According to rules, one cannot price identical items differently. But at the airport, we have a bottle of water which costs us much more than a local store. Ever wondered why is there a variation in Maximum Retail Price (MRP) on the same product at different places? On the same line of thought – Is it possible for companies to charge differently for the same product, sold through different trade and retail channels?
According to the Rules 2011 of the amendments that were introduced to Legal Metrology (Packaged Commodities), which was effective from January 1, 2018, it is mandatory that a company cannot apply dual MRP to identical pre-packaged commodities.
The MRP may vary due to the quality, quality, packaging and other product differentiation. The companies price these commodities at different MRPs and sell different packs across different retail and trade channels, which in turn brings cost variations.
As well as, these companies have different sizes of stock-keeping units for different trade and retail channels, and they are allowed to charge different MRPs according to the size.
The Airport Authority of India (AAI), has asked the concessionaires at the airports to sell the products at MRP and not above that. They also had informal meetings in the past where it was asked by the AAI that the concessionaires charge suitably for food and beverages, to make them affordable, especially in smaller cities.
1. Many must be unaware of the fact that the hotels and restaurants can legally sell bottled water and other packaged products above MRP because they render services, which cannot be governed by the Legal Metrology Act.
2. The location also has a huge role to play in the variation of cost. The airport concessionaires have to pay real estate cost, which are 5-6 times higher than other retail locations, which makes it capital-intensive.
3. Multiple changes to the GST structure in the last one and a half years is another factor which affects the MRP and labeling a tricky issue for packaged food companies.
Whatever the reason might be we appreciate teh actions by the AAI to control the prices and stand by it. Let’s hope in future, we can afford the whole dinner at the airport.