FMCG Import in Iran: All you need to know

FMCG market in Iran

The total size of the retail market in Iran is estimated at around 1,500,000 billion tomans, of which more than 500,000 billion is related to fast-moving consumer goods (FMCG).

These figures have been estimated by considering the number of households, the average annual expenditure of the household, and the allocation of this expenditure to different sectors according to the statistics available in the statistics center.

In Snapp’s surveys of the FMCG market, the market size of the FMCG industry in Iran has been estimated to be around 23 billion dollars by the end of 1400, which is 270 dollars per person per year.

The share of the total online market of Iranian FMCG in 1400 is eight-tenths of a percent of the entire FMCG market of the country, which is 620 thousand billion tomans in this report. This report shows that dairy had the largest share of FMCG sales last year. Dairy products, drinks, and snacks are in the following ranks.

In terms of numbers, dairy products and ice cream are the best-selling products, with a share of about 9% of online and in-person supermarket shopping baskets. These high sales are the reason for the emergence of new brands in the dairy sector every day.

But if we examine it in terms of amount, the results become more attractive. Cigarettes, with a share of 6.5%, are among the best-selling products in supermarkets. This means that more than 40 percent of the market of 626 thousand billion tomans of FMCG belongs to cigarettes. Milk and cheese are ranked next, with a market share of about 5 and 4.2 percent in the FMCG market.

But in these supermarket purchases, the beverage market was one of the top sections of FMCG in Iran in 1400, covering about 17% of supermarket purchases. The best-selling products of the beverage group are soft drinks, juices, and energy drinks.

Iran’s cosmetic and health markets were among the five best-selling groups of FMCG in 1400, with about 1900 brands, equivalent to 7.4% of the total FMCG market. The best-selling products in this section are tissues and cellular products, face and body care, and child health and care.

In this report, in a comparison between online and in-store shopping, it is said that the desire to buy chips, puffs, and popcorn online was more than three percent of the in-store shopping. Generally, the two groups of products, “chips, puffs, popcorn” and “biscuits and wafers,” have the highest index of willingness to buy online.

Importing FMCG regulations in Iran

Islamic Consultative Assembly, the Ministry of Industry, Mine and Trade, and the Islamic Republic of Iran Customs, the primary regulatory institutions in this field, have established special regulations for exporting and importing goods to Iran. The governing law in this area is The Export-Import Regulations Act with the latest amendment.

This law has been extended to provide related services to all exporters and importers. There is also a classification system for export and import goods. Currently, there are three categories, which are:

Permissible goods

The regulations related to these goods must be followed, and by complying with them, the export and import of these goods do not require a license.

Conditional goods

A license must be obtained to export or import this category of goods, and through the permit, the export and import of these goods are possible and allowed.

Prohibited goods

These goods are prohibited. Export, import, purchase, sale, or consumption is not permitted. This prohibition is established in Islamic Sharia as well as national laws.

The products that have an absolute prohibition label are as follows:

Drugs; weapons, ammunition, explosives, and alcoholic beverages; Gambling instruments; Magazines, photos, and films that contradict Iran’s religious and national dignity; Any writing that is against the official religion of Iran or causes disruption of public order and purity and national dignity.

The Export-Import Regulations Act allows the government to declare the export or import of certain goods illegal based on time and conditions. Although it is not explicitly part of these three categories, this category also exists and is considered. This category excludes products that are sufficiently available in the domestic market and therefore do not need to be imported into the domestic market.

What are the restrictions on importing foreign goods and FMCG into Iran?

In recent years, export and import policies in Iran have aimed to limit or ban the import of foreign goods and FMCG.

The most important reason for this is the adoption of strict economic policies, increasing support for domestic producers, and encouraging foreign producers to invest and produce their products in Iran instead of exporting them.

For example, there are bans or restrictions on the import of similar goods produced in Iran, or the import tariff of such goods has increased.

On the other hand, for economic development and to encourage domestic producers to produce high-quality products and export them to foreign countries, the provisions and benefits of Iranian producers and exporters are provided in the laws and regulations.

For example, according to Article 141 of the Direct Taxes Law approved in 2014, 100% of the income from the export of finished industrial and non-oil products, 20% of the revenue from the export of raw materials, and 2% of the income from the export of other goods, for the export of non-oil goods abroad are exempt from tax.

Any person who intends to import goods must first obtain an order registration permit.

According to the order registration certificate, a person can import the goods. Of course, this license allows goods to enter the country, and the rest is dependent on customs clearance.

