Israeli supermarkets might bring about the deterioration and even fragmentation of Israel’s food industry.
This was the sentiment expressed by Dan Propper, president and CEO of Osem-Nestlé Israel. Propper is the first senior executive in Israel’s food sector openly to challenge the country’s food supermarkets “which exert pressure on food manufacturers to slash prices.”
Propper termed Israel’s food market as “none other than price oriented, due to the chains’ sales strategies of opening inexpensive outlets and selling food products below production cost. There are even cases when small retailers buy at the supermarkets and sell the products at a profit,” according to a report in Maariv. He explained that this development is a result of the chains’ profit-motives, by “focusing their strategies on price rather than on proper marketing.”
Osem-Nestlé’s CEO added that as small food manufacturers “practically disappear, the food sector is adversely affected by a lack of competition. This will result in shutting down of branches and a decline in services to consumers, causing a serious crisis in the entire food sector.”
Propper called upon the Israeli authorities to apply regulations, as practiced overseas, “to prohibit pricing below production costs.”