Israeli supermarket shoppers are spending less on food this year, with products previously targeted as health concerns bearing the brunt of declines, retail research data show.
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Food sales at 2,150 stores monitored by Storenext were down 2.5% in the first four months of the year, compared to the same time in 2015. Sales in the run-up to the Passover holiday in April – a peak time for food spending – were 1.1% less than the same time last year, it said.
Industry sources say the top line figure understates the extent of the problem, especially as Israel’s population grows about 2% every year – an automatic increase in the number of mouths to feed.
“A drop of 3% in food sales is a horrible figure, mainly because we’re talking about food – a basic product that people need,” said one industry source who asked not to be identified.
“The fact that the economy is slowing is causing people to buy less. People are also feeling pressure – people think about the money they’re spending,” said the source. “Anyone who doesn’t come offering good value or something new is ignored, even if it’s an old, established brand.”
Israel’s biggest food maker, Tnuva, has suffered the biggest drop of all the top food manufacturers and importers, with sales dropping 8.1% year on year in the January-April period, shrinking the company’s market share to 13.2% from 14%.
Tnuva has had a host of problems that explain its drop in sales, among them the fact that this year’s Passover holiday fell in the last week of April. Dairy sales tend to fall before and on the holiday and recover the week after, which this year occurred in May (after the survey period).
In addition, Tnuva attributed the declines to the fact that controlled prices of dairy products were cut twice in the past year.
But industry sources said Tnuva’s problems run deeper. “We’ve already seen for the last several months that Tnuva hasn’t been able to reverse the deterioration in its condition,” said one source. “If Tnuva doesn’t recover by the Shavuot holiday [a time when people traditional eat dairy products, this year in June], it could end up being its worst figures in the last two decades.”
Two other dairy companies saw their sales rise in the fourth months – Strauss by 1.9%, and the tiny Gad Dairies by 5.9%. This suggests some of Tnuva’s sales are being lost to its competitors.
However, industry sources said food sales have taken the biggest hits in categories that have seen health warnings in the past few months. Sales of processed meats, like salamis, were down 27% year on year, or 90 million shekels ($23.7 million), in January-April. Meanwhile, those of prepared salads, including hummus, tumbled 81.2%, according to Storenext.
Meat processors and importers have been cutting production and staffing, and developing new products without preservatives. At market leader Soglowek, CEO Pini Kamari initially delayed plans to step down, in order to deal with the crisis. Last week, however, he announced that he would finally leave.
Processed-meat sales were partly hurt by the late holiday season, which not only delayed Passover but also saw the big meat-eating holiday of Independence Day fall in May, not April. But sales of processed meats have been in decline since the World Health Organization issued a report last October equating eating processed meats to smoking cigarettes as a carcinogen.
A Soglowek spokesman insisted that the company’s sales were improving, and said it was readying 12 million hotdogs and 2.5 million hamburgers and kabobs for Independence Day this week.
Sales of prepared salads were hit by a February exposé on Channel 10 television over the salads’ poor quality. Industry sources said people are now making hummus and other salads at home or buying fresh products from delicatessens.
Hummus sales, in particular, have been hurt by falling meat sales, since the spread is often used as an accompaniment to meat.