Iran rich culture and history is not to be demonstrated anymore, you will find enough sources on the web to document it. Let’s focus here on the Iranian market and its 80 millions consumers :

Iran is a huge country 7 times the size of Great Britain and 40 times the size of Switzerland with the same population than Germany or Vietnam. 60% of the population is less than 35 year old. And if the population of Tehran region is ‘only’ 12 millions, it represents 50% of the consumption of the country. So Tehran is often the entry door of the Iranian market for foreign products.

Unlike other countries of the Persian Gulf region, Iran produces a lot of crops. As the saying goes, the four seasons are present in permanence in the country. In 2016, they have banned importations of wheat, as the country is auto-sufficient.

Iran has been very resilient during the sanctions and in the absence of foreign competition, the local manufacturing industry has been growing to fill the gap, mainly in food & beverage, cosmetics and pharmaceutical sectors. Solico, the biggest F&B company in Iran, reaches the 47th position in the world ranking!

If exportations to Iran have slumped during the sanctions, they have never stopped. 70% of the food manufactured in Iran is produced on European machinery and a lot of raw ingredients kept coming from Europe. For finished goods, the gap left by European companies has been filled by Chinese companies. When talking to Iranians, you will not often hear them praise the quality of the Chinese products and they are waiting for the return of European quality. The downside is that they have been used to Chinese prices.

The ‘modern trade’ (hypermarkets and supermarkets) is a recent concept in Iran but quickly developing, led by Majid Al Futaim, the partner of Carrefour in the Middle-East. Modern trade volume averages 10-15 % of the global retail in Iran varying from 6% for sodas to 35% for more luxury goods like coffee. So the traditional retail channels (bazaars, grocery stores) are not to be overlooked : the soda manufacturers cover 220,000 points of sales throughout the country!

To cover this highly fragmented retail landscape, the choice of your distribution partner is key : The distribution chain is also highly fragmented. Most of the local producers have their own distribution network covering the whole territory (and often also neighbouring countries : Iraq, Afghanistan, Pakistan, Azerbaijan and Turkmenistan). There are a wide variety of distributors of foreign products of all size, reach and way to operate, to chose from, according to your strategy and business culture.

It is also probable that the import duties will impact your strategy. Iran government is protecting his manufacturing industry by raising import barriers. As an example, olive oil in bulk is taxed at 20%, while the bottled olive oil is taxed at 60%. You may have to consider a local packaging step or more to be competitive on the market, changing the criteria for the choice of your partner.

Iranians have good technical skills and you can find already many European products packaged or manufactured under license in Iran to European standards.

If there is a big pressure on the commodities prices, the European quality products addressing the mid to high range segments have a bright future. The middle class of Iran is estimated to 20 million people. The number of BMW, Mercedes and Porsches you see in Tehran will surprise you. These segments are far from being saturated compared to other markets.

Iran is not an easy market and they are many pitfalls to be aware of : high import duties, language barrier, trademarks and brands protection, registration of products, payments, grey import, … but they should not deter you. Iran is a rewarding market for those who will circumnavigate these pitfalls with dexterity!

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