Carrefour Ends Israeli Government "Basket of Israel" Initiative

Carrefour Israel's "Basket of Israel" initiative, a government-backed program aimed at lowering grocery prices, will conclude on October 14th after six months of operation and will not be extended at this time. Economy Minister Nir Barkat announced the decision not to proceed with a second phase, opting instead to leave the future of the project to the next government.

The move follows reports in August that Electra Consumer Products, the controlling owner of Carrefour in Israel, was considering ending its participation due to the financial strain it placed on the chain. While the initiative reportedly brought new customers, it also negatively impacted revenues and profitability.

The Ministry of Economy presented the decision differently, stating that after discussions with Carrefour's management, Barkat decided against committing to further expenses and an extended operational period before a government transition. The ministry will pass on the data collected during the pilot to the incoming government for future decisions.

Initial data from the Ministry of Economy indicates the state invested approximately NIS 25 million in the accompanying campaign, while direct public savings from purchasing "Basket" products are estimated at NIS 40 million. The ministry also claims indirect savings of tens of millions more due to price reductions at competing chains, reporting an 8.4% drop in "parallel baskets" at leading chains during the pilot compared to a 3% drop in overall consumer goods. Carrefour's basket was reportedly 32.5% cheaper on average than those of competing chains.

However, these figures contrast with earlier reports suggesting competitors were slow to lower prices and that some categories saw sales declines. The Ministry of Economy has not yet released its full report. A final document detailing sales data, household participation, cumulative savings, price developments, and overall costs is expected after the initiative concludes.

The "Basket of Israel" program, launched in April, saw Carrefour commit to selling a basket of 112 products at reduced, fixed prices in exchange for a government campaign costing around NIS 25 million for six months. The initiative faced criticism for being the sole participant in the tender, limited availability across Carrefour's stores, and using state funds to promote a single commercial chain. The ministry defended the pilot as a test of a model where the state generates competitive pressure rather than directly regulating prices.

Carrefour is currently preparing for a stock market listing and undergoing significant management changes under new CEO Inbal Harsson. Barkat stated the initiative proved prices can be lowered but acknowledged that the limited participation and challenges necessitate further examination of competition in the sector. Carrefour has launched its own independent promotion program, "Carrefour Special Deal," to run across all its stores and online, though it does not currently include fixed prices or a specific product list like the government initiative.