the food and beverage market entry handbook: iran · july 2017 prepared by: the food and beverage...

July 2017

Prepared by:

The Food and Beverage

Market Entry Handbook:

Iran A Practical Guide to the Market in Iran for European Agri-food

Products and Products with Geographical Indications

Enjoy It’s from Europe – Market Entry Handbook

The Exporter’s Handbook: Iran: How to use this Handbook

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EUROPEAN COMMISSION

Consumers, Health, Agriculture and Food Executive Agency

Promotion of Agricultural Products Unit

E-mail: [email protected]

mailto:[email protected]



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This document has been prepared for the Consumers, Health, Agriculture and Food Executive Agency (Chafea) acting under the mandate from the European

Commission. It reflects the views only of the authors, and the Commission / Chafea cannot be

held responsible for any use which may be made of the information contained therein.

More information on the European Union is available on the Internet (http://europa.eu).

Luxembourg: Publications Office of the European Union, 2017

PDF/Volume_01 EB-06-17-135-EN-N ISBN 978-92-9200-772-0 DOI 10.2818/876680

© European Union, 2017

Reproduction for commercial purposes is not authorised.

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Table of Contents

The Exporter’s Handbook: Iran ........................................................ 8

How to use this Handbook ......................................................... 8

Country Overview ......................................................................... 10

Iran at a glance ...................................................................... 10

The Iranian Food and Beverage market ...................................... 17

Operating in the Iranian market ................................................ 24

Logistics services and infrastructure ..................................... 24

Distribution ....................................................................... 31

Business environment ........................................................ 32

Consumer profile ............................................................... 34

Market Access and Entry ................................................................ 36

SWOT analysis ........................................................................ 37

Market information .................................................................. 38

Cultural sensitivities ........................................................... 38

Market size, market share, growth drivers and trends ............. 38

Market access and market entry strategy .............................. 40

Key Markets by Geography ................................................. 41

Legislation, Regulations and Administrative Information ................ 46

Import – Export rules ......................................................... 47

GI and IP protection ........................................................... 48

Customs, SPS requirements, and Labelling ............................ 49

Iran’s relationships with the GCC 6 and other regional bodies ........ 53

Market snapshots ......................................................................... 55

Beverages .............................................................................. 55

Consumption ..................................................................... 55

Offer ................................................................................ 59

Distribution ....................................................................... 61

Summary ......................................................................... 62

Products with Geographical Indications ....................................... 64

Consumption ..................................................................... 64

Offer ................................................................................ 68

Distribution ....................................................................... 76

Summary ......................................................................... 79



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Fresh meat ............................................................................. 80

Consumption ..................................................................... 81

Offer ................................................................................ 83

Distribution ....................................................................... 87

Summary ......................................................................... 87

Processed meat ...................................................................... 88

Consumption ..................................................................... 88

Offer ................................................................................ 90

Distribution ....................................................................... 94

Summary ......................................................................... 95

Olive Oil ................................................................................. 96

Consumption ..................................................................... 96

Offer ................................................................................ 99

Distribution ..................................................................... 104

Summary ....................................................................... 104

Fresh Fruit and Vegetables ..................................................... 105

Consumption ................................................................... 106

Offer .............................................................................. 108

Distribution ..................................................................... 114

Summary ....................................................................... 115

Processed Fruits and Vegetables .............................................. 116

Consumption ................................................................... 117

Offer .............................................................................. 120

Distribution ..................................................................... 124

Summary ....................................................................... 125

Dairy Products ...................................................................... 126

Consumption ................................................................... 127

Offer .............................................................................. 132

Export ............................................................................ 133

Distribution ..................................................................... 137

Summary ....................................................................... 137

Processed Cereals ................................................................. 139

Consumption ................................................................... 139

Offer .............................................................................. 143

Export ............................................................................ 144



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Distribution ..................................................................... 148

Summary ....................................................................... 148

Baked Goods ..................................................................... 150

Consumption ................................................................ 150

Offer ........................................................................... 152

Distribution .................................................................. 155

Summary ..................................................................... 156

Chocolate .......................................................................... 157

Consumption ................................................................ 157

Offer ........................................................................... 159

Export ......................................................................... 160

Distribution .................................................................. 163

Summary ..................................................................... 163

Confectionery .................................................................... 165

Consumption ................................................................ 165

Offer ........................................................................... 168

Import ......................................................................... 170

Distribution .................................................................. 174

Summary ..................................................................... 175

Honey Products .................................................................. 176

Consumption ................................................................ 176

Offer ........................................................................... 177

Export ......................................................................... 179

Distribution .................................................................. 181

Summary ..................................................................... 182

Cotton Plants ..................................................................... 183

Consumption ................................................................ 183

Offer ........................................................................... 184

Distribution .................................................................. 189

Summary ..................................................................... 189

Communication .......................................................................... 191

Advertising in Iran ................................................................. 191

Presenting a Product in Iran .................................................... 198

Target Audience .............................................................. 199

Communications Campaigns in Iran .................................... 200



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Promoting your Product .................................................... 200

DOs AND DON’Ts ........................................................................ 202

DO ...................................................................................... 202

DON’T ................................................................................. 203

Quick Facts .......................................................................... 204

Synopsis ................................................................................... 207

SWOT and 4P analysis ........................................................... 207

4P Analysis ........................................................................... 210

Conclusion ........................................................................... 212

Support Service Directory ............................................................ 214

Relevant Business Associations in Europe ................................. 214

Directory of EU member State Embassies ................................. 215

Useful Organisations and Service Providers in Iran ..................... 220

Calendar of Trade Events in Iran ............................................. 221

Annex I - EU Products Registered as GIs in Iran .............................. 222

Annex II - Professionals Contact Database ................................... 228

Major Retailers ................................................................... 228

Restaurants and Hotels ....................................................... 228

Importers and Distributors ................................................... 229

Media ............................................................................... 230

Bloggers............................................................................ 231

VIP Chefs .......................................................................... 232

Annex III: Case Study: Choosing the Right Local Partner is the Key to Success in Iran ................................................................................ 233

Company Profile ................................................................. 233

Distribution Channels and Customer Base .............................. 233

Challenges in Iran .............................................................. 233

Marketing Strategy and Key to Success ................................. 234

Table of figures ................................................................................ 235

List of tables .................................................................................... 239



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List of Acronyms

CAGR Compound Annual Growth Rate

F&B Food and Beverage

FDA Iran Food and Drug Administration

GTC Government Trading Corporation of Iran

ICCIMA Iran Chamber of Commerce, Industries,

Mines and Agriculture

IDICC Iran Dairy Industries Corporation

IMI Industrial Management Institute

IQIS Iranian Quarantine and Inspection Service

IRR Iranian Rial

ISIRI Institute of Standards and Industrial

Research of Iran

IVO Iran Veterinary Organization

MENA Middle East and North Africa

PPO Plant Protection Organization

RAJA Iranian Railway Company

TISC Technology and Innovation Support Centre

TRIPS Trade Related Aspects of Intellectual Property

Rights Agreement

TSP Targeted Subsidies Policy

WIPO World Intellectual Property Organisation



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The Exporter’s Handbook: Iran

This Handbook is intended to act as a reference for those agri-food producers

planning for, or in the process of entering the Iranian market. This Handbook

provides step-by-step guidance on the operationalisation of the market in Iran,

including relevant information such as analysis of product-specific markets, market access and market entry procedures - including as applicable at the

bilateral and regional levels - Intellectual Property Rights (IPR) for products

with Geographical Indications (GI), a signposting and referral system providing

useful contacts to professional buyers and strategies for penetrating the

Iranian market.

How to use this Handbook

The applicability of each section of this Handbook will depend on your stage of

market entry, company profile, product range and existing business strategies.

For those wishing to learn more about the Iranian food and beverage (F&B market in general, Sections 4 and 5 provide an overview of the business

climate. These sections include political, geographic, economic and cultural

information relevant to successful market entry and performance. The

information contained within these sections is of a general nature so may not

be relevant for those in the more advanced stages of market entry.

