Price war bursts out between Israeli supermarkets

Super-Sol executive: "Rami Levi is the next Clubmarket." Rami Levi: "They're behaving like a mafia."

"Do you imagine that we'll sit down and stare at Rami Levi? We have enough stores to absorb this, so our future looks rosier than ever before at Super-Sol. Rami Levy is Ginzburg times two. He's the next Clubmarket," said a Super-Sol Ltd. (TASE:SAE;Pink Sheets:SSLTF) executive in response to the price war declared by Rami Levi Chain Stores Hashikma Marketing 2006 Ltd. (TASE:RMLI), which has dragged the food retail market into a maelstrom.

The price war between the supermarkets continued to wage today. Blue Square Israel Ltd. (NYSE: BSI; TASE: BSI), controlled by David Wiessman through Alon Israel Oil Company Ltd., has initiated a campaign of discounts at its Mega branch in the Talpiot neighborhood of Jerusalem, the heartland of Rami Levi and the center of the attack launched by the Super-Sol last night.

Although the price war was initially limited to fresh produce, Blue Square escalated it to dry goods. The supermarket today cut prices on a range of products, some of which is selling at a loss. The company promised today, "There will be total war."

More evidence of the conflict was Blue Square's announcement on Thursday that it will sell chicken at NIS 0.99 per kilogram with purchases greater than NIS 200.

Super-Sol, controlled by Nochi Dankner through IDB Holding Corp. Ltd. (TASE:IDBH), is also initiating a strategy of price cutting. "You want the price list for shat time, exactly? It's irrelevant because there'll be a new price list in an hour from now," the company told "Globes" today in response to a request for the store's price list on selected products.

In a notice to the TASE today, Rami Levi said, "The company has a policy of low prices in every sector in which it operates. The company believes that its price policy does not substantially affect its profits."

Rami Levi told "Globes", "Do you think that I'm afraid and won't try to develop the company? That I'll capitulate to threats? They're behaving like a mafia. I opened a store and I compete fairly. There was competition in other places and there will continue to be competition. My profits won't be eroded."

Published by Globes [online], Israel business news - www.globes-online.com - on February 11, 2008

© Copyright of Globes Publisher Itonut (1983) Ltd. 2008

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