Morris Plains, NJ – Yoav Rokach-Penn probably did not imagine he would breathe new life into the grassroots consumer uprising first launched this summer. But that is precisely what he did when he walked into his local Shop Rite in New Jersey, took a picture of an Israeli-made candy bar, and posted it on his Facebook juxtaposed with a picture of the price-tag for the identical candy bar in Israel.
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The price for Elite-Strauss’s Pesek Zman candy bar in New Jersey was just 74 cents (including taxes) compared to about $1.70 in Israel. Rokach-Penn’s Facebook picture quickly went viral over the weekend.
On Saturday evening, in a feeble and somewhat disingenuous attempt to defuse the situation, Elite-Strauss’s PR people posted a message on the firm’s Facebook page citing the high cost of living in Israel as justification for the higher prices charged here. Fuel is more expensive in Israel, claimed Strauss, as are housing, transportation, production costs and taxes.
But consumers were not buying Elite-Strauss’s lame excuse and the market was unforgiving. On Sunday Strauss’s shares dropped 3.5%, representing a NIS 170 million decrease in market capitalization in active trading.
Unfortunately, candy bars, a product we can all easily do without, is not the only food item that is significantly more expensive in Israel than most places in the world.
Food prices in Israel in 2008 were 15 percent higher than the average for OECD countries, according to a Bank of Israel study released a month ago. And in the years since the situation has probably gotten worse by about ten percent, estimated Bank of Israel economists.
Some of the reasons for our ridiculously high prices are obvious and eminently solvable. For instance, it is widely known that the milk, fresh meat and fish markets are protected from foreign competition by high tariffs (there is a 150% tax on imported milk and butter) combined with cartel-like price fixing inside Israel.
This government has taken steps in the right direction.
Finance Minister Yuval Steinitz signed a directive December abolishing customs duties on hundreds of imports.
The changes, recommended by the Trajtenberg Committee, created in response to this summer’s demonstrations, went into effect on January 1 and are expected to cost the government more than $100 million annually in lost revenue while saving consumers that same amount.
But counterproductive steps have been taken as well.
Last March, the Netanyahu government, usually so strongly pro-free market, passed the Law for the Planning of the Dairy Market. In the 50-0 vote, the Knesset approved legislation reminiscent of now-defunct centrally- planned economies. Instead of allowing free market forces to sort out supply and demand in the dairy market, a special “quota committee” would determine annual dairy output. Though the law gives the Industry, Trade and Employment minister the prerogative to open up the local dairy market to international competition, Shalom Simhon, the present minister who is seen as representing the interests of moshavim (many of which are major producers of milk), has said publicly that doing so would be ineffective and would take too long.
The olive oil and honey markets are governed by a similar combination of price collusion and protection from foreign competition via tariffs. For instance, a study published by the Jerusalem Institute for Market Studies showed that due to tariffs and price collusion an average one-liter bottle of olive oil, at NIS 17, costs three times more in Israel than it does in Spain and Greece.
Other factors contribute to high food prices, such as the strong demand for kosher products, which makes it more difficult for non-kosher imports to compete.
Israelis also seem to be more willing than their foreign counterparts to pay more for imported brand-name products.
This might be because Israelis attach more importance to brands or because they have become accustomed to paying exorbitant prices for staple products.
But the tide is turning. People like Rokach-Penn or Itzik Elrov, the haredi man from Bnei Brak who launched the Great Israeli Cottage Cheese Uprising via Facebook in June or a group of retired men and women based in Even Yehuda called the Club for Smart Consumerism who monitor and publicize prices charged by local supermarkets are developing a more informed and mature consumer culture.
Our society is fed up with the sort of price gouging perpetrated by a host of food manufacturers, brand-name importers, and various other opportunists. Business people who fail to note the sea change taking place in Israeli society and change their greedy ways will be punished by a new generation of enlightened consumers.
The drop in Strauss’s share price is just a taste of the potential influence an angry and mobilized consumer populace can wield.
