Israeli Supermarkets Are Toughening Terms, Supplier Say

Israeli vendors are complaining that large retailers are trying to squeeze them with excessive demands for extra payments.

Battles between supermarket chains and their suppliers over terms of trade are fairly common, but vendors are now complaining that large retailers are trying to squeeze them too far with excessive demands for extra payments.

Claiming they can’t afford to accede to the demands, some say they’re considering taking the matter to the antitrust commissioner. Super-Sol’s demands for better trade terms have apparently been mainly targeted at its small suppliers.

“Super-Sol asked us to improve their terms of trade with a fee for stocking products on the shelves at its branches and for their logistics center, both of these paid from a percentage of sales,” said a small food supplier who asked not to be identified.

“They tend to grab at whatever they think provides a better chance of getting what they want. Super-Sol, for instance, knows that a supplier of my size can’t independently distribute products to more than 200 branches and therefore needs to use their logistics center. They asked us for up to 5% more for the two fees but we settled on a smaller hike following negotiations.”

Another smaller vendor said Super-Sol management told him the supermarket chain, Israel’s biggest, was losing money on stocking his products and that they’re completely reorganizing everything dealing with shelf placement and distribution.

The retailer demanded several percent more on the fee for stocking his products, he said. “In the end we settled in the middle.”

Super-Sol said it refuses to discuss its terms of trade with suppliers.

But most of the enmity of suppliers is aimed these days at Bitan Wines, which recently acquired the Kimat Hinam retail chain, turning the company into one of the country’s largest. Vendors say they are faced with countless charges and demands from the chain, which is owned by Nahum Bitan.

“We stopped working with Bitan Wines after finding their insane demands unacceptable,” said Moshe Wideberg, owner of the Hashahar Ha’Ole brand of chocolate spread. “They asked NIS 20,000 for converting the outlets [to the new brand] where I sell a total of NIS 60,000 a year. Nowhere in the world is there such a thing where suppliers are forced to pay such amounts if a branch changes its name or format.”

Wideberg said his company’s goods can still be found on the shelves at Bitan Wines, but only because the chain buys it from wholesalers. “We don’t conduct our relationships with customers through the media,” responded Bitan Wines.

Meanwhile, the Israel Consumer Council said yesterday it found price differentials for fresh produce had widened to as much as 25% between supermarkets and open-air markets.

The organization sent out inspectors last week to gauge prices ahead of the Passover holiday. They visited 161 supermarkets, 34 greengrocers and eight open markets where prices were compared on potatoes, tomatoes, cucumbers, dry onions, carrots, lemons, apples and bananas.

The basket of products averaged 22% more at greengrocers and 25% more at supermarkets than it did at the market stalls, the team found. Tomatoes, though, were 35% more expensive than open market prices at fruit and vegetable stores and 33% pricier at supermarkets.

The largest gap was for Granny Smith apples, which averaged NIS 8.04 a kilogram at the supermarkets, 40% more than the average NIS 5.72 price at the markets, the council said.

Eliyahu Hershkovitz