Unilever Offers Deep Discount Coupons as War With Israeli Supermarket Chain Super-Sol Widens

Manufacturer and supermarket chain engaging in a very public battle for shoppers' hearts, wallets.

Ofer Vaknin

The war between Super-Sol and Unilever Israel grew more bitter Sunday, as the Israeli arm of the Anglo-Dutch food and consumer goods maker got ready to issue coupons giving deep discounts on its products at most — but not all — Israeli supermarket chains.

Executives at a number of food retailers showed TheMarker the coupons, which will appear in newspapers and other media outlets beginning Tuesday. They will be valid for a week, starting on Tuesday. Examples of the coupons include 20% off the listed price on the popular childrens breakfast cereal Kariot, 15% off Klik chocolates, 25% on salty snacks, around 20% off Dove soaps and 20% on Lipton teas and Knorr instant soups.

Super-Sol, Israels biggest supermarket chain, has been in a dispute with Unilever since last week. Industry sources had expected the two sides to resolve their differences quickly but instead Unilever cut off deliveries to the chain and Super-Sol launched a public attack by posting signs in its stores urging customers to buy competing products.

This is a very unusual step for a supplier, especially for Unilever. I guess its a combination of pressure from lost sales at Super-Sol and an urge to take revenge at Super-Sol over the signs, said one food retail executive, who asked not to be named.

The manufacturers coupons come on top of the discounts of 15% to 25% that Unilever began giving retailers recently.

The coupons can be redeemed at Mega, Rami Levy, Victory and Tiv Taam, among other chains, but not at Super-Sol stores.

Unilever is giving Super-Sol a pummeling. All the sales and coupons are aimed at getting Super-Sol to remove the signs that it posted against Unilever, said a supermarket manager who asked not to be named.

A sign of how the dynamics of the supermarket segment are changing, Unilever first approached Rami Levy, the upstart discount chain, to offer it discounts, rather than No.2 Mega,Super-Sols traditional arch-rival. Mega is a deep financial straits, closing stores and negotiating debt relief with suppliers and banks. After Rami Levy, Unilever approached other chains, such as Victory.

Sources in the food sector said the real reason for the dispute is that Super-Sol is seeking to promote its private-label brands. The chain is in the midst of an advertising campaign urging shoppers to compare prices on its website, in particular its private-label brands versus name brands.

Super-Sol has a lot of private-label products in categories that Unilever has, so it was easy to pick Unilever to war with, said one industry executive.