If you are interested in the market, in Section 6, you may find out more

information relevant to your product through the 14 Market Snapshots for selected products. These sections illustrate market dynamics, including

overview, entry procedures, sanitary and phytosanitary requirements and

more, specific to each of the following product categories:

1. Beverages

2. Products with Geographical Indication

3. Fresh Meat

4. Processed Meat 5. Olive Oil

6. Fresh Fruits and Vegetables

7. Processed Fruits and Vegetables

8. Dairy Products

9. Processed Cereals

10. Baked Goods 11. Chocolate

12. Confectionery

13. Honey, Gum Resins and Plant extracts

14. Cotton, living plants

This information will provide more industry-specific intelligence to consider as

part of any market entry or market expansion strategies. The information

contained in this Handbook is a first resource to consult in deciding how to export your product to the Iranian market and does not constitute legal

guidance. Applicable legislation, regulations and market information are



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frequently updated or changed in Iran and should be reviewed with a

knowledgeable export support service or import counsellor prior to market

entry.

If you have already decided to market your product in Iran, but need some

assistance getting there, then the detailed information in Sections 7 onwards

can point you in the right way. In Section 7 you will find the necessary information to build your communication strategy, including statistics on social

media usage, main media channels and the local rules on advertisement.

Section 8 provides practical tips and a concise list of recommendations on what

to do and what not to do. The Synopsis in Section 9 presents an overview of

the F&B market in Iran through SWOT analysis and 4P Analysis. Finally, Section

10 provides a Support Services Directory which includes a well-informed contact network of service providers, business facilitation support

organisations and business contacts, which can be vital in entering and building

a brand in the Iranian market.


Country Overview: Iran at a glance

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Country Overview

Iran at a glance

Iran is a Middle Eastern country sharing a land border with Turkey, Armenia,

Azerbaijan, Turkmenistan, Afghanistan, and Pakistan. Its coastal borders open

to the Caspian Sea in the North, and the Persian Gulf and Gulf of Oman in the

South.

Figure 1 Map of Iran1 ©

1 Image obtained from Wikimedia Commons, avalailable at:

https://commons.wikimedia.org/wiki/File:Map_of_Iran.jpg ; Copyright ©

https://commons.wikimedia.org/wiki/File:Map_of_Iran.jpg



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Modern Iran has its foundations in the Islamic revolution of 1979, led by

Ayatollah Khomeini. There is a clerical and religious hierarchy on which political

power in the country rests. Members of parliament (the Islamic Consultative

Assembly) are popularly elected, and must be vetted by a 12-member Council

of Guardians, which includes six clerical members appointed by the head of state (Supreme Leader Ayatollah Ali Khamenei). This body must also approve

all legislation coming from the parliament.2 In May 2017 Hassan Rouhani

(pictured3) won a second term as President of Iran, with 57 per cent of the

vote.4

The country has the second largest economy in the

Middle East and North Africa (MENA) region after

Saudi Arabia, principally focused on the hydrocarbon, agriculture, and services sectors. It is

characterised by large natural gas reserves and

proven crude oil reserves, both of which are relied

upon by the government to a large extent (oil

exports account for around 80 per cent of total export earnings and make up roughly 40-50 per cent

of the government budget5).6

In Iran, agricultural production accounts for nearly

10 per cent of its economy and the sector offers

employment to about 18 per cent of Iran’s

population. Currently, about 27 per cent of Iran’s population is rural, however,

this number has been steadily declining over time due to increasing economic

development that has brough about rapid urbanization and industrialization.7

Many international sanctions imposed on Iran were lifted in January 2016 following the reaching of an agreement between Western powers and the

country to limit Iran’s nuclear programme. New sanctions imposed by

Washington, due to a ballistic missile test carried out by Iran, are specific to

entities and individuals linked to the missile programme. This re-entry into the

2 United States Institute of Peace. “The Parliament”. Iran Primer, August 2015, available at:

http://iranprimer.usip.org/resource/parliament 3 Hamed Malekpour, Tasnim News Agency, Image obtained from Wikimedia Commons, avalailable at:

https://commons.wikimedia.org/wiki/File:Hassan_Rouhani_in_Saadabad.jpg ; Copyright © 4 Financial Tribune. “Rouhani’s Inauguration Heralds Stronger International Ties”. August 2017, available

at https://financialtribune.com/articles/national/69995/rouhani-s-inauguration-heralds-stronger-

international-ties 5 Cordesman, Anthony. “The Iran Nuclear Agreement and Iranian Energy Exports, the Iranian Economy,

and World Energy Market”. Center for Strategic and International Studies, August 2015, available at

https://csis-prod.s3.amazonaws.com/s3fs-

public/legacy_files/files/publication/150817_Impact_Agreement_Iran.pdf 6. World Bank. “Iran Overview”. April 2017, available at:

http://www.worldbank.org/en/country/iran/overview 7 Mesbah Motamed, Developments in Iran’s Agriculture Sector and Prospects for U.S. Trade, United States

Department of Agriculture, A Report from the Economic Research Service. July 2017, pp. 2 , available at:

https://www.ers.usda.gov/webdocs/publications/84408/aes-100.pdf?v=42937

Figure 2 Hassan Rouhani,

President of Iran ©

http://iranprimer.usip.org/resource/parliamenthttps://commons.wikimedia.org/wiki/File:Hassan_Rouhani_in_Saadabad.jpghttps://financialtribune.com/articles/national/69995/rouhani-s-inauguration-heralds-stronger-international-tieshttps://financialtribune.com/articles/national/69995/rouhani-s-inauguration-heralds-stronger-international-tieshttps://csis-prod.s3.amazonaws.com/s3fs-public/legacy_files/files/publication/150817_Impact_Agreement_Iran.pdfhttps://csis-prod.s3.amazonaws.com/s3fs-public/legacy_files/files/publication/150817_Impact_Agreement_Iran.pdfhttp://www.worldbank.org/en/country/iran/overviewhttps://www.ers.usda.gov/webdocs/publications/84408/aes-100.pdf?v=42937



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global economy could have far-reaching economic effects, given the large size

of its economy.8

Table 1 Country factsheet

Iran

Official name Islamic Republic of Iran (Jomhuri-ye

Eslami-ye Iran)

Political system Theocratic republic

Head of state Supreme Leader Ayatollah Ali Khamenei

Head of Government Hassan Rouhani

Capital Tehran

Flag

Official languages Persian is the official language, others include Azeri Turkic and Turkic dialects,

Kurdish, Gilaki and Mazandarani, Luri,

Balochi, and Arabic

GDP, PPP

- Per capita, PPP - Trend

USD 1.359 trillion (2014, World Bank

latest, 1.185 trillion EUR)

- USD 16,507 (2014, World Bank latest, 14,397 EUR)

- Following sustained growth in both indicators from 2005, Iran experienced a dip in GDP and GDP

per capita from 2011 – 2013, with

a rebound from 2013-2014

8 International Monetary Fund. “Economic Implications of Agreement with the Islamic Republic of Iran”.

Regional Economic Outlook Middle East and Central Asia Report, October 2015, pp. 81 – 88, available at:

http://www.imf.org/external/pubs/ft/reo/2015/mcd/eng/pdf/mreo1015ch5.pdf

http://www.imf.org/external/pubs/ft/reo/2015/mcd/eng/pdf/mreo1015ch5.pdf



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Currency

- Exchange rate trend

Iranian Rial (IRR)

- From 2002 to 2011 IRR per USD increased from roughly 6,907 to

10,616. From 2012 to 2016 the rate of increase has been higher,

with a move from 12,176 in 2012

to 30,915 in 2016

GDP, PPP (billion, current international

$)

GDP per capita, PPP (current international

$)

12,000

13,000

14,000

15,000

16,000

17,000

18,000

19,000

900

950

1,000

1,050

1,100

1,150

1,200

1,250

1,300

1,350

1,400

GD

P p

er c

ap

ita

, PP

P (

curr

ent

inte

rna

tio

na

l $)

GD

P, P

PP

(b

illio

n, c

urr

ent

inte

rna

tio

na

l $)



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Major cities

- Metropolitan population (CIA, 2015)

