Consumer Anger Leads to Drop in Sales of Strauss Candy Bars in Israel

Ex-store owner in U.S.: Israeli firms sold goods for 50% less than price in Israel.

Six days after a Facebook user published photographs of Strauss Pesek Zman chocolate bars selling for less than half-price in New Jersey, some stores are reporting a decline in sales of the company’s candy bars.

“On Sunday and Monday, sales of Strauss candy bars fell by about 7% - Pesek Zman, Kif Kef and others,” says an executive at one of Israel’s medium-sized chains. Sales then picked up a bit, but to a level 3.5% lower than normal, he said.

Pesek Zman - Bloomberg - 22022012

“It isn’t a big drop like we experienced with the cottage cheese boycott,” he qualified. “But we need to remember that these aren’t staples; they’re products that people don’t buy in bulk every time they shop.” It will take more time to define the trend, he said.

Another executive at a big retail chain says sales of Strauss candy bars have rocketed up by 40% this week - but then, it is also true that the chain is giving a deep discount on all Strauss goodies. “When there’s a big sale, people will put the product into their shopping carts,” he said.

Strauss can only hope that the supermarket sales of its sweet snacks will get it over the hump of consumer anger. Among the chains offering Strauss candy bars at a discount are Super-Sol, Rami Levi Shivuk Hashikma, Machsanei Hashuk and more.

While Mega in the City, for instance, had been selling Pesek Zman bars for NIS 6.29 a pop, Rami Levi is selling them at a special discount for NIS 1.49, and Machsanei Hashuk is asking NIS 1.79 per bar.

Meanwhile, in Miami

But how is it that a store in New Jersey was selling Pesek Zman for less than half the price in Israel? “Many Israeli players, like Strauss and Unilever, would sell me stuff in the U.S. for 50% below the price in Israel,” claims the former owner of a store in Miami.

“I’d sell products like Beigel & Beigel pretzels and Kariyot [“cushions”] breakfast cereal for less than the price in Israel,” he said.

He believes the reason for the price differences is that Israeli manufacturers badly want to penetrate overseas markets, most notably the United States, which are bigger than tiny little Israel.

A Unilever source says that the reason for the gap is due to the fact that the company “does not market its goods abroad, nor is it involved in the pricing. In contrast to Israel, where Unilever takes upon itself all the shipping costs and the distribution and marketing to local retailers, goods sent abroad are sold to distributors who are solely responsible for pricing in the relevant markets, not to mention that they are the ones responsible for all expenses.”

Meanwhile, back in tiny little Israel, accusations were flying all over the map.

“There’s no need to sell Pesek Zman for more than NIS 4.60,” said one retailer: At that price the store makes 30% profit and the consumer gets a fair price, he said.

“What Super-Sol and Mega are doing is daylight robbery. They make sure that products checked in surveys like coffee or hummus are sold at good prices, but charge a lot for other products like candy bars and gum.”

Mega in the City pays Strauss NIS 3.20 per Pesek Zman bar and has been selling it for NIS 6.20. Super-Sol Sheli had been charging NIS 5.99.