Content is provided courtesy of the Jerusalem Post
The Strauss response is entirely correct. A product is worth whatever a customer will pay for it. They are entitled to charge whatever they want and let the market decide if that is too much. If you don’t like the price than you can buy a competing brand or simply forego the purchase. Unlike a container of milk or loaf of bread, a candy bar is not an essential of life but even it was, the market should set the price. If they can get double the price in Yerushalayim than in Tel Aviv, thats also their right. Laisez faire’.
thats what happens when you have a socialist economy, you pay for it when you buy chocalate bars, cereal, yogurt, cottage cheese, etc.
stop taking all that welfare, and watch the prices come soring down.
So what in switzerland the chocolate cost more than america
In Israel there are VAT taxes that are very high and that is the way the tax system works. In the USA there is more emphasis on Income Taxes.
Items used in Israel are subject to high VAT taxes while exports are exempt. Shipping costs are negligible compared to the taxes saved.
Israeli chocolate is very low quality in terms of cocoa percentage. It’s awful!
The company is correct. If you people in DibLand want all your social programs & handouts you have to be willing to pay more for everything. Gas costs money too and that only adds to the cost of goods. If you don’t understand it, try second grade economics again.
the pricing for international shipping is generally so low that I found a brand of bagel chips (thinly sliced pieces of bagels that get treated to extra toasting) that, despite its “NYC Style” logo, was actually imported from… Romania.
You could easily find a dozen bagel bakeries in the NYC area that would love to take their day old bagels and slice/dice/toast them. But the Romanian ones somehow were cheaper…
Consumer uprisings are also a part of capitalism. You force them to sell for cheaper and make less profits, just like they can raise the costs and earn more money.
Our founding fathers also approved of tariffs on certain imports to protect important domestic industries. If Israel fails to protect domestic food producers, they will be driven out of business by foreign competitors. Then, Israel will be at the mercy of foreigners who can threaten to cut off their food supply. There is no such thing as a free lunch and no such thing as a totally free market.
The high prices in Israel, in the old days, were because of socialism and central planning. Nowadays they are from price fixing by private corporations. Its just like in Russia, where economic oppression from Communism was supplanted by economic oppression from a handful of newly wealthy businessmen.
one things for sure, the cottage cheese there is superb!
There are economic reasons why some manufacturers will charge more on some items locally than they would in international markets. That said, as someone who has recently tried to take on cholov yisrael now that I live in EY (and there is little reason to rely on the heterim in chul), I applaud the government limiting dairy imports. Most dairy products imported from european markets rely on the heter of avkat chalav (powdered milk) and are not chalav yisrael according to many (not all) poskim. Keeping the market more Israel-milk saturated helps insure a higher standard of kashrus.
chocolate is not the only thing they charge more for in israel..try materna which is made in israel and is cheaper to buy in england! no.1 that’s not an extra like a chocolate bar..it’s pretty essential!
First of all Vat is included in Israel. In America there is sales tax add on but this still does not justify the difference in price. In Israel the company gouge as much as they can. If importers would bring in American candy and not gouge the price of Israeli candy would fall. The is a lot of mafia type protection in Israel to prevent products coming in. In England the same goods that are coming for Europe are in £’s what it is in America in $’s. while the pound is worth over 50% more; why. If they boycott the
Israeli candy this year on Purim it surely will fall.
The rare time I buy chocolate I buy Swiss. I may as well enjoy it and it may as well be GOOD!!
You ever heard of grey market? Why is it that you could buy USA made products in china for half the price? Causee they need to compete with that market
If companies have fat profit margins in E. Y. , it should not take too long for competition to come in and undercut the pricing. That is a how a free capitalist economy works.
As a matter of fact why don’t some of the whiners open competing companies.
It is surely not rocket science to make and sell some chocolate bars.
Who said chocolate is nt a necessity.
Chocolate is unfortunately not the only product manufactured in EY, which is of inferior quality. The toilet paper manufactured in Israel, does not compete with toilet paper made in the USA, in terms of quality.