- Province

Tehran (Capital)

- 8.4 million - Tehran

Mashhad

- 3 million - Razavi Khorasan

Esfahan

- 1.88 million - Isfahan

Karaj

- 1.81 million - Alborz

Shiraz

- 1.66 million - Fars

Tabriz

- 1.57 million - East Azerbaijan



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Population density

Land area 1,628,750 sq. km

Population

- Median age - Trend

- Age by cohort:

79,926,270 (2016)

- 29.40 - The previous three national

censuses show Iran’s population

grew at 6.60% from 2008-2011,

and at 6.36% from 2011-2016



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Labour force (economic participation of population

aged 10 and over, 2016)

- Employment share by sector

- Unemployment rate of population aged 15 and

over

26.40 million

- Agriculture sector 19.40%; Manufacturing sector 31.50%;

Services sector 49.10%

- 12.70%

5 4 3 2 1 0 1 2 3 4 5

0-4

10-14

20-24

30-34

40-44

50-54

60-64

70-74

80-84

90-94

100 and over

Population (million)

Ag

e


Country Overview:

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Provinces

- Population (million, 2016):

Information aggregated from World Bank; Statistical centre of Iran; CIA world factbook; World Food Programme

The Iranian Food and Beverage market

Overview

Globally it is estimated that the Muslim consumer category spent USD 1.17

(EUR 1.02) trillion on Food & Beverage (F&B) in 2015, representing 17 per

cent of global expenditure in the category. Additionally, the 2015 Halal

Certified F&B Market is estimated to have been USD 415 (EUR 362) billion. In

1.06 1.14

3.27 13.27

0.77 2.78

0.70 1.29 1.27

0.86 3.28

1.43 1.76

1.60 0.71

4.71 6.43

1.95 3.16

0.58 1.78 1.74 1.87

2.53 4.85

5.12 3.91

0.95 1.16 1.27

2.71

ZanjanYazd

West AzarbeyejanTehran

South KhorasanSistan& Baluchestan

SemnanQom

QazvinNorth Khorasan

MazandaranMarkazi

LorestanKordestan

Kohgiluyeh & BoyerahmadKhuzestan

Khorasan-e-RazaviKermanshah

KermanIlam

HormozganHamedanGolestan

GilanFars

EsfahanEast Azarbayejan

Chaharmahal & BakhtiyariBushehrArdebilAlborz


Country Overview: The Iranian Food and Beverage market

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this year, of Muslim countries, Iran ranked 6th in terms of the F&B market at

that time.9

Table 2 Top Food & Beverage markets by Muslim country

Muslim country Size of Food & Beverage

mkt, 2015 (USD, billion)

Indonesia 155 (135 EUR)

Turkey 116 (101 EUR)

Pakistan 106 (92.45 EUR)

Egypt 78 (68 EUR)

Bangladesh 69 (60.1 EUR)

Iran 59 (51.45 EUR)

Saudi Arabia 48 (41.86 EUR)10

Food and Beverage is a very important category in terms of household

expenditure in Iran, the latest information available in this area shows that in the period March 21st, 2015 – March 19th, 2016 gross expenditure per urban

household on F&B was 83,276,315 IRR (roughly EUR 2,253), this made up

23.60 per cent of total urban household expenditure.11

Iran’s F&B market is growing, due primarily to a growing population. The

Iranian government has set a policy which aims to make the country as self-

sufficient in this area as can be, particularly from Western countries. This has

led to a widely regulated food market. Iran is largely self-sufficient in vegetables and nuts as well as wheat and barley, and has the world’s largest

production of pistachio nuts, saffron and berberies. There is little import of

chicken meat, cheese and milk, though the country does import a significant

amount of red meat, butter, fish, fruit and wheat. There is opportunity for EU

F&B companies to import in several areas including specialised products in the

processed foods sector due to small variation in products in the country.12

The Iranian government outlines its ambitions for the Iranian Food and Beverage category in its 20 year outlook plan, which is currently just over

halfway through (2005-2025). Here the government states that production

capacity of food and beverage within the country should hit 100 million tons

by the end of the period. In addition to this, it is aiming for value added of

food and beverages to the economy of 15.70 per cent. Finally, with respect to

9 Thomson Reuters. “State of the global Islamic economy report 2016/2017”. 2016, available at:

http://ceif.iba.edu.pk/pdf/ThomsonReuters-stateoftheGlobalIslamicEconomyReport201617.pdf 10 Thomson Reuters. “State of the global Islamic economy report 2016/2017”. 2016, available at:

http://ceif.iba.edu.pk/pdf/ThomsonReuters-stateoftheGlobalIslamicEconomyReport201617.pdf 11 Central Bank of the Islamic Republic of Iran. “Household Budget Survey”. March 21st 2015 – March

19th 2016 Report, October 2015, available at: http://www.cbi.ir/simplelist/1421.aspx 12 Ministry of Foreign Affairs of Denmark. “The agriculture and food market in Iran”. March 2017,

available at http://www.lf.dk/~/media/lf/for-medlemmer/virksomhedsmedlem-hos-

os/ingrediensnyhedsbrev/2017/april17/report-the-agriculture-and-food-market-in-iran-.pdf?la=da

http://ceif.iba.edu.pk/pdf/ThomsonReuters-stateoftheGlobalIslamicEconomyReport201617.pdfhttp://ceif.iba.edu.pk/pdf/ThomsonReuters-stateoftheGlobalIslamicEconomyReport201617.pdfhttp://www.cbi.ir/simplelist/1421.aspxhttp://www.lf.dk/~/media/lf/for-medlemmer/virksomhedsmedlem-hos-os/ingrediensnyhedsbrev/2017/april17/report-the-agriculture-and-food-market-in-iran-.pdf?la=dahttp://www.lf.dk/~/media/lf/for-medlemmer/virksomhedsmedlem-hos-os/ingrediensnyhedsbrev/2017/april17/report-the-agriculture-and-food-market-in-iran-.pdf?la=da



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exports it plans that value by the end of the period reaches USD 6.5 (EUR

5.67) billion.13

To be taken into consideration in this market is Halal. Halal is defined as “Food

permitted per Islamic dietary guidelines from the Quran. Muslim followers

cannot consume: pork or pork by-products, animals that were dead prior to

slaughtering, animals not slaughtered properly or not slaughtered in the name of God, blood and blood by-products, alcohol, carnivorous animals, birds of

prey”. Currently Iran has the fifth largest market for Halal food products, after

Indonesia, Turkey, Pakistan, and Egypt.14

Knowledge of market competitors when entering any market is an advantage

in any sector, in February 2016, the Industrial Management Institute (IMI)

published names of the first 500 domestic food manufacturing companies with

the highest sales rate in 2015 in Iran, the top companies are listed here:15

Table 3 Top domestic companies in Food & Beverage sector in Iran, by sales, 2015 ©

Company Sales 2015 (USD MLN)

Sina Food Industry Group 613.54 (EUR 535)

Iran Dairy Industries Corporation

(IDICC)

49.54 (EUR 43.21)

Dashte Morghab Co. (1&1: Industrial

Production Group)

38.97 (EUR 33.99)

Pakdis Co. 35.16 (EUR 30.67)

Taliseh Nemooneh Co. 26.89 (EUR 23.45)

Chaharmahal Sugar Co. 17.7 (EUR 15.44)

Zamzam Mashhad Co. 17.43 (EUR 15.20)

Minoo Group 13.54 (EUR 11.81)

Biscuit Gorji Company 13.48 (EUR 11.76)

Sayeh Gostar Pars Managers – Economic and Business Consultancy16

13 “Iran’s Agriculture Machinery and Internal Combustion Engine Market Study”, SGPM Economic and

Business Consultancy, October 2016 14 Islamic Chamber Research and Information Center. “Halal Food, Lifestyle sectors to be worth $2.47

Trillion by 2018”. Halal World Institute, May 2015, available at:

http://halalworldinstitute.org/news/detail/475?lang=en#.WUEJ_GjyhhF 15 “Iran’s Agriculture Machinery and Internal Combustion Engine Market Study”, SGPM Economic and

