Osem Joins Pack, Raising Prices by Average of 3.5%

A host of food manufacturers are compensating themselves for increasing costs of raw materials

The Osem group has raised its prices, telling retailers on Monday about the new levels, which will come into effect on January 1. The increases are anywhere from 2% to 5% and encompass the company's main product lines.

Tirat Zvi franks.

Prices of soup powders and pastas, instant coffee, crackers and salty snacks, as well as cookies and biscuits will rise by 5%. Prices of cakes will increase by 3%.

Osem owns Tivall, which makes a range of frozen vegetarian products. Prices of Tivall's products and Osem ketchup will increase by 2% from January 1.

The breakfast cereals Osem sells under the Nestle brand (its parent company ) will remain unchanged in price.

Osem says it hasn't raised prices in two and a half years, but commodity prices have risen sharply of late, increasing the cost of raw materials.

During the last two years, "Sugar rose by more than 60%, wheat by about 40% and oil by about 30%. The price of corn rose by about 50%," Osem said. And that's not all. In the last two years, its outlay on water, electricity, city tax and labor also increased.

Until now it avoided passing the increase on to consumers, Osem said. It streamlined its operations and adopted working procedures from Nestle. But based on trends in the Israeli economy and global commodity markets, it has no choice, Osem said.

Moving on, the Carmel winery is also raising its prices by 3% to 5% as of January. Carmel CEO Israel Ivtsan explained that the winery expects a further increase in the price of water, a major component in the price of grapes. The prices of electricity, paper and packaging have soared as well, Ivtsan says.

In fact, Osem and Carmel are lagging behind the pack. Tnuva, Israel's biggest dairy company, has already announced price increases of 1.6% to 4.5%. It was followed by rival Tara, which lifted the price of its cottage cheese, white cheeses and yellow cheeses by 1.5% to 4.5%.

Strauss did not tarry, announcing increases in the prices of its dairy, coffee, honey, saccharine and frozen vegetable products by 2% to 8%. Strauss Ice Cream is raising prices by 3% from December 1. The Gad Dairy is raising its prices from mid-December.

Tirat Zvi, a meat-processing company in which Tnuva owns 50%, has told retailers of a 5% to 8% price hike. While it already sent out new price lists, maybe its decision isn't final. "We didn't raise prices for two years," the company told TheMarker. "Because of the increase in raw-material costs, we have to reconsider."