Food Sector Profits Soar Amidst Israel-Hamas War and Skyrocketing Prices

A new report by Fair Value Group reveals that the food sector in Israel has seen significant profit growth due to rising food prices during the Israel-Hamas War. The report, authored by CEO Eli El Al, shows a 15.4% increase in gross profit margins from October 2023 to September 2024. Food retailers enjoyed a 9.5% margin boost, while food importers and producers saw an even larger increase of 23.8%.

Earnings before interest and taxes (EBIT) for the sector surged by 44.8%, fueled by increased demand for essential food items during the war, as well as inflation-driven price hikes. The report highlights that some companies raised prices beyond actual cost increases, benefiting from operational efficiency measures. However, it also points to the sector’s high level of concentration as a significant factor driving these profit margins.

Critics argue that many companies, including industry giants like Tnuva, Osem, and Strauss, exploited the crisis to implement multiple price hikes. For instance, Strauss raised chocolate and coffee prices by up to 18%, while Unilever followed suit with increases of 12% to 16%. Critics contend that despite raw material prices decreasing, companies did not reduce prices, further fueling public frustration.

The centralization of Israel's food sector has drawn sharp criticism, with some calling out monopolistic practices that contribute to the rising cost of living. As inflation and utility costs continue to strain Israeli families, critics argue that the war has created a window of opportunity for companies to raise prices without facing significant political or public scrutiny.