invest in higher-quality plant: “Overall, Iranian companies prefer to buy European quality products, particularly in machinery – even though the price is much, much higher. But they prefer to do that, because they have a long-term mentality, for long-term production.
“The Iranian visitor numbers to Gulfood Manufacturing are much higher than to Gulfood in February – because most of the visitors are owners of manufacturing companies, or R&D managers. They come here because they need to upgrade their knowledge – especially in ingredients, that’s the big issue, where they need to grow their quality,” Rezazadeh added.
“Ten years ago, we had problems with packaging – now the packaging is ok, and we need to grow the quality, particularly the shelf-life of products. Now what do they need – they need advice, new materials, new products,” he said.
As to regional tensions, Rezazadeh suggested this was mostly irrelevant for the regional food business, and noted Iran and the Arab states across the gulf have a long history of trade: “Mostly they are local distributors – it doesn’t make any difference, in Bahrain, Qatar, Saudi Arabia, UAE.
“Media is media, business is business – the businessman knows what he wants to do. If anyone wants to do any business, they can travel to Iran, see what’s going on, how it’s going, start their business. And a lot of Iranian businessmen are doing business in the gulf,” he concluded.