Snack foods sell for half-price in Arab sector stores
You don't have to fly to the United States to buy Israeli products at half price.
You don't have to fly to the United States to buy Israeli products at half price, it seems: Israeli snack manufacturers sell their products at stores catering to the Arab community for significantly less than at shops throughout the rest of the country.
Shoppers at Arab Israeli and Palestinian stores pay as much as half of what shoppers pay at other stores in Israel, TheMarker found.
Take, for example, Pesek Zman, which sparked the latest round of protests and boycott calls against manufacturer Strauss, after a consumer photographed the candy bars selling for half the Israeli price at a supermarket in New Jersey. In Nazareth's Shimshom market and Baka al-Garbiyeh's Zohari Supermarket, for instance, you can buy one of these bars for NIS 4.50; in Ramallah's Barabo you can find it for NIS 5.
Stores in Jewish communities are selling the candy for significantly more. Mega in the City sells each bar for NIS 6.30 - which is 40% more than the price in Nazareth and Baka al-Garbiyeh.
Discount chain Super-Sol deal sells Pesek Zman for NIS 4.99, while King Store, a discount chain catering to the Arab sector, sells them for NIS 4.49 each.
Similar price gaps were found among other Strauss-Elite chocolate products, including Mekupelet bars, which cost NIS 3.99 in Nazareth versus NIS 5.80 at My Super-Sol - a 45% difference.
The stores in Nazareth and Baka al-Garbiyeh also sell 100-gram bars of Para chocolate for NIS 6, versus NIS 7 at My Super-Sol and Mega in the City.
Strauss' competitors also apparently sell products for less in Arab communities. For instance, 75-gram bags of Klik chocolate snacks cost NIS 8 at Mega in the City - but only NIS 4 at corner stores in Baka al-Garbiyeh. Arab discount chains were also selling Klik for less than their competitors around the country: NIS 4.49 at King Store versus NIS 6.50 at Super-Sol Deal - a 44% difference.
Imported candies such as Mars and Twix sometimes cost twice as much if not more in stores catering to Jewish residents: They cost NIS 6.50 each at Mega in the City, versus NIS 3 in Ramallah and NIS 3.50 in Nazareth. The local distributor, for both Jewish and Arab sectors, is Sides.
Arab-sector supermarkets have turnover of NIS 5 billion to NIS 6 billion a year, which is 10% of the total Israeli market, according to economic consulting firm Czamanski Ben Shahar. The Arab sector has 420 stores covering a total sales area of 52,000 square meters. Most of these stores are family owned. Mainstream Jewish stores haven't really penetrated this sector, say the firm's researchers.
King Store owner Bilal Salah said he wasn't surprised to find that Arab stores were cheaper. "Manufacturers don't have a special price list for the Arab sector, and we definitely receive fewer discounts than chains like Super-Sol and Mega, but we work on a very low gross profit margin of 13% - half of Mega's and Super-Sol's," he said. "And we're living quite decently on this."
The Arab stores lack the fancy headquarters and high executive salaries found at the big nationwide chains, he added.
There are other reasons for the discrepancies as well, say the consulting firm's Tamir Ben Shahar: Arab stores often pay for goods in cash, and buy products near their expiration date. They also have lower living and labor costs, occasionally because they employ family members without giving them social benefits. Some business owners also don't pay taxes.
When questioned, food manufacturers were quick to blame to supermarket chains. A senior sector source says that all the stores buy goods wholesale at more or less the same price, and that the price differences to consumers are directly related to the stores' profit margins.
For their part, the stores foisted the blame on the manufacturers. A senior source at a grocery-store chain says manufacturers sell their goods to Arab-sector stores for less since this sector has no brand loyalty.
Strauss and Unilever stated in response that they have one price list for all sectors. Sides, Mega and Super-Sol declined to comment.