Israeli Food Giant Slowly Recovering From Salmonella Scare

Thanks to deep discounting, sales of Unilever's Telma breakfast cereals are gradually rebounding.

Cereal boxes photographed at a Jerusalem supermarket on June 19, 2016.
Ronen Zvulun/Reuters

Israeli shoppers are quickly putting the salmonella scare behind them.

A survey of food retailers by TheMarker found that sales of Telma breakfast cereals by Unilever Israel — the company whose contaminated cornflakes set off the scare in August — are gradually recovering, although they are still down by double-digit percentage points from pre-crisis levels.

Meanwhile, in a poll this week of consumers by business research firm CofaceBdi, 18% of respondents said they had never stopped buying products linked with salmonella or other problems last month, while another 5% said they had resumed buying the products.

A survey of grocers by TheMarker found that sales of Telma cereals were down by 20% to 40% from their levels before the scandal.

While still down sharply, it marks a big improvement over declines of as much as 80% in the week right after the company belatedly admitted it had accidentally shipped at least one consignment of tainted cornflakes and failed to destroy other products still in its factory in a timely way.

Hotels in the Fattal, Crowne Plaza and Holiday Inn chains have resumed serving Telma cereals, after banning them from their breakfast buffets at the peak of the crisis.

Unilever Israel, the local subsidiary of the European food maker, has been trying to win back shoppers with big discounts. Its Cocoman, Shugi and Ugi children’s cereals are being offered at 10 shekels ($2.67) a box, while its cornflakes are priced at 11.90 shekels to 14 shekels at most supermarkets.

“The sales Unilever is offering on breakfast cereal are much bigger than usual and are aimed at boosting sales in the days before children go back to school,” said an executive at one supermarket chain, who asked not to be identified. The new school year began Sept. 1.

Another executive, also speaking on condition of anonymity, said he expected sales would almost completely recover to their pre-crisis levels by the start of the High Holidays at the beginning of October.

“Despite what happened and the big loss of faith with consumers, Unilever is still a big player with strong brands in important product categories,” he said. The company’s weak link is cornflakes, which unlike its other cereals in a generic product. He said some of the consumer its lost in that category may never return now that they’ve tried the competition.