Is Unilever justified in raising its prices? TheMarker has found that products made in third countries cost dozens of percentage points more in Israel than in Britain. And Unilever Israel often sells products to retailers for more than what British consumers pay at stores.
TheMarker checked products whose prices Unilever plans to increase on October 10. On Thursday evening, demonstrators held protests against the company and its pricing in major cities around the country.
Most of Unilever Israel's products, particularly food products, are made in Israel. But it also makes many bath and beauty products in countries such as Turkey, Mexico, the United States and Germany. Unilever says it's raising prices following "an extended period during which the company absorbed higher prices for raw materials and packaging," as well as higher production costs for inputs such as electricity, water and fuel.
But when it comes to products made abroad and imported to Israel, consumers here are already paying significantly more than their peers in other countries.
For instance, a 50-gram stick of Axe deodorant made in Mexico costs the equivalent of NIS 15.20 in Mexico and NIS 25.59 at Super-Sol - 68% more. Unilever Israel charges retailers NIS 19.35, which is even more than what British consumers pay. Unilever plans to raise the wholesale price to NIS 22.26.
Unilever occasionally gives local retailers discounts. Sources at the country's chains said discounts may shed 25% off the wholesale price. But even if you knock 25% off the wholesale price and factor in VAT, Israeli consumers still pay more than their British counterparts.
A six-pack of Dove soap costs nearly twice as much in Israel as it does in Britain. Israelis pay NIS 20 at Super-Sol Deal, while the British pay about NIS 10 at Asda. Unilever currently charges retailers NIS 18.60, which it plans to increase to NIS 19.72 on October 10. Even if you presume that retailers occasionally get a 25% discount and factor in VAT, the end price to Israeli consumers would still be NIS 16.30, significantly more than what the British pay.
"This means Unilever plays a decisive role in how expensive products are in Israel - and you can't just blame the retailers," said Ronen Regev-Cabir, deputy director at consumer rights NGO Emun Hatzibur. "Such significant price differences cannot be explained by the size of the Israeli market or shipping costs. The explanation lies in Israel's low level of competition."
Unilever begged to differ. "Comparing a handful of prices at specific stores in Israel and Britain at a specific moment in time is not the right way to do things. It does not reveal the real picture," the company said.
"In addition, the products we import are manufactured abroad, therefore transport costs affect the final price. In any case, the price consumers pay is ultimately set by retailers, not us."
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