January 26, 2015

American Food Brands More Widely Integrated on Israel’s Supermarket Shelves

JERUSALEM — Israelis are increasingly eating American branded foods, so much so that it set off alarm bells at Osem, one of Israel’s largest food companies which is owned by Nestle’s. With a 66% market share of the ketchup business, Osem is complaining that Heinz ketchup is a fraud, pure and simple. Osem’s complaint was directed at supermarkets warning that the Heinz ketchup distributed in Israel contains only about 20% tomato concentrate, much less than the 61% minimum required by Israeli regulations.

For years Israeli manufacturers paid little attention to the American brands, often licensed by Israeli importers. They believed that the American products were not compatible with the taste buds of the average Israeli and that in any case they were too expensive. A good example is American coffee, which Israelis don’t consider real coffee to the point that Starbucks was sent packing several years ago. But supermarket executives say that Israelis are increasingly buying the American brands, hence the dramatic charge that the world’s best known and probably oldest ketchup isn’t real ketchup after all.

For the approximate half million Americans who live in Israel, the American products are heaven sent, much like Israelis here covet Israeli products. The taste buds of customers does play a key role in the popularity of American brands, which explains why Americans living in Israel would go the extra mile to buy Kedem Grape Juice as opposed to Israeli grape juice brands which customers say is far “more grapey and smells like a vineyard.”

Osem appears to have taken the fight against a popular American brand to a new level by dispatching warning letters to supermarkets and Diplomat Group, the Heinz distributors in Israel. In addition, two lawyers, Yaacov Spiegelman and Amit Ido, have filed a motion for a class-action suit on behalf of consumers who purchased Heinz ketchup in Israel over the past seven years. The lawsuit is seeking some $18.5 million in damages. But Osem’s attempts at thwarting Heinz may be futile as American brands become more popular in Israel. Osem is also finding more competition in the US. For example, its coveted soup croutons are now competing with such American kosher brands as Shibolim, Gefen and Paskesz. Once again, the Osem argument is that they are all about quality which they say is not the case for its competitors. Ultimately, it will be for customers to decide.