Osem postpones price increase as Israelis lament rising costs

'Now is the time to say something; to get everyone together and scream about it.'

Packages of Bamba - made by Osem - on a shelf in a Jerusalem grocery store on December 29, 2021. (photo credit: OLIVIER FITOUSSI/FLASH90)
Packages of Bamba - made by Osem - on a shelf in a Jerusalem grocery store on December 29, 2021.
(photo credit: OLIVIER FITOUSSI/FLASH90)

Following pressure from the Finance Ministry, community leaders and the public, food mega-producer Osem has decided to postpone its planned 5% price hike on its products.

The company on Tuesday said it would delay the price rises for three months while an in-depth examination takes place to find ways to mitigate them.

When Osem initially announced the price rise earlier this week, it cited increased raw-material, packaging and transportation costs as its reasons.

Osem’s announcement comes after a meeting held between Osem chairman Dan Propper, CEO Avi Ben Assayag and Finance Minister Avigdor Liberman. The decision to postpone the increase was made during the meeting.

On Monday, Liberman and Economy Minister Orna Barbivay sent a joint letter to Israeli food producers, including Osem, Sano and Strauss, urging them not to raise their prices and threatening to take measures to prevent unnecessary price inflation.

Supermarket shoppers and workers without masks in Tel Aviv. (photo credit: AVSHALOM SASSONI) (credit: AVSHALOM SASSONI)Supermarket shoppers and workers without masks in Tel Aviv. (photo credit: AVSHALOM SASSONI) (credit: AVSHALOM SASSONI)

“Your announcement of a price increase at this time is cynical and offensive to the citizens of the country,” the ministers wrote, adding that they intend to “stop the rise in prices [in accordance with the] national responsibility expected from the companies in this challenging period, taking into account their economic situation and profits.”

On Tuesday, Kiryat Malachi Mayor Eliyahu Zohar said the municipality would no longer use tax money to purchase goods from Osem.

“Until the Osem company walks back its intention to raise the prices of its products, the Kiryat Malachi Municipality will not purchase any product of the company,” he said in a letter.

“It is true that this call will not collapse the Osem company, and the municipality’s purchases in this area are not large, but it is a value-based and symbolic step, a call to action for the residents of Kiryat Malachi in particular and the State of Israel in general,” he wrote. “Every elected official must take a value-based and unequivocal position that we will not allow the Israeli family to be harmed. The money of my residents is not worthless.”

 In light of impending price hikes, paying a premium for brands such as Osem is not the only option, said Mendy Blau, the Israel director of Colel Chabad.

Colel Chabad runs a network of nonprofit supermarkets that cater to lower-income areas by selling generic-brand products in smaller stores with limited overhead. 

Blau suggested that avoiding brand names can save people significantly more than they may expect.

“It’s come to a time where the Israeli customer isn’t stupid,” Blau said. “There’s no reason to pay 50% more just because of the brand. You shouldn’t pay more for any brand name. If you ignore the branding, you can find the same products of the same quality for less.”

Osem is one of several companies and services that have increased the prices of their products recently. Most notably, the prices of gasoline and electricity became more expensive on February 1.

Israel is creeping closer to holding a protest against these rising prices, similar to the 2011 campaign against the cost of cottage cheese. Consumers and businesses have vented their concerns and anger.

“It’s crazy,” a young clerk in a convenience store said. “It’s going to prevent a lot of people from making it to the end of the month. They’re going to get to a situation where they can’t pay for electricity and they have to sit without it. There are thousands of families in Israel who can’t buy food. They spend most of their life eating bread and margarine. Now they’re coming to take even more from those people.”

When asked about the possibility of protest, he said, “Now is the time to say something, to get everyone together and scream about it. We need to tell them we want lower prices.”

Regarding the viability of a possible protest, a woman in Tel Aviv said: “I’m from Russia, so it’s nice to be here where protests actually work.”

She was sitting at an outdoor cafe awaiting the results of a COVID antigen test.

“Is it the right time to protest? I’m not sure,” she said. “It depends on their motives. Are they doing this to make money or for more legitimate reasons? That’s the important question.”

The Public Utilities Authority has attributed rising electric prices to the increased cost of coal. The Energy Ministry raised the price of gas in tandem with the cost of crude oil, which has risen more than 5% in one week.