Order registration is done systematically through the Comprehensive Trade System, and Iran Trade Development Organization issues an order registration license.

Of course, it should be noted that some goods need a special license for import before the order registration stage. For example, we can mention medical and cosmetic equipment that requires a special permit before ordering from the Food and Drug Organization.

Applying new restrictions for imports after 2018

Since 2018 based on the decisions made by the country’s Supreme Council of Economic Coordination, the import of unnecessary and luxury items, including 1339 items of the tariff code, has been prohibited.

Following further investigations and the need to update the mentioned list and add domestically produced items, the number of goods subject to the import ban reached 1392 tariff lines at the end of 2018.

The list of included goods is revised annually according to the product’s internalization and other variables, breaking the headings into more detailed tariff codes.

At the beginning of 2019, the number of goods subject to import ban reached 1519 tariff lines; in 2020, it reached 1539 lines; in 2021, it advanced to 1537 lines; and in 2022, it went to 1552 lines.

In addition to these permanent bans, 766 tariff lines are currently subject to temporary bans. The list of these items can be expanded or limited according to the request of merchants, the needs of the country, and the expert opinion of the responsible institutions.

In addition to these prohibitions and to ensure the maximum use of domestic production capacities, some tariff codes with everyday items with similar domestically produced items are also subject to secondary and strict review at the time of order registration.

Product groups and their prioritization

Before 2018, goods subject to government currency and other goods were prioritized from 1 to 10. But in 2018, this category was changed, and the goods were placed in 4 groups.

Group 1, essential goods: subject to government currency

Group 2, semi-essential goods: subject to foreign exchange at the secondary market rate from the Nima system

Group 3, non-essential goods: subject to trade at the secondary market rate from the Nima system

Group 4, prohibited goods

The first group of goods

According to the export and import regulations of the country and the law of customs affairs, the list of commodity group 1 is allocated to basic and essential goods, whose currency will be provided from the income from the sale of oil.

On 08 / 05 / 2018, a letter of approval regarding the action of the Central Bank of the Islamic Republic of Iran regarding the provision of foreign exchange for the first group of goods (including basic goods, essential goods, medicine, and medical equipment) was approved by the Board of Ministers. The following list includes basic and important goods.

Row	Product title
1	Foreign rice
2	Wheat
3	Cold red meat (heavy)
4	Warm red meat (light)
5	Chicken
6	Egg
7	Soybean meal
8	Corn
9	Barley
10	Essential veterinary drugs
11	Different types of chemical fertilizers
12	Chemical technical poisons
13	Different types of seeds
14	Raw sugar
15	Semi-solid and liquid edible oil
16	Raw oil
17	Legumes include lentils, cobs, peas and beans
18	Different types of oil seeds (soybeans)
19	Heavy tire
20	Printing and writing paper
21	Newsprint
22	Pulp
23	Foreign dry tea
24	Medicines and necessary medical equipment and supplies
25	Rice harvester and transplanter

The second and third groups of goods

The list of commodity groups two and three, according to the export and import regulations of the country and the law of customs affairs, will include raw materials, intermediate and capital, and consumer goods, whose currency is provided by the export of goods that are required to provide currency in the Nima system.

According to the Iranian Chamber of Commerce report, in the first four months of 2022, 11 million and 159 thousand tons of capital, intermediate and consumer goods worth 17 billion and 228 million dollars were imported into the country.

Also, the statistics show that intermediate goods account for 69.1% of the value, the largest share of the total imports.

So that during this period, more than 9 million and 712 thousand tons of intermediate goods worth 11 billion and 902 million dollars were imported into the country, which has grown by 13.7% in terms of value compared to the fourth month of 2021.

The share of capital goods during this period was 14.1 in terms of value, and in the fourth month of this year, 236 thousand tons of capital goods worth more than two billion and 432 million dollars were imported.

Also, during this period, one million and 211 thousand tons of consumer goods worth two billion and 894 million dollars were imported into the country, which means that the share of consumer goods in the total import was 16.8% in terms of value.

Intermediate goods, such as wood, are used to create other goods and form part of other products, and capital goods, such as machinery, are used to produce other goods.

The fourth group of goods

According to the export and import regulations of the country and the law of customs affairs, the list of the four goods group includes 1339 8-digit tariff lines, whose orders were prohibited in the meeting of the resistance economy command headquarters in 2018.

In 2022, the number of these items reached 1552 tariff lines. Among the prohibited items of the fourth group of goods, we can mention clothing, home appliances, domestically produced and luxury agricultural products, and unnecessary consumer items such as musical instruments.

