'No room to cut olive oil prices' - Israel Business, Ynetnews

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Israelis pay more of olive oil Photo: Index Open
Israelis pay more of olive oil Photo: Index Open

'No room to cut olive oil prices'

Olive growers participating in industry conference aren't troubled by latest wave of socioeconomic protests. Advertiser Reuven Adler: Strong branding could justify high retail costs

Gil Kalian, Calcalist
Published: 11.04.11, 14:04 / Israel Business

The winds of Israel's social protest blew far from this week's olive grower and olive oil producers' conference in northern Israel, which was held on the backdrop of a possible lifting of excise taxes.


The growers warned that the move may lead to the destruction of the industry, but Israeli consumers remain puzzled by the irreconcilable gap between the prices of olive oil in Israel and in Europe.  

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According to online retail information service Store Next, in 2010 Israel's retail chains charged an average NIS 40 ($11) per liter of olive oil, while European consumers pay about half that price.


Adi Nali of the Plant and Production Marketing Board explained: "Olive oil production costs are quite similar in Israel and Europe, but the European Union's €2 per kilo subsidy keeps retail prices low."


Israeli growers are protected by an excise tax  of NIS 6-6.5 per kilo, which drives up retail prices. Nali doubted the plausibility of importing the European model to Israel: "We are concerned that the duty will be lifted with no subsidy in place. We demand a viable policy that will not be revised on the Treasury's whim."


The conference participants agreed that there is no room for cutting olive oil retail prices. Olive growers' representative at the conference Ran Ben Nun said: "There is no way that prices can be slashed under NIS 20 per kilo for growers, otherwise groves will have to be razed to the ground."


Another solution discussed was branding Israeli olive oil as a product superior to its European counterparts, in order to convince Israeli consumers that the higher price is worthwhile.


Veteran advertiser Reuven Adler said that "just like every European is familiar with the JAFFA brand name, there is no reason they should not favor Israeli olive oil. If we can create a credible mark of quality and strong branding, we can price the products accordingly".


Businessman and retailer Rami Levi, who was slated to participate in the conference, told Calcalist that "olive oil has a 20% sales stake in the Israeli olive market.


"In Spain and Italy things are different... because the prices are €2-3 per liter. In Israel, despite the fact the olive oil is healthier, it's sold to the rich. It's true that were olive oil to sell in Israel at the same price as in Europe everyone would make a little less money but increased sales would set off the loss and net profits would climb. Just because someone claims their oil is better quality is no reason to double the price".


Click here to read this report in Hebrew




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