Food importers bow to gov’t pressure on price rises

Food importers Diplomat Holdings (TASE: DIPL) and Leiman Schlussel have joined Osem-Nestle in postponing planned price rises after pressure from Minister of Finance Avigdor Liberman and Minister of Economy Orna Barbivai.

Diplomat CEO Noam Weiman wrote to the ministers, “I was very sorry to read in your letters that you see bad and cynical intentions in the legitimate commercial activities of Diplomat resulting from the restraints forced upon us, mainly from the global economic crisis.”

In his letter he also called for the situation to be changed through cooperation between the government and manufacturers, importers and the large retailers to find ways to cut costs including reducing direct and indirect taxes, regulatory relaxations ad more. “All such relaxations as these would be immediately passed on to make products cheaper for our customers,” Weiman wrote.

The bottom line was that due to government and public pressure, Diplomat announced that it had agreed to the request of Liberman and Barbivai and postponed raising prices until after Passover. He added that he expected to see the “contribution of relaxations of the Bennett government.”

Leiman Schlussel CEO Moni Leiman wrote, “Even though we are coping with major prices rises by manufacturers and suppliers, the supply chain is more expensive, the minimum wage is rising, salaries are soaring, prices of electricity, energy and municipal taxes are rising and regulation is weighing, we have not raised the prices of products in Israel for years.”

He added, “We are attentive to what is happening with the public but that does not mean we can keep this level of prices that have become uneconomic forever.”

These responses have come the day after Osem-Nestle said that it would postpone its price rises until after Passover.

Diplomat’s imports include Kellogg’s, Heinz, Beyond Meat, Kikkoman, Pampers, Gillette, Head & Shoulders, Pantene, Ariel, and other Proctor & Gamble brands, Duracell and much more. The company also owns Starkist through which it controls 40% of Israel’s canned tuna retail market. Leiman Schlussel imports brands including Hershey’s, Mentos, Loacker, Toffifee, Werther’s Original, Nature Valley, Lavazza, and Yogueta.

Schestowitz CEO Yoni Schestowitz said that his company would, “examine ways that it could ease mattrers for the public and examine activities in which we can offer our products at cheaper prices.”

Schestowitz imports Colgate, Palmolive, Barilla, Revlon, Calvin Klein and much more.

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Research by the Ministry of Finance chief economist into food importers that was published today has found that profit margins before tax are an average of 12.5%, which the study calls “an exceptional level of profitability” and 2.3 times higher than other importers.

Published by Globes, Israel business news – en.globes.co.il – on February 2, 2022.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2022.