Below is the list of prohibited imported goods in the FMCG group and the tariff code. The list of banned imported goods in Iran is updated in different time frames.

Also, this list may change under the influence of circulars and amendments issued by the Ministry of Security and other related institutions. Contact us to find out about the ban on the FMCG product you want and get more information.

Customs prohibitions

Iran’s Customs Law divides prohibitions into four parts. These prohibitions are divided into permanent import goods, goods that enter the country temporarily, a ban on foreign transit, and an export ban. We will learn more about permanent and temporary entry bans in the following.

1. Prohibitions on definitive entry

Article 122 – It is prohibited to enter the following goods permanently:

1. Prohibited goods based on the holy law of Islam and according to the law.
2. Prohibited goods according to the customs tariff table or approvals based on the law.
3. Weapons of any kind, gunpowder, detonators, cartridges, bullets, and other war munitions, dynamite, and flammable and explosive materials, except with the announcement and approval of the Ministry of Defense and Armed Forces Support.
4. Narcotics and psychotropic drugs of any kind and their precursors, except with the approval of the Ministry of Health, Treatment, and Medical Education in each case.
5. Transmitting devices of any type and parts belonging to them, except with the approval of the Ministry of Communications and Information Technology in each case.
6. Equipment for aerial photography and filming, except with the approval of the Ministry of Defense and Armed Forces Support.
7. Eavesdropping systems, small transmitters, and recorders, including micro cameras and micro microphones with the capability of spying and special transmitters and high-speed coverage, all kinds of goods or systems with the ability to control and listen to wired and wireless communications (monitoring) and encryption system that are used for espionage purposes, except with the approval of the Ministry of Information in each case.
8. Carriers of audio and video recorded against public order, national affairs, public modesty, or the country’s official religion as determined by the Ministry of Culture and Islamic Guidance.
9. Books, newspapers, magazines, pictures, signs, and any writing against public order, national affairs, public modesty, or the country’s official religion as determined by the Ministry of Culture and Islamic Guidance.
10. Goods with words or signs against public order, national affairs, public modesty, or the country’s official religion on them, their wrappers, or their related documents.
11. Foreign banknotes, fake stamps and stickers (band rolls), and lottery tickets are out of legal circulation.
12. Goods with an address, name, mark, or other characteristics on the goods themselves or their wrappers cause the buyer and consumer to need clarification about the manufacturer, the place of manufacture, and the main properties or characteristics of those goods.
13. Prohibited goods according to special laws.
14. Prohibitions on temporary entry and internal transit

Article 123 – In temporary entry and internal transit, the following restrictions can be applied:

1. Temporary entry and internal transit of goods prohibited by law are not possible.
2. The temporary entry and internal transit of the goods referred to in paragraphs of Article (122) of this law is subject to the approval of the relevant ministries.
3. The temporary entry of the goods subject to clauses of Article (122) of this law is prohibited, but the internal passage of these goods is subject to the approval of the relevant ministries.
4. Temporary entry and domestic transit of conditionally permitted goods are possible with the approval of Iranian customs.

What is import versus export? Is it possible to import fast-moving consumer goods (FMCG) instead of exporting?

Since the growth of exports brings currency into the country and increases economic income, the government has implemented measures and facilities to encourage and support exporters to improve and facilitate exports.

One of the ways to encourage exporters is to allow the entry of certain items of goods needed for the production of exported goods, or goods in general that guarantee a favorable benefit for the exporter and continue exporting goods, and obtain the privilege of re-entering the desired goods.

Of course, this method is desirable and economical as far as the items used exclusively in reproducing manufactured goods are concerned.

But when it is related to the entry of goods other than the exported goods or export items of the country, especially when they are luxury and consumer items, regardless of the necessity of entering such goods or their non-entry, it not only lacks an economic and desirable aspect but also causes instability in It provides the export. It will gradually become a pest for the country’s exports.

Such a way that whenever the government does not want or does not want to announce such a privilege, the country’s export statistics will suddenly find a downward momentum or vice versa.

Based on this, in July 2018, the head of the Trade Development Organization and the Deputy Minister for Export Affairs announced the new guidelines for import versus export, the exchange of export currency at an agreed rate, the method of transferring export licenses, and the import criteria of the third group of goods.

It is stated in this notice: All exporters of non-oil goods, except for petrochemical products and petroleum products, steel products, and non-ferrous metals, who have been exporting since the 11th of April 2018, can sell the foreign currency from the export and give the export license to the importers as follows.

