Unilever Israel price cuts an illusion

Yesterday's price cuts on food items are only a fraction of the price hikes made in the past year.

An investigation by "Globes" has found that Unilever Israel Ltd. sharply raised prices of food items in the past year - by far more than the price cuts announced yesterday. Moreover, the new prices listed in the announcement are the average consumer prices according to Nielsen Ratings, implying that actual prices may be higher for some products.

Unilever Israel is apparently trying to accrue the price of competition between large supermarkets at the expense of small retailers who pay it full price for its products.

Unilever Israel raised the price of Blue Band margarine 51.6% since March 2008, including two hikes of NIS 0.68, or 25.4%, in the past year. It has now cut the price by 6%, or NIS 0.21. In the past year, it has raised the price of a 500-gram jar of Telma mayonnaise by 17.6%, and now cut the price by 7.5%. The company announced that, according to Nielsen Ratings, the average consumer price of this item is NIS 11.20 (including VAT), but the "Globes" investigation found that the actual price is NIS 11.35 per jar.

Unilever Israel also raised the price of Hellman's Real Mayonnaise by 21.5% in the past year, it raised the price of non-dairy creamer by 16.5%, and the price of mustard by 8%. It has now cut the price of mustard by 5%. The company did not cut the price of its low-fat mayonnaise, Mayokal, after raising the price by 17.7% in the past year.

Unilever Israel said that it was cutting prices by up to 10%, whereas in practice the only item reduced by that amount is jams - a negligible item in terms of consumers' purchases.

Unilever Israel's prices cuts are effectively meaningless. The company did not cut prices for items that account for a large proportion of its sales, in particular breakfast cereals. The company dominates this sector and its prices in Israel are higher than in Western countries. The company took care to cut prices on items that have only a marginal effect on the company and consumers, such as jams and mustard.

Published by Globes [online], Israel business news - www.globes-online.com - on October 11, 2011

© Copyright of Globes Publisher Itonut (1983) Ltd. 2011

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