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Osem is hiding behind the fact that it is a private company, and the public can not know how much it was affected by the rise in the price of raw materials, or benefited from the fall in the dollar rate that was not passed on to the consumer.
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Tnuva CEO Eyal Melis, Osem CEO Avi Ben Assayag and Shufersal CEO Itzik Aberkhan. Consumers will buy less
(Photos: Uriel Cohen, Abigail Uzi, Itzik Shokel)
Strauss, Unilever and Diplomat announced about six months ago that they are considering raising prices, in order to cope with the jump in shipping costs and the prices of some of the raw materials. The Competition Authority’s investigation conducted in recent weeks on suspicion of violations of the Economic Competition Law and in which the heads of these companies were interrogated under warning, froze the intention, but it can be estimated that the price increase in the barn paves the way back to the original plan.
Osem’s move is about three years after it announced an increase in prices and returned a few days later. This follows consumer protests and threats to confiscate its products, which were accompanied by a pressure roller exerted on the company’s heads by then Finance Minister Moshe Kahlon. A week after announcing at that time a price increase of a third of its products by up to 4.5%, Osem withdrew it and withdrew its request to raise prices. In the present case, Finance Minister Avigdor Lieberman, who has led prices that have skyrocketed prices in recent months, does not have the legitimacy that Kahlon had, which is struggling with rising prices.
Osem, which in recent months has reduced discounts, as compensation for the price increases it has absorbed, informed retailers yesterday that it will increase the price of hundreds of products in the categories of coffee, pasta, salty snacks, ketchup, sabra salads, cakes, vegan and gerber at various rates between 4% – 7%.
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Production line at the Sderot barn factory
(Photo: Amit Shaal)
The company stressed that the prices of Materna products, baby milk compound will not go up. It can be estimated that Bassem, which controls the Materna brand with 76.3% of the baby milk substitute market and 49.2% of the milk substitutes market, refrained from raising the prices of these products, for fear of a harsh reaction from the competition authority. At 78.4% of the tea market. It can be estimated that in the barn, there is a fear that a possibility that was examined about seven years ago, and was rejected, to declare Materna and Similac a concentration group, will once again exceed the agenda of the commissioner, who is expected to be appointed today.
Osem’s move is set at a convenient time for it, against the background of the atmosphere created by the retailers who declared in October that the jump in transportation prices will lead to a surge in prices. Those who hurried to act were Snow and Shastowitz, the prices of some of their products at a rate of about 10%. These increases were recorded after the prices of disposable utensils skyrocketed last month, following the imposition of a purchase tax of NIS 11 per kilogram. From last month, it also applies to the large beverage containers, which will lead to the prices of beverages rising next week from about NIS 6 per 1.5 liter bottle to about NIS 9, including the deposit fee, purchase tax and VAT.
The leap will not stop there and it is expected to expand into the milk refrigerators. In the near future, prices of regulated dairy products are expected to rise by 3.5% -8%, following a request from Tara to the Prices Committee, against the background of rising raw milk prices. The rise in the price of dairy products under supervision usually leads to a rise in the price of all dairy products at a similar rate.
The reduction policy pursued by Osem and other suppliers in recent months has led to a decline in consumer shopping. As revealed in “Calcalist”, the Sterncast price index recorded a 2.9% increase in October compared to October last year, reaching a peak since the index was launched 5 years ago. The jumps were recorded, following a sharp reduction in discount operations in the market. While in 2020, 22.1% of sales in the industry were of products on discount promotions, in October only 15.3% of sales were under sale. In response to rising prices, sales of the food, beverages, toiletries and cleaning products recorded a decrease of 6.2% in October-November.
These data indicate consumers’ sensitivity to price increases and therefore, what is now required of retailers, headed by Itzik Aberkhan, CEO of Shufersal, which controls the industry, is Yad Barzel. He must demand from Osem an explanation for the increase in prices in each of the categories. Approval for a sweeping price increase will make him a partner in the move, and he will be the first to get hurt: reducing consumption next year is almost unquestionable. The consumer will not be able to continue buying the same quantities, when prices will skyrocket. Abercrombie will be able to influence the degree of reduction in consumption.
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