While Strauss licks the salmonella wounds, the contestants storm the shelf areas left empty of cow chocolate, spoon-fed, bubbly and a time-out. But it turns out that with chocolate comes appetite: importers who until a few weeks ago could only dream of increasing their market share by a percentage or two, today try not only to grow at the expense of Strauss-Elite, but also to exploit their temporary dominance to profit at our expense.
Here, for example, Diplomat, which markets the main competitors for Strauss-Elite products, led by Milka, has informed retailers that it plans to reduce discounts and price the products. Milka managed to capture close to 20% of the chocolate bar market in Israel, mainly with the opening of the market for parallel imports and with the price adjustment to Strauss, which occupies about 50% of the market. In the weeks since the famous recall, Milka has taken the place of the red cow as the popular chocolate bar in Israel.
TWIX (Photo: PR)Ostensibly, importers had to make do with increasing sales pleasure, but in our trading world there is no contenting with little, but rather the opposite (you choose the definition). We have seen this well in the days of the Corona where many manufacturers and importers took the opportunity to sell us expensively, while now most importers are trying to maximize the unexpected opportunity given to them to make as much profit as possible on existing inventory.
For the protection of importers, it can be said that the ongoing competition with a huge commercial rival, such as Strauss, prevents them from flooding the market with products. For example, one of the major chocolate importers told us: “We plan the import processes based on sales from previous years. Also, according to the seasons, we entered the summer season, where chocolate products lose market share due to being a hot country, and all the goods that arrived “To the country before the Strauss crisis and which was supposed to last until July, it was sold last month. We have been without chocolate products for almost three weeks, and until the next delivery arrives, it will be another month. Such a situation is not good for us as a company.”
Milka donuts (Photo: PR)Who are the competing competitors?
And these are the names of the brands that are now being revamped: Milka and Tobelron by Diplomat, the chocolates Ritter and Tony by Leiman Schlissl, the ego brand by Carmit, Vered Hagalil and Click by Unilever, Chukta by Shestowitz and premium brands such as Godiva by Wissotzky, Lindt by Sids and Belg. Jan and Gunz of KA. Chocolate, on which you can add a few more brands at prices that are less accessible to the average consumer.
The chocolate bar segment stars March brand brands: Sneakers, Twix and March, which occupy a handsome market share alongside Kinder products (which they also recalled before the one Strauss announced), as well as Click products.
In the waffle segment, Leiman Schlissl’s locker is enjoyed, which today occupies more than half of the market, and the two old local brands are pleasant and fun.
In the field of chewing gum are the Mast brands of Elite, Orbit of Mars-Regley and Mentos of Leiman Schlissl, which are fighting for the no-man’s land on the sales floor of the retail chains.
Lemon-flavored waffles without added sugar (Photo: PR)
Waffles Man (Photo: Man)The conversations in the corridors representing the leading brands we have listed are around the viability of raising prices. What is the right thing to do – take advantage of the opportunity?
As we have written here before, a price increase does not have to be a change in the price stated on the packaging. To such a step customers are very sensitive, and they may be angry at the manufacturer or importer who takes advantage of the temporary distress. Thus, the way to earn more goes through a hidden price increase, that is, the abolition of quantity discounts and promotions. The price remains the same price, but the inventory is suddenly worth more money. And there are, of course, more visible increases as well.
Mentos Fruit (Photo: Efrat Eshel)If we pay for Milka chocolate today an average price of NIS 5.30, then in the coming days the price we will pay will be more than six shekels. On a pleasant waffle, which weighs 200 grams and is sold at an average price of NIS 2.80, we will soon pay NIS 3.80. Locker’s favorite Quadrini waffle, which weighs 250 grams and is sold at an average price of NIS 13.50, will soon cost us NIS 15 and more. The impulse products – snacks and chewing gum – will remain at the same price, but the frequency of these products for a quantitative purchase that changes the price is high. That is, a single snack can cost six shekels, and on a regular average sale it is sold at half price, for example three units for nine shekels. It is enough for the sale to change to three units for NIS 12, and there will already be a 33% jump in the price. That means formally prices have not gone up, we will just pay more.
Waffles Man (Photo: Man)The taste of centralism
Old centralization is usually better than new centralization: the old one is created by high consumer demand over the years, while the new one is caused by a jump following a sudden success. Just as not every person knows how to behave wisely with a huge amount of money landed on him, so do those who benefit from the new centralization. They hope that their brand exposure will translate into an increase in market share in the long run as well, but in practice they fear that the lack of popular and familiar taste will only make consumers miss it and long for its return.
Cow chocolate, dawn spread, cottage cheese, bamba, tortilla and valley cheese are just some of the products that can be defined as Israeli home products, and an international brand, even one that is considered to represent high quality, will have a hard time replacing Israeli taste.
Click snack (Photo: SWEETWEET)The mythological dawn spread preserves its taste and packaging for fear that any change may cause an unwanted reaction from the consumer. Although Nutella spread has gained a respectable market share over the years after many decades in which Dawn has starred alone, it turns out that this is a very tough market and we do not easily get new products. Various branded spreads have penetrated the local market – Unilever has previously developed a Click spread and Strauss-Elite has launched a spread, a cow spread and a time-out spread – and yet competitors, despite their size, operate mainly on the margins.
Twix Snack (Photo: March Israel Press)Look for the SAG
However, the status of a local heroine also has a price, as Strauss now reveals, one of the oldest companies in the Israeli economy that is going through a complex and not simple process. By the way, most of the damage is not health, since after the tests it turned out that the panic was much higher than the failure that was actually examined. The question is “Why did consumers and the audit authorities storm the Strauss-Elite company, while foodborne illnesses and symptoms are common and everyday?”.
In any case, the default is not just Strauss’. The Ministry of Health is also responsible. But in the encounter between two giants – one commercial and the other governmental – there is a tendency to look for the SAG and roll the responsibility on it.
Locker 118 g (Photo: sand pressure)
Ritter (Photo: Ritter Sport)This could have been a good time for Strauss’s competitors, who could operate out of a strategy that would lead to controlled growth and significant growth while strengthening the brand. Unfortunately, most will probably get drunk on the smell of fast money. We saw this in the presentation of the alternative products in the pasta protest against Osem: the cheap brands did remain cheaper than the well-known brand, but very quickly reduced the gaps. The same thing is happening today on the shelves that Strauss-Elite reluctantly vacated: the smaller brands are trying to snatch as much as they can, without thinking about the consumer, who might have kept their faith even with the return of the dominant competitor.
The author is the CEO of the Institute for Retail Research