Smotrich invites US giant Costco to enter Israeli market

Minister of Finance Bezalel Smotrich has proposed to US shopping giant Costco Wholesale Corporation, a membership-only chain of retail stores, that it should enter the Israeli market. In a letter to Costco chairperson Hamilton James and CEO Craig Jelinek on Thursday, Smotrich wrote, “The Government of Israel has set for itself several objectives, one of which is to reduce the cost of living and increase competition in the Israeli retail food market. We believe that a significant way to accomplish this is by inviting leading, large global players with an international presence similar to your company to enter our consumer market.”

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Smotrich added that “We view that as a mutually beneficial opportunity for both your company, which will gain a presence in a new attractive market, and for the people of Israel who will enjoy a reduction in the cost of living through increased competition.” He offered to meet James and Jelinek on his next visit to the US.

Smotrich said on taking office that he intended to find solutions to the rise in food prices in Israel and the rising cost of living. In a session of the Knesset Finance Committee last month Minister of the Economy Nir Barkat said that he and Smotrich would act to find a short-term solution to the problem of the cost of living. “There is no dispute that the concentration in the market must be tackled wisely and seriously,” he said. “There is a need to broaden competition, which is the first element in reducing the cost of living.”

Last year, two international retailing chains announced their entry into the Israel market. Last March, France-based retailing giant Carrefour announced an agreement with Electra Consumer Products, which owns the Yeinot Bitan chain (which includes Mega) to introduce its brand into Israel. Carrefour-branded products are already appearing on the shelves of the Yeinot Bitan chain, which is being converted to the Carrefour format, at prices sometimes considerably lower than those of equivalent products of other brands. In addition, Shufersal, Israel’s largest supermarket chain, announced that it would participate in a franchise for importing brand product of Netherlands-based chain SPAR and opening SPAR branches in Israel.

Costco was founded in 1976. It has 848 stores around the world: over 580 in the US and Puerto Rico, and a substantial presence in Mexico, Japan, the UK, Spain, South Korea, Vietnam, and Australia, with footholds in France, China, Iceland, New Zealand, and Sweden as well.

Published by Globes, Israel business news – en.globes.co.il – on February 5, 2023.

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