Supermarket mogul Rami Levi's plan to begin selling products under his own brand name has hit a snag, with a conflict with the brand's manufacturer threatening the entire enterprise.
Levi, who has a reputation for offering low prices, made the announcement about the brand name some six months ago, noting that his brand, Rami Levi Shivuk Hashikma, would be cheaper than the brands of competing supermarkets Mega and Super-Sol. The first 500 products were scheduled to hit shelves within the next few months.
Currently, Levi offers products branded with Hamutag ("the brand" ), a brand owned by several private supermarket chains, including Levi's own, under a partnership named Hareshet Hareviit.
The company that operates Hamutag, Brand For You, was supposed to develop Levi's private brand as well.
Brand For You CEO Rafi Sheffer said the negotiations had come undone because Levi wanted to choose his own manufacturers, while Brand For You was obligated to work with its current manufacturers. As a shareholder in Hareshet Hareviit, Levi was also obligated to work with these manufacturers, argued Sheffer.
Sheffer said his contract with Levi would prevent the supermarket mogul from releasing his own brand before July 2015, which is when the two sides' contract expires. During that period, Levi couldn't stock any private brands other than Hamutag, said Sheffer.
Levi countered that Brand For You's offer - to produce his own brand under the exact same terms as Hamutag - would not have gained consumers anything. "I wanted to negotiate with suppliers myself in order to get lower prices and better quality, or to move on to new suppliers," Levi said, adding that the matter was now being handled by his lawyers.
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