Bethel Finance:New boycott threatened against Strauss

www.bethelfinance.com
The Cottage Cheese boycott leaders are threatening to launch a new boycott against Strauss Group Ltd. (TASE:STRS) over differences in prices for the company's products in Israel and overseas. Cottage Cheese boycott leader Itzik Alrov says that if the company does not immediately lower prices, "The People of Israel will have a Purim holiday without Strauss-Elite products."

The call for a new boycott came after reports that the Pesek Zman (Time Out) chocolate bar made by Strauss's Elite unit costs $0.69 in the US, but more than NIS 6 (about $1.50) in Israel. An inquiry by "Globes" found that Strauss markets Pesek Zman to Israeli retailers at NIS 5.70 (including VAT) per bar, double the retail price in the US.

In addition, Facebook user Yoav Rokach-Pan showed receipts from New Jersey grocery stores that other Elite chocolate bars are also being sold in the US for less than half their prices in Israel. Twist sells at $0.39 (NIS 1.50) in New Jersey compared with NIS 3.40 in Israel, and Ta'ami is sold for $0.59 (NIS 2.20) compared with NIS 3.60.

The inquiry also found that Strauss raised the price of Pesek Zman by 5% in July 2011, at the height of the cottage cheese boycott.

In a letter to Strauss executives, the Cottage Cheese boycott leaders state, "It seems that your company is exploiting its dominance and monopolistic power, and the lack of government regulation to allow yourselves to sharply raise prices even when it is clear that the only reason is your insatiable appetite for consumers' money. Israel's people are paying a scandalous price for your products, while foreign consumers pay a substantially lower price. This conduct creates an intolerable situation in which the public is forced to pay exorbitant prices for food products, reducing its consumption to the absolute minimum."

The boycott organizers added that they had received many calls from the public to launch a new boycott against Strauss. "If the demands of the struggle are not met, we will call on the public to launch a month-long boycott against some of the company's products on March 1."

Strauss said in response, "Following the protest, Strauss made a permanent price cut averaging 10% on 50 key products, including dairy products, chocolate bars, Turkish coffee, and Ahla brand hummus. These are permanent cuts, not a marketing gimmick, one-time discount, or sale, but reductions in the price list."

As for Taami and Twist, Strauss added, "The final consumer price is set solely by the retailers, and is not under our control. Snacks sold at a discount in New Jersey cost an average of NIS 2.40 (including sales tax) for Taami and NIS 1.60 (including sales tax) for Twist. The local retailer sets the price, and they do not reflect the consumer price throughout the year."

"Similarly, these and other snack products by Elite can be found at discount prices Israel, such as NIS 6 for a three pack (NIS 2 per unit) at Yeinot Beitan supermarkets, a four-pack for NIS 10 at the Yesh supermarkets, a seven-pack for NIS 20 at Shefa Shuk supermarkets, and, next week, a six-pack for NIS 16 at Shufersal Deal."

Strauss's share price fell 0.6% in morning trading today to NIS 45.52. giving a market cap of NIS 4.8 billion.