Strauss cuts prices after report

Company had repackaged dairy products, effectively raising their price 25%.

June 29, 2011 06:48
3 minute read.
cottage cheese

cottage cheese 311 R. (photo credit: Marc Israel Sellem)


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Strauss Group Ltd. has canceled a price hike on several dairy products after Globes exposed a repackaging ruse.

Strauss repackaged products to conceal price hikes. It repackaged 1.5 percent fat Danone yogurt without notifying retailers that the product price in the new packaging was higher. Strauss began distributing the newly packaged products to retailers two weeks ago. The price hike was achieved by reducing the number of yogurts in the package from eight to six, effectively raising the price per unit by 24.6%.

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“We launched the product in order to diversify, and we didn’t notice that the price rose,” said a retailer who was surprised to discover the price differential.

“We weren’t told. It’s sad for customers. At Strauss they see apartment prices rising, so they exploit this in the food market and say, let’s ride the wave.”

“This is a popular product,” the retailer told Globes. “I estimate that at least 600,000 packages are sold annually.”

The price rise effected by Strauss with the new packaging was just part of a plan to raise prices for dairy products through repackaging.

Globes reported Monday that Strauss planned to repackage dairy products to raise prices per unit by 14%-21% without notifying retailers about the change.

The products involved were the fourpack Danny chocolate and vanilla puddings, four-pack strawberry-flavored yogurt with cornflakes topping, the four-pack yogurt with chocolate-coated rice crispies, the four-pack of yogurt with chocolate-coated Chinese pecans and the two-pack cottage cheese.

A retailer said Strauss had notified it about the new packaging, but when it compared the items, it found that the packaging was unchanged and only the bar code had been changed, reducing the benefit for consumers. The new packages were scheduled for distribution beginning on July 4.

“All the packaging reflected a 20% higher price,” a retailer told Globes. “They come to you ostensibly with a new product, when in practice it’s the same old product with a different bar code and higher price. It’s simply a trick, and we feel the consumers’ pain. Strauss is the dairy delicacy powerhouse. The Danny puddings have strong sales, and it’s hard for consumers to deal with this.”

“We told the Strauss representative, ‘You’re raising prices.’ He replied, ‘Nonsense.

These are new products.’ What new product? This is the same product, but they lowered the benefit for consumers,” another retailer told Globes.

“They reduced the benefit and raised the price indirectly, which without a doubt misleads the consumer.”

In response, Strauss said Tuesday: “Yesterday, after Ilanit Hayut put the report on the Globes website, Strauss said, ‘No such thing occurred, we are sure of it.’ Regrettably, that statement, though made innocently, was erroneous.

Following Ilanit Hayut’s inquiry, this morning we were informed that there had been a change in the price for packages of Danone dairy delicacies. We regret this, and inform you it is only thanks to you, and your report from this morning, that we rechecked our information systems and regrettably an error occurred in the company’s notices.

“The company accepts full responsibility for lowering the consumer price immediately, so that the price per unit will be the same as for the previous packaging.

“We reiterate that our response yesterday was unequivocal and that we discovered an error today in the information system chain, and we regret it. We thank Ilanit Hayut for her dedication.”

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