The term FMCG refers to those goods that are generally replaced or fully used up over a short period of days, weeks or months and within one year. In contrast, durable goods or major appliances such as kitchen appliances are generally replaced over a period of several years. FMCGs have a short shelf life, either as a result of high consumer demand or because the product deteriorates rapidly. Some FMCGs – such as meat, fruits and vegetables, dairy products and baked goods - are highly perishable. Other goods such as alcohol, toiletries, pre-packaged foods, soft drinks and cleaning products have high turnover rates.
The Cyprus FMCG Environment
Cyprus differs from the major European markets due to the following facts which affect the supply chain:
- Cyprus is an island and as a result, the continental short trucking transit times are not achievable due to the fact that sea carriers’ services are always used and hence transit times are being increased
- It is a favored seasonal destination for more than two million tourists, three times the local population, which creates FMCG demand variations stretching to as much as 3:1 in monthly comparisons in specific areas
- Small businesses are a characteristic of the Cyprus business set up. 98% of the businesses are SMEs (Small & Medium size enterprises). This fact is also reflected in the FMCG supply side as well as POS side. As a result, the supply chain has more orders of lower values adding to the logistics costs
- Infrastructure at the POSs is poor in terms of receiving facilities. This extends the time spent at the POS and it is therefore reflected in the logistics cost.
- Stores have insufficient storage space. This results to more frequent deliveries.
- Electronic ordering and invoicing is not yet developed in Cyprus. Thus the cost of checking and administration for both suppliers and retailers is increased