Unilever Israel raising prices by up to 15%

Unilever Klik chocolate snack  / Photo: Shany Moses , Globes

The company is reducing the size of its packages for Kariot, Klik, Nishnushim, and other products in Israel.

Unilever, a food and toiletries manufacturer and importer that has prominent brands in Israel like Telma Cereals and Pinuk Shampoo, is raising its effective prices by using small packages for the food products that it manufactures, sources inform "Globes." The increase in the real price for the retailer is 8-15%, and the price increase for the consumer is likely to be higher.

As of now, a small range of Unilever's non-bestselling products is involved. As far as is known, the price hikes do not include the company's toiletries products.

An informatory letter to retailers obtained by "Globes" states, "I hereby notify you that starting in November 2019, our packages will be reduced in sized for a number of Unilever products, including Kariot, Klik, and Nishnushim. The effective price per 100 grams of these products will be increased."

For example, the Kariot series of products, whose packages weigh 750 grams, will be reduced to 686 grams, a real price increase of 9% per 100 grams. Another product to be reduced in size is Klik chocolate snacks, which currently weigh 75 grams a bag and will be reduced to 65 grams, an effective price increase of 12% for 100 grams. Packages of the nishnushim product, both crackers and snacks, will be reduced in size by 8-15% for 100 grams.

Similar to last year summer's wave of price increases, which continued until after the holiday season, Unilever's excuse is an increase in input prices: "Reducing the package sizes and increasing the prices follows an increase in production inputs in recent years, including a substantial rise in wages. The company has absorbed the increase in input prices in recent years, and has taken streamlining measures in order to avoid additional price increases. The price was raised following the thorough examination of a limited number of products as a last resort, and does not reflect the full increase in input prices."

In its notice to retailers, Unilever states, "The information about the change and the new weight will be displayed prominently and clearly on the front of the new packages… even after the increase in the price per 100 grams, these products will be sold at a competitive price in comparison with the leading competitors in the category." It is not clear whether this hints at future price increases for products that are not category leaders, or to another concern.

The summer of 2018 saw a wave of price increases of consumer products that began following in increase in paper prices. Kimberly Clark notified retailers at the time that it would raise prices of its products for the first time in six years, and was followed by the other paper suppliers: Sano, Shaniv, and the private brands of Shufersal and Rami Levy raised their prices. The food market followed suit. Tnuva, Israel's largest food company, was the first to raise prices of its dairy products not subject to price controls, followed shortly afterwards by Tara and Coca Cola Israel, Tempo, Jafora, Sugat, Wissotzky, and many others. Another company that tried to raise prices, but rescinded the raises, was Osem-Nestle. The timing with which it chose to announce it to the media, combined with increase in water and electricity prices, caused public outrage. The company was attacked and became the subject of a brief public protest, and Osem-Nestle retracted its announcement. As part of that wave of price increases, Unilever raised the price for retailers of the Krembo snack that it manufactures by 4%.

Unilever Israel recently announced that CEO Anat Gabriel would leave her post to become a VP in the global Unilever group.

Unilever, one of the largest manufacturers of food and toiletries in Israel, is part of a major international corporation. The company has a 4.6% market share in consumer products sales in Israel. Unilever's sales fell 1.3% in the first nine months of 2019, compared with the corresponding period in 2018.

Published by Globes, Israel business news - en.globes.co.il - on October 6, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

Unilever Klik chocolate snack  / Photo: Shany Moses , Globes
Unilever Klik chocolate snack / Photo: Shany Moses , Globes
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