Sales of consumer products in Israel up 45%

Consumer goods  / Photo: Bar Lavi , Globes

More alcogel and antiseptic wet wipes have been sold in Israel in recent weeks than in all of 2019, and Israelis are buying more toiletries than even food.

The numbers behind the frenzied shopping in Israel in the past week are piling up, with the public fearing that the coronavirus will force people to stay at home for a prolonged period. Sales of consumer products during March 14-18 were 45% higher than in the past year, according to data from StoreNext. The biggest increase was in purchases of products for the home, with personal care sales soaring 80% to NIS 165 million, and sales of products for the home up 68% to NIS 123 million. An exceptional 40% rise to NIS 929 million was also recorded in food sales, and beverage sales climbed 26% to NIS 121 million.

Tnuva's milk and cottage cheese, alcogel, and wet wipes

The fastest growing categories are paper products, rice, legumes, pasta, hygiene, and body care, in which sales more than doubled in a week, reaching NIS 34 million. Sales of hygiene products skyrocketed 1309%. More alcogel and antiseptic wet wipes were sold in the past two weeks than in all of 2019.

What were Israelis' favorite products over the past week? Tnuva milk and cottage cheese are still leading the bestseller list in sales in monetary terms. Family-sized bottles of Coca Cola, however have been overtaken in third place by dry products, such as various types of Persian rice, StarKist tuna, and rolls of Lily toilet paper.

StoreNext's figures show that the fastest growing sales channels are discount stores, pharmacies, and neighborhood stores. The combination of the coronavirus and the cold weather is having a negative impact on sales by convenience stores, other than in categories like wet wipes and toilet paper.

Sales last Saturday totaled NIS 118 million, 43% higher than the average sales on a Saturday over the past year.

The most spectacular increase in sales was 70% in Hod Hasharon, followed by Or Yehuda-Yehud with 64%, Tirat Hacarmel and Netivot with 60%, and Tel Aviv with 57%, all in comparison with the preceding year. StoreNext said, "Hoarding was less evident in communities with a large haredit population, such as Modi'in Illit (a 26% increase), Tzfat (28%), Bnei Brak (31%), and others." StoreNext added that the reason for this may be avoidance of hoarding products with leavening before the Passover holiday.

Negative effects on suppliers to the institutional market

While the retail food sector and its suppliers are benefiting from extraordinary and unprecedented growth by chains and online, food suppliers are experiencing a precipitous drop in their sales to the institutional market, meaning hotels, restaurants, cafes, and pubs. Almost all the food and beverage companies, both large and small, have substantial activity in the institutional market, which can account for 15-20% of sales for large companies like Tnuva and as much as 50% for companies like Gad Dairies. Some of this activity has been completely discontinued in recent days, while some has continued on a much lower scale of deliveries or collection from the branches. The decrease in this activity has been substantial.

For example, Tempo Beverages reported this week that the orders to close cultural and leisure sites "are expected to have a negative effect on activity, and to detract from the company's sales… mainly in the cold market customers channel (restaurants and entertainment sites)." Tempo added, "The company is taking steps to minimize the damage," but warned that it was "unable to estimate the effect on its activity," and that if "the coronavirus worsens and continues for an extended period, the negative effects on the group's activity will be even greater."

The locations involved are those where the company's beverages are sold chilled for immediate consumption, including hotels, guest houses, clubs and bars, restaurants and fast food outlets, cafeterias, bakeries, convenience stores in filling stations, catering services, wedding halls, pubs, and cafes.

Tempo's sales to this market in 2018 totaled NIS 452 million, 32% of its total sales. The profit margin on this activity is higher than sales to the hot market, i.e. retail sales.

Tempo is not the only company with this problem. Almost all of the food companies have substantial activity in the cold market. For example, Tnuva and Tara sell milk to cafes, Coca Cola Israel has sales to restaurants and cafes, and Osem and Strauss sell chilled salads to this market. Strauss also has coffee activity for the institutional market, and Osem markets its Bonjour products to it. For smaller companies, such as Nani Seyman and Jacobs Farm Cheese, sales to the institutional market are likely to account for an even higher proportion of total sales.

Some companies are exercising creativity in the crisis. In recent days, Tnuva, Israel's largest food company, has introduced an online sales service with free delivery for a large proportion of its basic products, including fresh milk, sour cream, delicatessen items, and cheese. Given the load that the large food retailers are experiencing in online sales, and at a time when public attention is low during a crisis, Tnuva has taken to offering deliveries of its products in far shorter times than chains like Shufersal can currently offer. As of now, these deliveries include only fixed packages, with no selection, a relatively limited range, and no premium products, but this is paving the way for a direct online entry into consumers' homes, with no intermediaries. If Tnuva's services prove satisfactory to consumers, it could be preparing the ground for substantial activity in the future.

Published by Globes, Israel business news - en.globes.co.il - on March 22, 2020

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020

Consumer goods  / Photo: Bar Lavi , Globes
Consumer goods / Photo: Bar Lavi , Globes
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