Shufersal brand meat sales to hurt Tnuva

fresh meat
fresh meat

The Israeli supermarket chain aims to replace Tnuva’s fresh meat "Adom Adom" brand with its own private label “Angus”.

Shufersal Ltd. (TASE:SAE) will drastically reduce its stock of Tnuva Food Industries Ltd.'s “Adom Adom” brand meat, sources informe “Globes”. The decision will likely hurt Tnuva, which up until several months ago made up 58% of the fresh meat sales at Shufersal.

Over the past year, Shufersal undertook two major product launches that encroached on Tnuva its private label dairy offerings and its private label fresh meat products. Since Shufersal is the largest supermarket chain in Israel with 280 branches, and because it has entered product categoriesdominatedby Tnuva, the potential danger for Israel’s largest group is clear.

In August, Shufersal launched a private label meat line called “Angus” by importing fresh meat from Argentina. Shufersal announced prices lower by 10-15% and even up to 40% than average prices in Israel. The announcement undercut Tnuva’s justification for the high prices of “Adom Adom” especially given that Shufersal imports the meat via plane, which increases cost by some NIS 15 per kilo.

But Tnuva returned fire by importing fresh meat from Poland and announcing its prices would beat those of the “Angus” brand. In reality, the amount of meat imported from Poland was minimal, but Tnuva’s announcement captured the headlines; Shufersal’s move was upstaged.

Shufersal has since announced that it aspires for “Angus” to account for half of the fresh meat sales in its branches. After its successful launch, the label managed to achieve a market share of 35-40%, partially on the back of “Adom Adom” whose sales plummeted at the supermarket chain.

However, during the holidays and after a shortage in “Angus” supply when the butchers returned to Israel for vacation Tnuva managed to recapture its former market share in Shufersal.

But that will soon change cutting back the display of “Adom Adom” is expected to halve the sales of the brand at Shufersal; Tnuva’s response was already crafted last week, when the food group launched a sales special on meat at the Mega supermarket chain.

A Shufersal statement said: “Due to the growing demand for Shufersal’s ‘Angus’ products, the mix of suppliers in the meat category is changing, but there is no intention of dropping ‘Adom Adom’ from our branches.”

Published by Globes [online], Israel business news - www.globes-online.com - on November 17, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

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