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It is estimated that the investigation of Weiman and other officials at the Competition Authority’s diplomat earlier this month on suspicion of violating the Competition Law was based, among other things, on the company’s statement in the second quarter report that it is considering price increases due to rising transportation prices. For different options, and if necessary, check the update of selling prices. ”
In the current report, as stated, the company has changed version. Diplomat writes that in the past year there has been a damage to the global supply chain resulting from a shortage of containers, which is causing a sharp rise in sea freight prices.
But unlike the previous report, this time a diplomat noted that it is taking action to prevent price increases. In her opinion, with the clarification of the facts, it will become clear that the conduct of the company’s senior executives did not go unnoticed.
Weiman, as mentioned, is not alone. Strauss, the second food company in Israel, was the first to propel the expected leaps in food prices. In its first quarter reports it noted that
“In light of the increases in the prices of some of the raw materials and in the prices of sea transportation, the company is preparing for various options … and in some cases, and in accordance with the policy, it will consider updating sales prices.” In its reports for the summary of the third quarter, which were published exactly one week after the Competition Authority’s investigators raided the company’s offices and the investigation of the group’s CEO Giora Bar-Dea, the possibility of raising prices was no longer mentioned. The company stated that it “works to reduce the effects resulting from the volatility of raw material prices … Also in certain geographies and in certain products, some of the group’s companies have updated the selling prices to its customers.
Not only food manufacturers and importers were put off by the intensity of the public reaction that led to their intention to examine the possibility of raising prices. Eyal Ravid, CEO and controlling owner of the Victory chain, also changed his style after visiting the Competition Authority’s investigation room. Ravid was the first to warn of a surge in prices. In a Facebook post, he wrote about a month ago: For starters, the government passed a new tax on disposable utensils alongside an additional tax on sugary drinks. These are just some of the factors that will weigh on the pockets of all of us … “With products from the Far East, they cost NIS 7,500 and today the price is already NIS 59,000 per container. From Europe, the price has jumped from NIS 2,500 to NIS 17,000 per container, and all of us’s wallets will absorb all of that.”
However, in the reports for the summary of the third quarter, various chants were heard, with the company noting that “the company has made and still makes every effort to maintain a cheap product basket for the consumer and not raise prices, despite other inputs such as property taxes, transportation prices and computer expenses.”
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Right: Diplomat CEO Noam Weiman and Strauss CEO Giora Bar-Dea. A visit to the investigation rooms of the Competition Authority had a chilling effect
(Photos: Tommy Harpaz, Keren Ben Zion)
Although a decade has passed since the social protest, it seems that its influence on the main factors in the food market has not expired. It was the intensity of the public response to the feasibility study of raising prices that led the heads of the companies to look for alternative ways of dealing with the increase in expenses, first and foremost, the implementation of efficiency plans and the examination of procurement sources.
Although there is no guarantee that this will continue, and as early as this morning the prices of Snow and Stowitz products are expected to rise, but at least in the near term, it seems that the plans to create a public atmosphere that will understandably receive a wave of price increases have failed.
As for the diplomat, which is controlled by the Mandel-Weiman families and managed by Noam Weiman, it ended the third quarter with a decrease in sales and a 13.6% reduction in net profit, which amounted to NIS 21.9 million.
The sales of the importer of international brands such as Gillette, Heinz and Procter & Gamble, decreased by 5% and amounted to NIS 677.8 million. This, according to the company, is mainly due to the behavior of the Israeli market, the shortage of working days during the Tishrei holidays, and also due to a shortage of product inventory due to problems with shipping lines and ports.
Sales in Israel decreased by 8.2% in the quarter to NIS 389 million and operating profitability in Israel decreased to 5.2%. In addition, the company’s sales worldwide were reduced due to a change in the company’s work model in South Africa, after Procter & Gamble, whose products are distributed there by a diplomat, handed over some of its operations to Lydia; And yes, due to the impact of the exchange rates of the South African rand.
The company’s gross profit decreased by 1.9% and stood at NIS 141.2 million. Gross profit improved slightly to 20.8% of sales, compared with 20.2% in the corresponding quarter. The company faced an increase in storage, wages and depreciation expenses in the quarter, which led to a decrease of 18.6% in operating profit, so that its share decreased to 4.6% of sales, compared with 5.3% in the corresponding period last year. The impairment in operating profitability was recorded in all countries in which a diplomat operates, including South Africa, Georgia, New Zealand and Cyprus.
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