At a press conference today, Shufersal Ltd. (TASE:SAE) launched its new line of milk products that it says will be substantially cheaper than the government controlled price for the same products, and will create competition with the large dairies.
Initially, the chain is launching milk, chocolate milk, and sweet cream produced by Ramat Hagolan Dairies, and imported cheese.
A liter carton of 3% milk will be priced at NIS 5.3, about 10% cheaper than the controlled price of NIS 5.9. A carton of 1% milk will sell for NIS 5.4, 14.3% below the controlled price of NIS 6.3. 38% whipping cream will sell for NIS 5.9, 10.6% less than the controlled price of NIS 6.6.
The cheese that Shufersal is launching, equivalent to Tnuva's Emek cheese, will be sold at a lower price at the dairy counter: NIS 37.9 per kilo, compared with NIS 45.4, or 16.5% less.
The prices set by Shufersal, which it says are profitable for it, put a question mark over the margins on price-controlled milk products.
Shufersal VP Trade & Marketing Uri Kilstein criticized the prices of dairy products in Israel. "Milk is a very emotional subject for the consumer," he said, "The average Israel family spends NIS 290 monthly on dairy products. It's an emotional matter because we really are dear. When you look at Israel in comparison with the OECD, you see that we are 40-50% dearer for beverages and milk.
"In the Tesco chain in the UK, a liter of the chain's own-brand milk sells for NIS 4.65, while in Israel the controlled price is NIS 6.3, 26% more. Our pricing for the stores will be only 14% above the price in the UK, and if VAT on milk is removed, then for the first time there will be a situation in which an own-brand in Israel will be at the same price as, or even slightly cheaper than, an own-brand in the UK."
If the major dairies expected a limited launch, they were wrong. Shufersal CEO Yitzchak Abercohen made clear today that Shufersal would be launching further dairy products, such as Gouda and Parmesan cheeses, and yogurts.
Published by Globes [online], Israel business news - www.globes-online.com - on May 3, 2015
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