Strauss Cutting Prices, Freezing Exec Wages

Retailers say limited deals won't save consumers anything.

Strauss Group announced a number of changes yesterday in response to the summer's social protests, including lowering prices on 36 products, a wage freeze for 25 senior executives and raises for its lowest paid workers.

The company will also give some 200 contract workers permanent status and grant 100 higher education scholarships a year to employees' children.

Strauss, cow chocolate,

Strauss Israel has some 6,000 employees and the company intends to cut the number of outsourced and contract workers. Employees earning minimum wage, or not much more - some 2,000 workers - will see 3% to 5% raises in January.

Strauss said the total cost of these steps will be about NIS 40 million a year, about NIS 10 million of which will be for the benefits to employees, and the rest the annual cost of the lower prices.

The 36 products include chocolate bars, cookies, hummus, red cabbage salads, Turkish coffee and Shokolit cocoa powder - but only in certain sized packages. Prices will be reduced some 5% to 10%.

A number of retailers criticized the move, saying Strauss had lowered prices mainly on products that are not big sellers, or come in unpopular package sizes.

"Strauss is making a laughingstock of the consumer. Instead of lowering the price of instant coffee, the 100-gram [package] of Turkish coffee, desserts or drinking chocolate; they have chosen to lower the prices of less popular products," said one senior executive from a large supermarket chain.

Another supermarket executive said Strauss' reductions will not lower prices for consumers, since the various products involved are already on sale almost all the time, and a 5% cut is "nothing."

In any case, prices for these same items have risen steeply in recent years, and the cuts do not offset these price hikes. For example, Turkish coffee is now 50% more expensive than in 2008, and Strauss is only offering a 5% cut.