Iran customs also recently presented the process of import versus export according to the latest instructions of the central bank, which can only be used for priority 2 and 3 goods.

Prioritizing goods for currency allocation in Iran

Before allocating currency, we must learn the methods of providing currency to importers. There are the following two methods for delivering currency from the central bank:

Providing currency for importing essential goods, medicine, medical equipment, and strategic goods at the bank rate.

Currency supply through the Nima system with the Nima bank rate for other goods.

The first group of goods is subject to government currency. The second group of goods that are subject to the purchase of foreign currency from the Nima system (export currency).

The third group of goods that can only be supplied with foreign exchange through the free market currency and the fourth group of goods prohibited from importing, and the second and third groups were combined in the recent circular.

This means, except for the goods subject to government currency, the rest of the goods allowed to be imported can be supplied through the NIMA system at the secondary market rate, whose currency can be through non-oil exports of any exporter.

The future of FMCG imports in Iran and the removal of bans

The Ministry of Security seeks to conclude commercial tariff agreements with different countries. Still, it has yet to be determined what the status of cooperation with other countries will be.

Do the Ministry of Security officials still prioritize the import ban, or will the trade tariffs be a prelude to reducing the import restrictions that have been applied since 2018 and have continued until now?

According to Isna, the Minister of Industry, Mines and Trade said in June that removing the ban on the import of 4 or 5 items of goods was proposed to the government, which is under review. Still, the main structure of the prohibition of importing 2000 items of goods, which was approved in 2018, will be maintained.

However, these few items whose details are not precise have yet to be determined. This official announced in his last press conference in 2021 that he agrees with imports in all fields at a maximum of 20% and with planning for the ratio of exports to imports, which has yet to be achieved so far.

But recently, news of the resumption of implementing the preferential tariff agreement between Iran and Pakistan was published.

This agreement was concluded in 2013, but as mentioned, importing more than 2,000 items was banned in 2018. Many of the goods included in the preferential tariff agreement between Iran and Pakistan were included in this list.

Finally, two weeks ago, it was decided to lift the ban on importing all goods related to the preferential tariff system with Pakistan, which was banned in 2018.

In another example, it has been approved by the Foreign Exchange Action Committee that any company and business person who exports to the countries of the Eurasian Union and Russia can import any goods in exchange for this export. Also, 25% of export incentives should be allocated to goods exported to Russia.

The Ministry of Security intends to use the preferential tariff system with other countries and has often announced this issue.

One of the most crucial tariff regimes is with the Eurasian countries, which some producers have counted on. But it is still being determined how stable the import ban structure will be with these countries.

The officials believe that because Pakistan cannot change the import ban structure severely, free trade has started with them.

But it still needs to be determined what the status of cooperation with other countries will be. Do the Ministry of Security officials still prioritize the import ban, or will the trade tariffs be a prelude to reducing the import restrictions that have been applied since 2018 and have continued until now?

Custom production (white label) of FMCG goods in Iran

One of the essential policies of the Iranian government is to substitute production instead of imports due to the intensification of sanctions, and this policy is currently being implemented thoughtfully by the Ministry of Security.

Limiting the import of similar domestically produced goods in the country, supporting domestic production, and self-sufficiency in creating products that can be manufactured in the country, are among the most critical measures taken in this direction.

Providing customized production facilities is an alternative to importing fast-moving consumer goods.

This method helps foreign companies to use the empty capacity of production units in Iran without spending money to establish a production line.

In this regard, the Ministry of Safety announced in the middle of May 2021 the instructions for issuing a certificate of activity “production without factories.”

Today, many of the world’s brands in the field of cars, home appliances, and technology products, even because the cost of production in the mother countries is high, follow the implementation of output without factories in other countries.

Using their brand in countries where their factories have the power to produce high-quality products at low cost, they make their products in factories that do not belong to them.

Successful experience in Asian countries

The discussion of “production without factories” was first raised in 1989 by “Kodak” company, and after that, other companies moved in this direction.

These companies sought to use the empty capacities of their factories effectively through specialized exports to preserve the national capital.

In Asia, during recent decades, the factory-free production model has been experienced in populous countries such as China and India, Southeast Asian countries such as Korea, Malaysia, and Singapore, etc., and has achieved good results in handicrafts, tourism, etc. Even now, this model is being implemented in Turkey.

This model is primarily a provider of services and products and a receiver of services. Production complexes are service providers, and in recent years, outstanding capacities have been created in industries. But most of these industries are operating with minimum capacity.