Business Consultancy, October 2016 16 “Iran’s Food Sector”, SGPM Economic and Business Consultancy, October 2016 ; Image Copyright ©

http://halalworldinstitute.org/news/detail/475?lang=en#.WUEJ_GjyhhF



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Iran F&B Trade profile

Currently the EU overall ranks as Iran’s 5th largest trading partner, accounting

for 6 per cent of Iran’s trade. Whilst before the sanctions regime the EU was

Iran’s first trading partner, The United Arab Emirates and China are currently

Iran’s most important partners.17

Exports to Iran in the F&B category have seen a rather sharp decline in the

recent past. World exports have seen from 2012-2016 a drop in total value of

exports here of 47 per cent, whereas the EU-28 from 2012-2015 have seen a drop of just over 50 per cent. Iran’s F&B related exports center mainly on

horticultural crops, including tree nuts, fruits, and vegetables, with pictachios

being a major export article.18

Figure 3 Exports to Iran of Food & Beverage categories

© UN Comtrade19

Data on Harmonized System categories relevant to F&B from the UN Comtrade

database shows that imports to Iran from all countries is concentrated in a

relatively small number of categories, the top five categories listed below made

up just over 80 per cent of imports to Iran in 2016.

17 European Commission. “Iran Trade”. Countries and Regions: Iran, April 2017, available at:

http://ec.europa.eu/trade/policy/countries-and-regions/countries/iran/ 18 Mesbah Motamed, Developments in Iran’s Agriculture Sector and Prospects for U.S. Trade, United States

Department of Agriculture, A Report from the Economic Research Service. July 2017, pp. 6, available at:

https://www.ers.usda.gov/webdocs/publications/84408/aes-100.pdf?v=42937 19United Nations International Trade Statistics Database, Department of Economic and Social

Affairs/Statistics Division available at: https://comtrade.un.org

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

2012 2013 2014 2015 2016

Exp

ort

s to

Iran

, USD

bill

ion

World

EU-28

http://ec.europa.eu/trade/policy/countries-and-regions/countries/iran/https://www.ers.usda.gov/webdocs/publications/84408/aes-100.pdf?v=42937http://comtrade.un.org/



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Table 4 Imports of selected Food & Beverage categories to Iran, 201620

Category

Percentage of total trade

value

Cereals 44.57%

Animal or vegetable fats and oils and their cleavage

products; prepared edible fats; animal or vegetable

waxes

14.64%

Meat and edible meat offal 9.52%

Coffee, tea, mate and spices 6.95%

Sugars and sugar confectionery 5.45%

Fish and crustaceans, molluscs and other aquatic

invertebrates 3.72%

Miscellaneous edible preparations 3.44%

Edible fruit and nuts; peel of citrus fruit or melons 2.96%

Dairy produce; birds' eggs; natural honey; edible products of animal origin, not elsewhere specified or

included

2.71%

Preparations of vegetables, fruit, nuts or other parts

of plants 1.99%

Cocoa and cocoa preparations 1.75%

Preparations of cereals, flour, starch or milk; pastry

cooks' products 1.13%

Edible vegetables and certain roots and tubers 0.81%

Beverages, spirits and vinegar 0.26%

Animal or vegetable fats and oils 0.06%

Preparations of meat, of fish or of crustaceans,

molluscs or other aquatic invertebrates 0.03%

Preparations of vegetables, fruit or nuts 0.01%

Preparations of cereals, flour, starch or milk; bakers'

wares 0.00%

© UN Comtrade21

Total imports for the above categories in 2016 were 4.458 billion USD (3.9

billion EUR).

20 Data used in this table is a mirror data collected by UN Comtrade from world export data, it is not directly

obtained from Iran. 21 United Nations International Trade Statistics Database, Department of Economic and Social


http://comtrade.un.org/



22 | P a g e

Iran has, within the F&B categories mentioned above, a number of partners

which are more important than others. The top 20 trading partners provided

just under 96 per cent of imports in the studied categories in 2016. Further,

Brazil is by far the biggest partner, and the top four countries importing to Iran

in 2016 (Brazil, India, Russia and Malaysia) make up just over 63 per cent of the total. In terms of EU countries there are four which figure in the top 20:

Germany, France, Spain, and Romania.

Figure 4 Percentage of total selected Food & Beverage exports to Iran of top 20

exporters (2016)22

© UN Comtrade23

Focusing on the top seven product categories and the top 10 exporters to Iran

it can be seen that there is differentiation in the importance to Iran of the

various partner countries.

22 Total trade value for all exporters was USD 4.458 billion, data available at comtrade.un.org/data/, extracted

June 2017. HS codes extracted: 2-4; 7-10; 15-22. 23United Nations International Trade Statistics Database, Department of Economic and Social


0.51%

0.59%

0.61%

0.63%

0.65%

0.77%

0.81%

0.82%

1.34%

2.10%

2.43%

3.01%

3.43%

3.71%

3.80%

5.54%

6.94%

9.19%

17.05%

31.76%

Ecuador

Australia

Romania

Rep. of Korea

USA

Spain

Philippines

France

Indonesia

New Zealand

Argentina

Kazakhstan

Turkey

Sri Lanka

China

Germany

Malaysia

Russian Federation

India

Brazil

https://comtrade.un.org/data/http://comtrade.un.org/



23 | P a g e

Figure 5 Percentage of top seven selected Food & Beverage categories attibutable to

partner countries (imports to Iran)

© UN Comtrade24

With the lifting of sanctions from Iran, country’s trading profile is likely to

change. For example, lower trade costs and access to new suppliers in new

24 United Nations International Trade Statistics Database, Department of Economic and Social


Brazil

Brazil

BrazilBrazil

India

India

India

India

Russia

Russia

Malaysia

Mal

aysi

a

Ge

rman

y

Germany

Ch

ina

Ch

ina

China

Sri Lanka

Turkey

Turkey

Turkey

Kazakhstan

Argentina

Other

Other

Other OtherOther

Other

Other

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Cereals Animal orvegetable fatsand oils and

their cleavageproducts;prepared

edible fats;animal orvegetable

waxes

Meat andedible meat

offal

Coffee, tea,mate and

spices

Sugars andsugar

confectionery

Fish andcrustaceans,molluscs andother aquaticinvertebrates

Miscellaneousedible

preparations

http://comtrade.un.org/


Country Overview: Operating in the Iranian market

24 | P a g e

markets can raise imports for many food and beverages products such as rice,

barley, corn, and soybeans, for which Iran is not nearly self-sufficient25 as well

as for new products from different markets including the European Union

markets.

Operating in the Iranian market

Logistics services and infrastructure

Although Iran has access to five important international transit and business

corridros (International North-West Transport Corridor, Transport Corridor Europe Caucasus Asia, International East-West Transport Corridor, South Asia

Corridor and Asian Land Transportation Infrastructure Development) 26

The country does not have a particularly well-developed infrastructure

environment, compared to the rest of the region it scores rather low on

Logistics performance according to the World Bank (see graph below). One of

the reasons for this current situation is believed to be high levels of red tape

in the country which cause delays in construction. The country is however trying to improve the landscape by increasing investment in infrastructure

after the lifting of economic sanctions in January 2016. This should help the

country to attract more FDI in infrastructure from several countries, including

most notably India, as demonstrated by the announcement in February 2016

of Iran’s interest in gathering 8 billion USD (6.9 billion EUR) of infrastructure

related investment from India.27

25 Mesbah Motamed, Developments in Iran’s Agriculture Sector and Prospects for U.S. Trade, United States

Department of Agriculture, A Report from the Economic Research Service. July 2017, pp. 18, available at:

https://www.ers.usda.gov/webdocs/publications/84408/aes-100.pdf?v=42937 26 Financial Tribune. “Iran Logistics Industry Overview”. January 2017, available at

https://financialtribune.com/articles/economy-business-and-markets/56843/iran-logistics-industry-overview 27 The Dollar Business. “Iran Invites India to Invest in $8 Billion Project”. Countries and Regions: Iran,

February 2016, available at: https://www.thedollarbusiness.com/news/iran-invites-india-to-invest-in-8-

billion-project/41106

https://www.ers.usda.gov/webdocs/publications/84408/aes-100.pdf?v=42937https://www.thedollarbusiness.com/news/iran-invites-india-to-invest-in-8-billion-project/41106https://www.thedollarbusiness.com/news/iran-invites-india-to-invest-in-8-billion-project/41106



25 | P a g e

Figure 6) Logistics Performance Index 2016

World Bank28

The following section gives an overview of the main distribution networks

within the country, to aid with company logistics planning.

