Israeli food manufacturer Osem is raising prices - here's why

Until now, harsh media criticism has prevented this from happening. Retail chains have also helped stop such moves, explaining that the timing was problematic.

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)

Israel’s Competition Authority made a lot of noise last month when it launched an investigation against supermarket chain executives like Itzik Aberhahn from Shufersal or Rami Levy from the chain that carries his name, on suspicion that they were fixing prices.

In practice, it turned out that the address for the Competition Authority's claims was not the retailers, but food manufacturers such as Osem, one of the largest companies in Israel.

Osem, owned by  Nestle and managed by Avi Ben Assayag, told supermarkets this week that it plans to increase the cost of its products by 3% -7% and at an average rate of 4.6%. As the third largest food product manufacturer in Israel, Osem is initiating a move other food manufacturers have shied away from making.   

 Osem-Nestle CEO Avi Ben Assayag attends a ceremony of the new Bamba factory of the Osem corporation in Kiryat Gat, on February 19, 2019.  (credit: FLASH90) Osem-Nestle CEO Avi Ben Assayag attends a ceremony of the new Bamba factory of the Osem corporation in Kiryat Gat, on February 19, 2019. (credit: FLASH90)

Until now, harsh media criticism has prevented this from happening. Retail chains have also helped stop such moves, explaining that the timing was problematic.

The price increase is across the board and includes hundreds of products: Bamba, pasta, coffee, snacks, ketchup, cakes and more. If Osem does not cave to public pressure, then next in line will the be dairy producers like Tnuva and Strauss, which will also raise their prices.

Osem is doing this since it can, and perhaps also because foreign ownership allows it to ignore local public criticism. In 2018, when Osem was leaning towards such a move, its top executives were summoned to the office of the finance minister at the time and after being warned against raising prices, they pulled back.

What was true then is not true today. The wind blowing from the current Finance Minister Avigdor Lieberman's office is different and, as a result, Osem is no longer deterred from increasing prices, which as expected is blamed on rising production costs.

Osem responded: "Raw materials, packaging and transportation costs have skyrocketed in a way that is unparalleled in the past. Unfortunately, the trend is continuing due to unprecedented costs and even after deducting the effect of exchange rates. After taking every possible step – including absorbing the price increase for a long time - we are forced to update our prices that only partially compensates for the increase."