The Nielsen Report published for the first half of 2014 provides further proof of a slowdown in the market. The marketing chains and suppliers have redoubled their bargain campaigns, especially of food products, in an attempt to induce the consumers to buy. This effort follows a prolonged slide in consumption since the beginning of the year.

19% of all food items sold this year were sold at bargain prices, the highest proportion in recent years. For the sake of comparison, note that even at the time of the social protest, the proportion of items sold at a bargain price was only 18%. The many bargains have made the actual consumer prices lower than in 2013, and closer to the prevailing prices during the social protest three years ago. Excluding the increase in VAT, the current prices are even lower than during the social protest. It should be stressed that the low level of prices is due solely to the aggressive bargain campaigns triggered by the fall in purchases by the consumers. Despite the agreements with the marketing chains, all the food manufacturers have raised their prices since the social protest.

Despite the bargains, quantitative sales are still stagnating, resulting in a real drop in consumption, in view of natural population growth. For the first time since the social protest, the fast moving consumer goods market (FCMG) was down 1.2% in money terms, despite the VAT hike. Food sales were down only 0.5%, but beverages were off 3.3% in money terms and 1.9% in quantitative terms.

Despite general price slide caused by bargains, the average consumer basket price rose, because the private brands have weakened, while the leading brands have become stronger. The reason is that the price gap between the leading brands and the private brands has narrowed to an average of only 16%.

Published by Globes [online], Israel business news - www.globes-online.com - on July 17, 2014

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