Road

Most domestic trade in Iran takes place via roads. Road infrastructure links all

cities and the majority of towns in Iran. Most roads (around 73 per cent in

2011) are paved, and there is good connection to neighbouring countries to

the north, west, and east. In total, there are roughly 83 thousand KM of main

roads, highways, freeways, and access roads. There is control of the roads by the Traffic Police (supervised by the Ministry of Road and Transportation),

28 Global Rankings 2016. The World Bank, available at: https://lpi.worldbank.org/international/global

0

1

2

3

4

5Customs

Infrastructure

International shipments

Logistics competence

Tracking & tracing

Timeliness

United Arab Emirates Region: Middle East & North Africa Iran, Islamic Rep.

https://lpi.worldbank.org/international/global



26 | P a g e

aided by the fact that all trucks / transit trailers are equipped with GPS to

control location and speed.29

Figure 7) Main road networks of Iran30 ©

Travel time for products in the F&B sector is important, for this reason average

travel times between a number of the main cities and towns is stated below.

Table 5 Travel time from capital city to major towns in Iran, road

Tehran Tabriz Isfahan Shiraz Mashhad Hamedan Yazd

Tehran - 7h 5h 11h 10h 4h 7h

Bandar

Abbas

16h 22h 11h 8h 17h 16h 10h

29 Logistics Capacity Assessments. “Iran Logistics Assessment, World Food Programme”. Regional

Economic Outlook Middle East and Central Asia Report, June 2016, available at:

https://dlca.logcluster.org/display/public/DLCA/Iran%2C+Islamic+Republic+of 30 United Nations, Image obtained through Wikimedia Commons, available at:

https://commons.wikimedia.org/wiki/File:Un-iran.png Copyright ©

https://dlca.logcluster.org/display/public/DLCA/Iran%2C+Islamic+Republic+ofhttps://commons.wikimedia.org/wiki/File:Un-iran.png



27 | P a g e

Bandar

Anzali

(Rasht)

5h 7h 10h 16h 14h 6h 13h

Bandar Imam

(Port

close to Ahvaz)

13h 16h 11h 7h 20h 10h 12h

World Food Programme31

Air

Throughout the country there are 54 major airports. Iran Air is the national

airline, and operates both domestic and international flights. The main national airport, Mehrabad, is located in the country’s capital, Tehran. Following this,

Mashhad airport is the second most crowded airport in the country in terms of

air traffic. It can be said that in general international connections with Iran’s

airports have been improving over the recent past, as long ago as 2007

international flights were moved from the main airport Mehrabad, to the Imam

Khomeini International Airport (which is outside of the capital), due to a need

for further capacity.32



https://dlca.logcluster.org/display/public/DLCA/Iran%2C+Islamic+Republic+of 32 Ibid.

https://dlca.logcluster.org/display/public/DLCA/Iran%2C+Islamic+Republic+of



28 | P a g e

Figure 8 Airports of Iran

World Food Programme

Maritime Shipping

For exporters looking to enter the Iranian market the Seaway is a key point of

entry. Overall capacity at Iran’s ports in the recent past has been increasing, by the end of 2015 it was expected that container unloading and loading

capacity at ports would be around 7 million.33 There are 16 ports in the country,

with three points of concentration.

Bandar Abbas is a highly important port amongst these, given that it handles

an estimated 90 per cent of the country’s container throughput. Bandar Anzali

in the north is the biggest port in this part of the country, on the Caspian Sea.

Finally, The Imam Khomeini Port is located in the northern part of the Persian Gulf, and due to good rail connections (which link it with the entire country) is

an important transit entry point for cargo.34

Iranian seaports are expected to play even greater role in contributing to the

development of country’s economy as major European shipping companies are

looking to return to Iran. The government is welcoming these big international



https://dlca.logcluster.org/display/public/DLCA/Iran%2C+Islamic+Republic+of 34 Ibid

https://dlca.logcluster.org/display/public/DLCA/Iran%2C+Islamic+Republic+of



29 | P a g e

shipping companies and it has indicated that no limitations will be posed on

the returning shipping companies.35

Further information on Iranian ports can be found at the website of the Ports

and Maritime Organization here.

Figure 9 Ports of Iran36


Rail

In Iran there are around 11,106km of railroad track..37 This is small when

compared to countries with similar size, for example, Germany has 19 times

more than Iran and Poland 11 times more. Goods coming from the major port

Bandar Abbas are distribuned through trucks and freight trains, the Tehran-

Bandar-Abbas railroad specifically connects this port with the railroad system

35 “No Limitations for Liners Returning to Iran”, World Maritime News, February 2017, available at:

http://worldmaritimenews.com/archives/212061/no-limitations-for-liners-returning-to-iran/ 36Logistics Capacity Assessments. “Iran Logistics Assessment, World Food Programme”. Regional


https://dlca.logcluster.org/display/public/DLCA/Iran%2C+Islamic+Republic+of 37 Iran Journey. “Transport in Iran”. 2011, available at: http://www.iranjourney.com/contents/TI

http://www.pmo.ir/en/homehttp://worldmaritimenews.com/archives/212061/no-limitations-for-liners-returning-to-iran/https://dlca.logcluster.org/display/public/DLCA/Iran%2C+Islamic+Republic+ofhttp://www.iranjourney.com/contents/TI



30 | P a g e

of Central Asia via Tehran and Mashhad. Railroads are generally in good

condition throughout the country, though it should also be noted that the

network as a whole is rather under-developed in terms of reach. This is

expected to improve over time, especially as within infrastructure one of Iran’s

strategic goals is to expand the railway network, with 25,000km of track expected in 2025.38 A current example of this expansion is the investment

project of EUR 1,176 million in a stretch of railway connecting Shiraz, Bushehr,

and Asalouyeh.39

Figure 10 Railroads of Iran


The Islamic Republic of Iran Railways is the national state-owned railway

system of Iran, freight transport management specifically is coordinated by

the Railway Transportation Company (The Raja Passenger Train Company manages passenger trains), all of these are overseen by the Iranian Ministry



https://dlca.logcluster.org/display/public/DLCA/Iran%2C+Islamic+Republic+of 39 The Swedish Trade and Invest Council. “A new dawn for Swedish Business in Iran”. Business Sweden,

2016, available at: http://www.business-sweden.se/globalassets/business-sweden---a-new-dawn-for-

swedish-business-in-iran.pdf

https://dlca.logcluster.org/display/public/DLCA/Iran%2C+Islamic+Republic+ofhttp://www.business-sweden.se/globalassets/business-sweden---a-new-dawn-for-swedish-business-in-iran.pdfhttp://www.business-sweden.se/globalassets/business-sweden---a-new-dawn-for-swedish-business-in-iran.pdf



31 | P a g e

of Roads and Transportation. It was estimated in 2015 that 33 million tonnes

of goods were transported annually by the rail network, 9 per cent of all

transportation in the country.40

Again, travel time for the F&B sector is an important factor to take into

consideration, an indicative list of travel times by train to major towns and

cities in Iran is provided below.

Table 6 Travel times from capital city to major towns in Iran, rail

Tehran Tabriz Mashhad Bandar

Abbas

Bandar Imam

Khomeini

Khosravi

Tehran - 7h 12h 17h 15h 10h

Tabriz 7h - 16h 21h 15h 10h

Mashhad 12 16h - 15h 21h 18h

Bandar

Abbas 17h 21h 15h - 12h 18h

Bandar Imam

Khomeini

15h 15h 21h 12h - 10h

Bazargan 10h 3h 20h 1 day 17h 12h

Sarakhs 12h 20h 2h 17h 1 day 19h

Khosravi 10h 10h 18h 18h 10h -


Distribution

Currently the focus of grocery retailing is on traditional forms of retail in Iran.

