Two months after the World Health Organization warned on the cancer-causing dangers of processed meats and sausages, the announcement has hit the industry’s workforce. Sources inform “Globes” that processed meat manufacturers are reducing the workload at their factories, and some are terminating employees.
Between November and December of 2015 the two months after the announcement sales for all sausages (including processed meat products) dropped sharply by more than 25%.
The company hit hardest is Soglowek, the largest player in the market. Within two months, Soglowek’s sales for the product line dropped 35% a loss of NIS 22 million at market prices. Soglowek is currently laying off 35 employees.
Meanwhile, Soglowek launched several new products in a bid to jumpstart sales, including preservative-free sausages even though those were still included in the WHO definition of processed meats. Soglowek also manufactures baked goods and meat alternatives; it is currently launching falafel sticks, a pre-made frozen food item.
The company said in a statement: “Soglowek has been conducting an efficiency review for a year, during which 35 workers were terminated out of 850 employees. Following the launch of preservative-free meat products and sausages last week, we are already seeing an improvement in sales for the category.”
The second player in the market, Tirat Zvi jointly held by Kibbutz Tirat Zvi and Tnuva also saw its sales hit, by 20.3%, in two months a market value of NIS 8.7 million. The company chose to reduce work hours following the drop in sales.
Maadaney Yehiam sales dropped by 26.4% while Of Tov sales took a similar hit (23.6%).
Maadaney Yehiam has 160 employees. The company’s factory, which generally operates 6 days per week, reduced its operations to 5 days per week. To avoid letting go of workers, the factory management decided to reduce the work of all employees meaning some workers dropped down from full time which directly impacts their compensation.
A source in Maadaney Yehiam’s factory said the plant’s export operations were barely affected.
Regardless, it is unclear whether the current measures undertaken by the industry will be enough to withstand the crisis, which seems unlikely to pass. The sharp drop in sales is expected to hit the manufacturers’ bottom lines; if it continues, it may send some of them into the red.
“The intensity of the crisis continues. It will not be simple,” said a senior industry insider to “Globes”.
Published by Globes [online], Israel business news - www.globes-online.com - on January 12, 2016
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