Testimony: Israeli Firm Paid Another Not to Stock Cadbury Products

Food company Strauss, which has merged with Elite, says it will prove this claim by an importer wrong in court.

Reuters

Supermarket chain Hatzi Hinam said candymaker Elite paid it not to stock Cadbury chocolate, according to a former vice president of sales at importer Carmit, which sought to import Cadbury to Israel.

Carmit is suing Strauss, which has since merged with Elite, over the issue. Carmit is arguing that Elite illegally took advantage of its monopoly over Israel’s chocolate market to block Cadbury’s entrance in 2002 and 2003. At the time, Elite was a Strauss subsidiary.

Lod District Court Judge Hadas Ovadia cleared Carmit to submit statements from two new witnesses a week ago. The statements had not been accepted earlier amid objections by Strauss.

Sources close to Carmit said that after Strauss argued that Carmit’s poor management was responsible for any shortcomings, Carmit’s then-vice president of sales, Yossi Bijawi, agreed to testify.

In his statement, Bijawi said Cadbury’s launch was very successful, outpacing goals set by Carmit. In January 2002, three weeks after the launch, Cadbury was available at 5,000 sales points, including at 500 supermarkets, he said.

“Based on this, and based on other documents from that time, it’s clear that Strauss’ claim that Carmit’s distribution network was inefficient is untrue,” he wrote. Some 77% of the wholesale customers who bought Cadbury products said they intended to make another purchase, he added.

Bijawi said Carmit ran into a problem when it tried to bring Cadbury products into Hatzi Hinam, the largest private supermarket chain at the time.

“Despite my repeated approaches to Hatzi Hinam … representatives repeatedly refused to sell Cadbury products, stating that Elite had paid them significant sums to compensate them for not stocking Cadbury,” Bijawi wrote.

As early as December 2002, he started hearing rumors about “actions and threats by Strauss’ sales staff toward retailers, in an attempt to illicitly pressure them not to work with Cadbury.” At the time, Carmit interpreted these comments as nothing more than rumors, not as an organized plan by Elite, Bijawi said.

But in January 2003, Carmit drafted a list of kiosks and small stores that had allegedly been threatened by Elite regarding Cadbury. Within two weeks, the importer realized that at least 74 stores had pulled Cadbury products from their shelves, allegedly due to threats by Elite sales representatives, Bijawi said.

Meanwhile, wholesalers reported that Cadbury products were being returned “without any logic, since Cadbury products hadn’t even gone out on the shelves and consumers hadn’t been given a chance to judge them,” he testified.

Wholesalers reported to Carmit that retailers had been told that if they kept stocking Cadbury products, Elite would stop offering them discounts, Bijawi said. Cadbury sales dropped from 2.5 million shekels ($720,000) in January 2003 to 1.05 million in February and 350,000 in March, he added.

For its part, Strauss said Carmit had submitted its evidence long ago and that the testimony stage of the trial had ended. The company intends to prove Carmit wrong in court, it added.