Independent outlets (traditional grocery retailers) accounted for 98 per cent

of value sales in grocery retailers in 2016. There is a large number of small

groceries and food/drink/tobacco specialists in the country which are

convenient for shoppers. Bakers, butchers, greengrocers and confectioners were the dominant types of food/drink/tobacco specialist retailers in the

country in 2016. Within other grocery retailers, the Kiosks in the country

(which sell grocery items, among other products) were the dominant format

in 2016.41

There is however a shift occurring in shopping habits and the retail landscape.

Traditional grocery retailers are moving towards more modern forms of

shopping, with independent groceries that have high turnover tending to



https://dlca.logcluster.org/display/public/DLCA/Iran%2C+Islamic+Republic+of 41 Iran Here. “Retail in Iran”. March 2016, available at: https://iranhere.com/retails-in-iran/

https://dlca.logcluster.org/display/public/DLCA/Iran%2C+Islamic+Republic+ofhttps://iranhere.com/retails-in-iran/



32 | P a g e

convert to the supermarket format to fulfil demand and increase shelf space.

Supermarkets and hypermarkets, more modern types of grocery outlets,

continue to increase market share due to price competitiveness and

promotional activities. Consumers however continue to have preferences for

items such as bread, meat and fruit through more traditional channels due to perceived higher levels of freshness and quality.42 Internet retailing of grocery

items is also a small but emerging distribution point in the country, expected

to grow in importance through platforms such as Digikala.com.43

Whilst traditional grocery is clearly dominant in the country in terms of value,

growth in these areas is expected to slow over the next few years, with more

modern grocery formats expected to continue to grow market share.

Business environment

Generally, the business environment in Iran is quite difficult, though there are

several steps being taken to improve in this area by the government. Relevant

authorities have established a “one stop shop” for businesses which should

allow for more simplified administrative procedures. This should be a positive

for EU F&B sector companies looking to do business in the country. However, further steps, such as regulatory reform, are required to increasingly attract

foreign companies and investment. Iran is also characterised by a high level

of state interference in the economy, as well as some red tape, which in some

cases further complicate the environment.44

In comparison with the other 190 countries studied by the World Bank in 2017

it would seem that, relatively, Iran is more difficult to do business in than the

average, given that its 2017 ‘doing business’ rank was 120/190 (more info here). This however does not show the whole picture as there is variation

depending on the topic, for example in the sub-sector “dealing with

construction permits” Iran ranked 27/190.

42 Financial Tribune. “Why Grocery Stores Outnumber Any Other Shop in Tehran”. June 2015, available

at: https://financialtribune.com/articles/economy-business-and-markets/19404/why-grocery-stores-

outnumber-any-other-shop-in-tehran 43 Muftah. “Digikala: An eCommerce Success Story in Iran”. September 2014, available at:

https://muftah.org/secret-digikalas-success/#.WWTiioiGOUk 44 World Bank. “Ease of Doing Business in Iran”. Doing Business Report. 2017, available at:

https://doingbusiness.org/data/exploreeconomies/iran

http://www.doingbusiness.org/data/exploreeconomies/iranhttps://financialtribune.com/articles/economy-business-and-markets/19404/why-grocery-stores-outnumber-any-other-shop-in-tehranhttps://financialtribune.com/articles/economy-business-and-markets/19404/why-grocery-stores-outnumber-any-other-shop-in-tehranhttps://muftah.org/secret-digikalas-success/#.WWTiioiGOUkhttps://doingbusiness.org/data/exploreeconomies/iran



33 | P a g e

Table 7 Iran ease of doing business rank (no./190 other countries)

Overall 120

Starting a business 102

Dealing with Construction

Permits 27

Getting Electricity 94

Registering Property 86

Getting Credit 101

Protecting Minority Investors 165

Paying Taxes 100

Trading across Borders 170

Enforcing contracts 70

Resolving Insolvency 156

World Bank

For further information and insight into doing business in Iran the World Bank’s

“Doing Business 2017” for Iran is suggested, available here.

The legal system in Iran is poorer in quality when compared to other countries in the region, there is also a heavily regulated private sector, as well as

regulatory weakness. An important point to consider for F&B sector companies

looking to enter the Iranian market is the differential treatment given to

domestic versus international investors: international investors are required to

obtain a licence of operation from the organisation of Investment, Economic

and Technical Assistance of Iran.45

The Regulatory Quality Ranking for 2014 of Iran is very low, owing to the high level of state interference in economic activities. This ranking for Iran is in the

bottom ten in the world, as well as regionally in 2014.46

There are a number of positives for the business environment in the country.

This includes ICT which is developing at a strong pace, which would

increasingly facilitate business opportunities. The government has initiatives

to remove the cap on internet speeds and introduce 3G and 4G in the country.

The government is also planning to expand internet services to rural areas via

45 Ministry of Economic Affairs and Finance Organization for Investment, Economic and Technical

Assistance of Iran. “Guidance and FAQs on Foreign Investment in the Islamic Republic of Iran”. Invest in

Iran. 2017, available at: https://investiniran.ir/en/faq 46 World Bank. 2015. Doing business 2016 : measuring regulatory quality and efficiency - Iran, Islamic

Republic of. Doing business 2016. Washington, D.C. : World Bank Group.

http://documents.worldbank.org/curated/en/890901467986376633/Doing-business-2016-measuring-

regulatory-quality-and-efficiency-Iran-Islamic-Republic-of

http://www.doingbusiness.org/~/media/wbg/doingbusiness/documents/profiles/country/irn.pdfhttps://investiniran.ir/en/faqhttp://documents.worldbank.org/curated/en/890901467986376633/Doing-business-2016-measuring-regulatory-quality-and-efficiency-Iran-Islamic-Republic-ofhttp://documents.worldbank.org/curated/en/890901467986376633/Doing-business-2016-measuring-regulatory-quality-and-efficiency-Iran-Islamic-Republic-of



34 | P a g e

deployment of 4G LTE mobile technology.47 . In addition to this, higher

education rates are increasing in the country, a positive for the business

environment, however Iran is still faced with a brain drain problem, which

complicates the business environment further. This is due to educated and

skilled Iranians leaving for better jobs and higher wages.

Consumer profile

Since 1979 Iran has been fairly isolated from the international economy, a

factor which has affected consumer behaviour. Iranians over the past five

years particularly have become more cautious when purchasing items, either

by holding off on impulse purchases or price checking products. Given this historical restraint it is believed that there is a desire for high quality Western

products now that sanctions are being lifted.

The cultural shift in society seen over the past decade is particularly acute in

the young consumer section of the economy. Where in the past dining outside

home was not the norm, the situation is now relatively more relaxed and

younger generations feel comfortable going out to cafes and restaurants where

before they would have organised activities at home. This more relaxed attitude is a positive for EU exporters given that there is openness to Western

goods and services in Iran. In addition to this desire for Western brands, well

off Iranians often look to buy luxury goods as a status symbol.48 Furthermore,

Iranian cosnumers expect the top quality from products as they have been

accustomed to high-qulity products provided at a an affordable price in the past. At the same time majority of Iranian consumers are relatively price

sensitive and look for the products with best value for money.

