Israel's fast moving consumer goods (FMCG) market is grinding to a halt. "Globes" has obtained Nielsen data for February 2014, which show a 4.5% drop in FMCG sales, compared with February 2013, following the 1.8% drop in January, compared with the corresponding month.
Israel's population growth is 2% a year, which means that the market should grow by the same amount to maintain consumption levels; the present drop in consumption has not been seen in years.
Sales of beverages fell by 8.5% in February (in both quantitative and financial terms), compared with the corresponding month. Food sales fell by 4.5% in quantitative terms, but only by 2% in financial terms, because of higher prices. Personal care product sales rose by 3.1% in quantitative terms and by 1.6% in financial terms, while home care product sales dipped by 0.2% in quantitative terms, and by more in financial terms, indicating a drop in prices.
"We're experiencing a hard start to the quarter. The decline has already lasted two months, and the reasons are unclear. There is no recession, no unemployment. Usually, food sales are the last to be affected; this time, it's the first," a market executive told "Globes". "Even in the Arab community, which is always growing, they say that they have never seen such a small increase. They're really in the dumps."
The drop in consumption is affecting both national supermarkets and independents. The biggest drop is in the national chains, Shufersal Ltd. (TASE:SAE), Mega, owned by Alon Holdings Blue Square - Israel Ltd. (NYSE: BSI; TASE: BSI), and Coop Israel Ltd. According to Nielsen, sales at national chains fell by 7.9% in quantitative terms in February, and by 5.6% in financial terms.
Suppliers say that while sales are down at all three national chains, Mega has been hit more than Shufersal. Only small supermarkets have bucked the trend, with a 4.1% increase sales in quantitative terms in February, and 3.1% increase in financial terms. However, sales in absolute terms are small.
The data do not include FMCG sales at pharmacy chains and convenience stores.
Published by Globes [online], Israel business news - www.globes-online.com - on March 12, 2014
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