The recipient of services is also export-oriented companies that can order the market needs from manufacturers.

Currently, production units in many countries have left the issue of packaging and information technology to the private sector and have achieved good results.

Custom production (fee) is increasing in Iran as well. If this strategy is used well, many factories’ empty and unused capacities can be used for branding.

Therefore, using this strategy helps a lot in the growth of exports and domestic production, at the same time, it costs little, and it is not necessary to make an initial investment in it.

Manufacturing companies of complementary industries, distribution companies, or chain stores to diversify their product portfolio and, in line with the market development for their products, can produce products under their brand name by providing documentation related to the brand after concluding a contract and legal formalities.

How do I find a factory for the custom manufacturing of FMCG goods?

A few questions to ask before finding a custom manufacturing partner can include the following:

• What is your minimum order quantity?
• How much is your sample price?
• What is the price of your production?
• What are your payment terms?
• Is all the production done in-house, or is part of the process done in-house?

These questions give you an excellent perspective on whether a business partner can handle your request.

If this strategy is used well, many factories’ empty and unused capacities can be used for branding.

Therefore, using this strategy greatly helps the growth of exports and domestic production; at the same time, it costs less than import costs.

Keinia Industrial Group has different commercial brands with other products. Custom brand production and consulting to find a business partner in this field is one of the services of this industrial group that helps you to produce your FMCG product in Iran at a low cost.

Custom production is an excellent solution for you in marketing to have more maneuverability in selling your products. Contact us for more information about the terms of cooperation with Keinia Industrial Group.

Streamlining Imports of Raw Materials Boosts FMCG Industry Growth (updated: May 7, 2023)

The recent facilitation of importing raw materials for the food industry in Iran has significant implications for the Fast-Moving Consumer Goods (FMCG) sector. The National Standard Organization’s decision to remove the requirement for a certificate of inspection at the origin has streamlined the import process, benefiting FMCG companies that rely on these raw materials for their production.

The Association of Food and Beverage Importers, representing FMCG companies, highlighted the challenges and obstacles faced by importers of raw materials in a meeting with the National Standard Organization. Recognizing the importance of ensuring a smooth import process, the organization responded by introducing measures to simplify procedures.

Previously, import companies were obligated to provide a Certificate of Inspection (COI) at the origin, which proved impractical due to existing sanctions. However, under the new guidelines, if a supply contract between the importing company and the manufacturing company is established, the need for a certificate of inspection at the origin is eliminated. Instead, the manufacturing company must meet the standards set by the National Standard Organization, including having a quality control laboratory.

Furthermore, in line with the initiatives provided by the Standard Administration of Hormozgan Province, if a Certificate of Inspection (COI) is presented at the origin, the importing company can benefit from streamlined transportation from customs to recognized and standardized warehouses. This not only reduces delays and costs associated with container stoppage and warehousing but also ensures the integrity and quality of the imported goods.

These streamlined import procedures have a direct impact on the FMCG industry. FMCG companies rely heavily on a steady supply of raw materials to maintain production and meet consumer demands. By simplifying the import process, FMCG companies in Iran can experience increased efficiency, reduced costs, and improved product availability. This, in turn, can contribute to the growth and development of the FMCG sector, benefiting both businesses and consumers alike.

Overall, the facilitation of importing raw materials for the food industry has a positive ripple effect on the FMCG sector, fostering an environment of growth, innovation, and enhanced competitiveness in Iran’s consumer goods market.

New List of Items for Barter Trade (updated: July 17, 2023)

In a recent letter to Mehdi Zighami, the head of the Trade Development Organization, Ahmad Khani Nouzari, the Deputy Chief of the Trade Development Department, highlighted a new list of items for barter trade.

Following the letter numbered 52571, and considering the necessity of bartering certain agricultural commodities for imports, using the proceeds from exports exclusively for importing the desired products, the following items are hereby added to the import list, in addition to the items mentioned in the aforementioned letter. It is worth mentioning that the import of the previously declared items and the supplementary list attached is solely in exchange for the export of pistachios, dates, raisins, figs, almonds, grade one and two dried apple fruits, persimmons, oranges, apples, potatoes, onions, greenhouse tomatoes, edible eggs, and industrial powdered milk.

In conclusion, the Trade Development Organization has introduced a new list of items for barter trade. This initiative aims to facilitate import activities by allowing the exchange of specified agricultural products in return for the importation of desired goods. By implementing barter trade, the organization aims to optimize trade activities and strengthen the economy.