Israel’s largest supermarket chain, Super-Sol, said Wednesday the commercial dispute it is engaged in with food maker Unilever is part of a wider fight to bring down the price of food for consumers.
“It can’t be that manufacturers are selling to us at higher prices than they sell the rest of the world,” said Super-Sol chairman Rafi Bisker. “Commodities prices are falling, and that is not being passed on to the consumer. Mega collapsed because it wasn’t profitable enough at a time when suppliers, some of which you can see in their financial reports, were showing double-digit profits,” he added.
Unilever has cut off deliveries of its products, which include popular brands like Telma, and has offered steep discounts to shoppers who buys its products at competing supermarkets. Super-Sol retaliated last week by urging customers to buy competing products.
Nevertheless, Bisker denied the retailer was “at war” with Unilever.
Mega, Israel’s No. 2 chain, is seeking debt relief after posting years of losses and cutting back branches and staff. Both Super-Sol and Mega have been squeezed as consumers seek out lower prices and do more of their shopping at discount chains like Rami Levy.
Super-Sol reported Wednesday that, after a patch of red ink, it had swung to a second-quarter profit – although sales continued to fall.
The food retailer earned a slim 16 million shekels ($4.2 million) – compared with a year-earlier loss of 157 million shekels – but revenue fell 8% to 2.8 billion shekels, down from 3 billion. Some of the decline was due to the timing of the Passover holiday, which occurred later in the 2014 quarter and boosted sales then. In spite of the profit for the quarter, sales at Super-Sol stores open at least a year – a key retail metric – fell 7.4%, as did the chain’s market share.
Super-Sol shares closed up 1.2% at 10.02 shekels in Tel Aviv Stock Exchange trading.
The retailer has been lowering prices, promoting private-label products and cutting costs as its meets an onslaught of competition from upstart discount supermarkets.
“Super-Sol has undertaken the biggest strategic initiative ever,” said Super-Sol CEO Itzhak Aberkohen, saying it was seeking to double operating margin to 3% while giving a fair deal to shoppers.
Aberkohen denied that the fight with Unilever, which began after the second quarter was over, was hurting sales. “Our July sales, like those in the first week of August, were good. Unilever sales fell, but customers are buying substitute products and we haven’t seen a major impact on turnover right now,” he said.