Israelis Hit Elite-Strauss Hard over Lower U.S. Prices

Strauss stocks take a beating as customers punish it for selling candy bars at much higher prices in Israel than in U.S.

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Gil Ronen,

Pesek Zman in New Jersey
Pesek Zman in New Jersey
By permission, Yoav Rokach Penn

A Facebook user named Yoav Rokach Penn caused heavy damage to food giant Strauss over the week end when he showed his online friends how much cheaper Strauss's candy bars are in the United States.

Strauss's stocks went down by 3.49% Sunday.

Rokach Penn, an Israeli who resides in New Jersey, took a photo at the local Shop Rite showing the price for Strauss's Pesek Zman candy bar. He used a graphic tool to juxtapose the photo with an image from an Israeli supermarket chain's website, showing how much the same candy bar costs in its home country, Israel.

The Israeli prices were almost 2.5 times higher than those in the U.S.: about $1.70 for a candy bar that cost $0.70 in the U.S..

"The large firms must think we're stupid, there is no other explanation," Rokach Penn wrote in his Facebook status update on Wednesday. "By the way, I checked – it is manufactured in Israel."

The status update went viral and he was soon being interviewed on major Israeli news outlets with the story. Israelis bombarded Strauss's Facebook page with angry demands for explanations.

On Sunday, Strauss's stock dropped sharply, losing 3.49% at the Tel Aviv Stock Exchange – shaving NIS 170M off of the firm's worth. The trading volume for the stock was NIS 7M – twice the average daily volume.

On Saturday evening, the firm posted a message on its Facebook page, citing the high cost of living in Israel in general as justification for the higher prices it charges for its chocolates in the Holy Land. Israel has more expensive fuel, housing and travel – as well as higher production costs and taxes – than much of the rest of the world, Strauss explained.

In addition, it said – Strauss cannot control the prices at which a retailer chooses to sell his product. The wholesale price for a Pesek Zman chocolate bar in Israel is 3.50, it said. The "grocer" in New Jersey may have decided to sell the product at a discount or even at a loss.

Rokach Penn and the angry consumers he aroused were having none of this, however. Rokach Penn explained that Shop Rite was not some "grocer" and took photos of similar price tags for the products in other stores as well. Visitors to Strauss's Facebook page dismissed the explanation regarding the cost of water, etc. as phony. 

Various initiatives for boycotting the firm's products were being formed at week's end, and it remains to see if customers will punish the firm by avoiding its candy bars.