The diet of the Iranian population varies depending on the region, however

many dishes include fresh meat and nuts,

pomegranate, yoghurt, sumac, turmeric and

saffron. Fruit consumption is relatively high,

whilst eating raw vegetables is not particularly common. Popular dishes include: ‘Chelo Kabab’

(pictured49), a national dish of Iran consisting of

steamed saffron Persian rice and Kabab;

‘Khoresht’, a stew served with Iranian rice;

‘Aash’, thick soup; ‘Kookoo’, vegetable soufflé;

47 “Iran to boost internet speeds, cooperate with Kazakhstan”. TeleGeography, May 2016, available at:

https://www.telegeography.com/products/commsupdate/articles/2016/05/17/iran-to-boost-internet-speeds-

cooperate-with-kazakhstan/ 48 Lens Culture. “Iran’s Booming Consumer Culture”. June 2014, available at:

https://www.lensculture.com/articles/thomas-cristofoletti-iran-s-booming-consumer-culture 49 Image obtained through Wikimedia Commons, available at:

https://commons.wikimedia.org/wiki/File:Kababi_alborz2.jpg ; Copyright ©

Figure 11 Chelo Kabab ©

https://www.telegeography.com/products/commsupdate/articles/2016/05/17/iran-to-boost-internet-speeds-cooperate-with-kazakhstan/https://www.telegeography.com/products/commsupdate/articles/2016/05/17/iran-to-boost-internet-speeds-cooperate-with-kazakhstan/https://www.lensculture.com/articles/thomas-cristofoletti-iran-s-booming-consumer-culturehttps://commons.wikimedia.org/wiki/File:Kababi_alborz2.jpg



35 | P a g e

and ‘Pollo’, white rice with meat or vegetables and herbs.50

A lot of Iranian dishes are a combination of rice with meat, lamb, chicken or

fish with onion, vegetables, nuts and herbs. The consumer profile is dictated

to a certain extent by the distinction that is made between ‘hot’ (lamb, chicken,

fish, sheep’s milk, mint and generally all sweets) and ‘cold’ (beef, cow’s milk,

lettuce, spinach, and generally all sour things) foods, with a balance between hot and cold being considered ideal. Additionally, given the importance of

religion in the country, consumer eating habits are affected by religious

leaders, a clear example of the influence of religion is the banning of the eating

of pork or animals that do not have vertebras.51

There is a growing demand by the consumer in Iran for Western food. In

addition to this there is a shift particularly in the younger generations towards

more convenient foods, for example packaged foods including yoghurts, due to time savings. Traditionally popular, and also time saving, is street food in

the country. Popular dishes in this market for the Iranian consumer include

falafel, Persian Pizza, Shish Kabob and hot/cold soups and stews.52

Alcohol is banned though smuggled often through the port town of Kish. Pepsi

and Coca-Cola amongst the consumer population are popular, in addition to

the domestic version, Zamzam. Here there is a split between younger and

older consumers, with younger preferring these ‘black’ soft drinks, whilst older generations opt more often for orange coloured fizzy soft drinks referred to as

‘Kanada’. In addition to this at meal times the drink ‘dough’ is popular, a

yoghurt based mint drink in carbonated and non-carbonated versions. Tea is

also extremely popular, as is fruit juice. There is a growing demand for milk

based products due to calcium deficiencies that affect many Iranians, as well

as bottled water due to its link with weight loss and healthier skin.53

Bazaars (tradirional markets) are still the favoured palces for Iranian

consumers to shop for food and beverage products. At the same time big shopping malls are also gaining popularity as they offer entertainment together

with shopping. Younger generations are especially drawn towards super- and

hypermarkets as most of the foreign brands get marketed in supermarkets and

hypermarkets.54

50 Food in Every Country. “Food in Iran – Iranian Cuisine”. Foods of the Iranians. Available at:

http://www.foodbycountry.com/Germany-to-Japan/Iran.html 51 Ibid 52 Food Republic. “Persian Food Primer: 10 Essential Iranian Dishes”. 2014, available at:

http://www.foodrepublic.com/2014/10/29/persian-food-primer-10-essential-iranian-dishes/ 53 Trend News Agency. “Iran is world’s largest consumer of soft drinks”. November 2013, available at:

https://en.trend.az/iran/2215398.html 54 Lens Culture. “Iran’s Booming Consumer Culture”. June 2014, available at:

https://www.lensculture.com/articles/thomas-cristofoletti-iran-s-booming-consumer-culture

http://www.foodbycountry.com/Germany-to-Japan/Iran.htmlhttp://www.foodrepublic.com/2014/10/29/persian-food-primer-10-essential-iranian-dishes/https://en.trend.az/iran/2215398.htmlhttps://www.lensculture.com/articles/thomas-cristofoletti-iran-s-booming-consumer-culture


Market Access and Entry: Operating in the Iranian market

36 | P a g e

Market Access and Entry

A number of EU F&B products, including those with GI, are already being

exported to Iran. This includes for example Nutella (Italy), Bavaria non-

alcoholic drinks (Netherlands), Haribo (Germany), Delverde (Italy), Royal

Dansk (Netherlands), Evian (France), Badoit (France), Twinings (UK), Frico

Cheese (Netherlands).

To help you navigate this shifting market, this section includes information on: Cultural Sensitivities; Market Size and Market Share; Growth Drivers and

Trends; Market Access and Entry Strategy; Key Markets by Geography;

Customs, SPS Requirements and Labelling; Status of GI and IP protection;

Role and influence of GCC6 and other regional bodies.

The information contained in this section is designed to be used as a

complement to the product-specific Market Snapshots in Section 4. You can

find a list of F&B products covered by this handbook below.

Beverages; GI products; Fresh Meat; Processed Meat; Olive Oil; Fresh Fruits

and Vegetables; Processed Fruit and Vegetables; Dairy Products; Processed Cereals; Bread, Pastry, Cakes, Biscuits and other bakery products; Chocolate

and derived products; Confectionery; Honey, Gums, Resins and Plant Extracts;

Cotton, Living Plants.


Market Access and Entry: SWOT analysis

37 | P a g e

SWOT analysis

Strengths

• EU already has presence in Iran in the F&B sector, easing awareness of EU products

• EU products in the country are regarded as high quality, driving demand

Weaknesses

• Relativly high pricing for EU products compared to domestic substitutes dampens demand

• Local knowledge in the country is key to success, and not easily established by new entrants

Opportunities

• Increasingly westernised population open to EU products can be targeted

• Growing population with higher disposable income should be increasingly receptive to EU products

Threats

• Iranian government pushes domestic production which could hamper EU entrants

• Trade with ECO may be strengthened, pushing out EU exporters

• Iran has a difficult relationship with the West which weakens certainty in the market


Market Access and Entry: Market information

38 | P a g e

Market information

Cultural sensitivities

Iran is a deeply religious country with the strong majority of the population, 99.4 per cent55, being Muslim. This religious aspect permeates into all aspects

of life, including sensitivities around food and drink.

Islamic decrees forbid the eating of Pork, other foods must be ‘Halal’, products

which are definitely Halal are: Milk (from cows, sheep, camels, and goats);

Honey; Fish; Plants (which are not intoxicant); Fresh or naturally frozen

vegetables; Fresh or dried fruits; Legumes and nuts like peanuts, cashew nuts,

hazelnuts, walnuts; Grains such as wheat, rice, rye, barley, oat. Animals are also Halal, but they must be slaughtered according to Islamic Law (Zabihah).56

Additionally, Alcoholic consumption is forbidden in the country, and their

importation is prohibited.57

The opposite of Halal is Haram (unlawful), products which are Haram are

(some already mentioned above): pigs; blood; carnivorous animals; almost all

reptiles and insects; the bodies of dead animals; Halal animals that are not

slaughtered according to Islamic Law; Wine, Ethyl Alcohol, and Spirits. These

must be avoided by all Muslims.58

Further, reports of supposedly Halal meat containing significant levels of Pork (Haram) in Iran mean that consumers are aware of the possibility that what

they are purchasing is not necessarily what it purports to be, making it even

more important for EU exporters to follow guidelines and show their products

compliance with these local cultural sensitivities.59

Market size, market share, growth drivers and trends

EU exports to Iran in the Food and Beverage category grew just over 11 per

cent during the period 2008-2016, with a varied picture depending on the sub

category. Currently ‘Primary’ food and beverage mainly used for industry is

the most important export, and has over the years experienced highs (2014)

and lows (2010-2011). This category is similar in importance to EU exports as Processed Food and Beverage mainly for household consumption which has

followed an opposite flow to the previously mentioned category in that in 2010-

2011 it experienced a boost whilst in 2013 it was at a low for the period

studied.

