Seeing Red: Israeli Food Maker Claims Heinz Ketchup Isn’t the Real Thing

In a warning letter, Osem claims that the 138-year-old brand defrauds consumers. Two lawyers file a class action on behalf of consumers.

H.J. Heinz Co.

It looks like ketchup and tastes like ketchup, and for much of the world it’s even synonymous with ketchup.

But according to Israeli food maker Osem, the stuff that H.J. Heinz Co. makes isn’t ketchup, at least according to Israeli standards.

In a warning letter to the country’s supermarkets this week, Osem claimed that a lab test it conducted showed that the Heinz ketchup distributed in Israel contains only about 20% tomato concentrate, much less than the 61% minimum required by Israeli regulations.

That’s not all. Osem claimed that Heinz’s 907-gram (32-ounce) bottles are labeled as containing 39% tomato concentrate but were found in lab tests to contain just 17%.

That, the company said, meets standards in the U.S. and Europe but not in Israel, which requires ketchup to contain at least 10% tomato solids. Osem says tomato concentrate must make up at least 35% of the product to reach that level.

Osem, whose brand of ketchup is Israel’s top seller with a 66% market share, asserted in the letter that marketing the Heinz product as ketchup amounts to consumer fraud.

In addition, two lawyers, Yaacov Spiegelman and Amit Ido, have filed a motion for a class-action suit on behalf of consumers who purchased Heinz ketchup in Israel over the past seven years. The lawsuit seeks 73 million shekels ($18.5 million) in damages.

Tempest in a tomato patch?

Diplomat Group, which distributes Heinz ketchup in Israel and also received the warning letter, on Tuesday claimed that the lab tests must have produced erroneous results. But even if they were correct, Diplomat contended, the regulation Osem is citing is not binding on Heinz ketchup sold in Israel.

“Heinz ketchup is sold as ketchup in 130 countries, but according to Osem, in Israel it’s not legal,” the company said. “It’s clear that monopolistic Osem would be happy if only its product could be sold in Israel, but Osem’s claims are without substance. It is relying on a standard that is not official and is not mandatory. This determination is backed by a legal opinion.”

Diplomat added that H.J. Heinz Co., which is based in Pittsburgh, Pennsylvania, had assured it that the labeling on Heinz ketchup sold in Israel is accurate in stating that the Heinz product contains 39% tomato concentrate.

And Diplomat said that Osem - which is controlled by the Swiss foods giant Nestle - has not provided the laboratory results on which it is basing its claim.

The testing, Diplomat claimed, produced an estimate rather than data from measurement equipment.

According to the website at Heinz, which is controlled by Warren Buffett’s Berkshire Hathaway and by the New York investment firm 3G Capital, the company started selling ketchup 138 years ago, in 1876.

It sells more than 650 million bottles of the stuff annually in more than 140 countries, booking sales of more than $1.5 billion.

Diplomat recently began distributing 700-gram bottles of the iconic ketchup brand, sitting alongside Osem’s 750-gram bottles. The similarly sized Osem and Heinz ketchups now sell for about the same price at discount supermarket chains, although the Osem bottles contain 7% more ketchup.

If Osem is seeing red over Heinz, Israel’s supermarkets aren’t.

“I don’t understand what the idea is here,” one senior grocery chain executive, who asked not to be identified, told TheMarker.

“It’s not fair on Osem’s part. If you have a problem, then address it to the [responsible] regulatory agency and not to the supermarket chains themselves.”