55 U.S. Central Intelligence Agency. “Iran”. The World Factbook, 2017, available at:

https://cia.gov/library/publications/the-world-factbook/geos/ir.html 56 Eat Halal. “What is Halal”. 2014, available at: http://www.eat-halal.com/what-is-definition-of-halal/ 57 European Commission. “Iran Fiche”. July 2017, available at:

http://madb.europa.eu/madb/viewPageIFPubli.htm?doc=overview&hscode=2200&countryid=IR#h1 58 Eat Halal. “What is Haram”. 2014, available at http://www.eat-halal.com/haram/ 59Muslim Village. “Scientists Develop New Halal Meat Test”. February 2014, available at:

https://muslimvillage.com/2014/02/01/49491/scientists-develop-new-halal-meat-test/

https://cia.gov/library/publications/the-world-factbook/geos/ir.htmlhttp://madb.europa.eu/madb/viewPageIFPubli.htm?doc=overview&hscode=2200&countryid=IR#h1



39 | P a g e

Figure 12 Value (EUR) of exports of Food and Beverage from EU-28 to Iran over time,

by sub-category

Eurostat60

As seen in the country overview section of this handbook the EU in 2015 made

up just over 11 per cent of world exports to Iran in the Food and Beverage

category.

Generally, the trend in the future in the Food & Beverage sector in Iran is

expected to be positive. A number of factors will influence the outlook for the

category, one of these is the general stance of the Iranian government to

encourage domestic production of products over importation, for example in the Agricultural Food Sector, relevant to Food & Beverage. Iran is also, in the

agriculture / horticulture field, rather self-sufficient, it is estimated that around

90 per cent of products here come from within the country. The economy is

built on a concept of resilience which requires self-sufficiency, this trend is also

likely to impact on EU Food and Beverage importers to the country, in that it is probable that there is stiff competition from domestic companies, as well as

the attitude that domestic is better.61 A growing population in the country also

inevitably means that for the majority of products and sectors, including F&B,

there will be increased demand in the future for products, which is a positive

for EU entrants to the market. A general increase in per capita income also in the country means that consumers have more disposable income, and are also

more likely to try potentially more expensive EU product offerings. The recent

60 Eurostat, available at: http://ec.europa.eu/eurostat 61 Netherlands Chamber of Commerce. “Road2IranXL Conference”. 2017, information is based on the

interviews with companies and trade representatives.

€ 0

€ 100,000,000

€ 200,000,000

€ 300,000,000

€ 400,000,000

€ 500,000,000

€ 600,000,000

€ 700,000,000

€ 800,000,000

€ 900,000,000

€ 1,000,000,000

2008 2009 2010 2011 2012 2013 2014 2015 2016

Va

lue

in E

UR

Primary, mainlyfor industry

Processed,mainly forhouseholdconsumption

Processed,mainly forindustry

Primary, mainlyfor householdconsumption

http://ec.europa.eu/eurostat



40 | P a g e

lifting of sanctions also is likely to continue to boost the prospects for this

sector.62

Market access and market entry strategy

Having a strategy when entering any market in any sector is extremely

important, there are a number of factors to take into consideration in the Food and Beverage sector in Iran, which are generally applicable to other sectors of

the economy as well.

A reliable local partner is seen as possibly the single most important step in

the market entry process. This relationship should ease workings with

government agencies and intermediaries in the marketplace. It goes without

saying that the local partner should have a good understanding and knowledge

of the Food and Beverage sector in the country, but in addition to this good

government contacts are important for the partner to have.63

As a corollary to finding a local partner, within Iran it is important for Food and

Beverage exporters to build trust and personal relationships with the market.

Oftentimes it is the case that on first contact there is simply the establishing

of the relationship, without necessarily talk of business being conducted. This

is an important factor to take into account when thinking about market access

strategy for Iran, a word of caution also however as ‘middle-men’ will be keen to present themselves as invaluable for new market entrants from the EU, all

will not be so. 64

Oftentimes going solo when entering a market is an arduous process, given

the significant amount of local knowledge which is required in order to make

the process a success. This is also part of the reason why domestic companies

are strong in Iran, as they of course have more knowledge about Iranian

consumers, their habits, and the local market.65 To ease entry into the Iranian market therefore it is suggested that Food and Beverage exporters look to join

trade missions (either at the EU or national level) that will help to guide them

through the process. The format of the mission may vary though generally the

main goal is to establish long lasting business collaborations in the country, as

well as to provide legal know-how and advice on market entry strategies.66 Indeed, EU Agriculture and Rural Development Commissioner Phil Hogan will

be leading a Food and Beverage delegation to Iran (and Saudi Arabia) on 7-12

November 2017.

When entering a new market, the question of what representation / presence

to have in the country arises, this is also something Food and Beverage

exporters will want to look at when devising a strategy for the Iranian market.

62 Italian Trade Agency. “Market Overview of Iran’s Agricultural Food Sector”. ICE, January 2016. 63 Netherlands Chamber of Commerce. “Road2IranXL Conference”. 2017. 64 Ibid. 65 “Iran’s Agriculture Machinery and Internal Combustion Engine Market Study”, SGPM Economic and

Business Consultancy, October 2016 66 Netherlands Chamber of Commerce. “Road2IranXL Conference”. 2017.



41 | P a g e

It is believed to be valuable for new market entrants to establish a presence

in Iran with either a local branch or potentially otherwise a joint venture, this

would be an alternative to direct export from the EU. One of the reasons for

this strategy would be tax benefits, The Head of Iran’s Tax Administration has

pointed out that Iran plans to attract EUR 80bn of FDI and is therefore offering tax exemptions ranging from 5 to 20 years. In addition, Iran’s Investment

Organization provides investment guarantees. Having a physical presence in

Iran would also potentially be a first step into other countries in the region.67

Another challenge when entering the Iranian market are the currently still

limited relations between Iranian and European banks, this is even after lifting

of the sanctions against the country. Most large European banks do not process

transactions with Iranian banks because of their exposure to US sanctions. Smaller banks that do not have this exposure do have banking relations with

Iran. Larger banks such as ABN AMRO apply a case-by-case approach although

ABN AMRO has a ‘white-listing’ method which means transactions involving

agricultural products face less difficulties. Large European banks will likely

continue their current approach towards Iran for the next few years.68

Table 8 Selection of Iranian banks with presence or correspondence in the EU and vice versa

European banks with Iranian

correspondent relations

Iranian banks with subsidiary in Europe

KBC (Belgium) Bank Melli (Germany)

Danske Bank (Denmark) Bank Sepah (Germany)

DZ Bank (Germany) EIH-Bank (Germany)

Banque Wormser Frères (France) Bank Tejarat (France)

Banca Popolare di Milano (Italy) Bank Saman (Italy)

Banca Popolare di Sondrio (Italy) Persia Bank (UK)

Oberbank (Austria) Bank Melli (UK)

Raffeisen (Austria)

BCP (Switzerland)

Key Markets by Geography

Iran is split into 31 provinces governed from a local centre which is usually the

largest local city. The most populous provinces, which will be explored in more detail in this section, are Tehran (13.27 million), Khorasan-e-Razavi (6.43

million), Esfahan (5.12 million), Fars (4.85 million), and Khuzestan (4.71

67 Netherlands Chamber of Commerce. “Road2IranXL Conference”. 2017. 68 Ibid.



42 | P a g e

million). Most populated cities correlate to a large extent with size of province,

see country overview section for more data.

Tehran

Tehran is the most populated province in the country and over 60 per cent of

its about 13 million provincial population lives in the capital Tehran (pictured69)

of the country situated in this province of the same name. The province was

proclaimed the capital of the country by Agha Mohammad Khan in 1778. Since

then the province has only grown in importance in the country, today it has roughly 26 per cent of all

industrial units in the country,

accounts for roughly 30 per

cent of the Iranian economy,

and makes up about 40 per cent of Iran’s consumer

market. This province hosts a

large proportion of the total

Iranian population, and at

18,909 km2 is relatively small

especially when compared to provinces further to the West

and South of the country. For

this reason, the province and

especially the capital are likel

the food and beverage market entry handbook: iran · july 2017 prepared by: the food and beverage...

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