Yeinot Bitan Prices Rise Since Purchase of Bankrupt Israeli Supermarket Chain

Two weeks after Yeinot Bitan purchased bankrupt Mega, hopes that the discount supermarket chain would lower prices at Israel’s second-largest industry player have not panned out.

• Business in Brief: Discount derivative suits free to proceed
• Ministry urges Israeli kids to eat more vegetables
• Israel's labor targets for Haredi women met mark five years early

Not only have prices at Mega’s urban brand Mega Ba’ir not decreased, prices at Yeinot Bitan supermarkets have actually increased, TheMarker found in a price survey.

The survey was conducted via price comparison site mySupermarket. TheMarker checked the prices of 33 items at Yeinot Bitan and Mega Ba’ir, as well as at competitors Shufersal and discount chain Rami Levi Shivuk Hashikma. Prices were checked on June 30 before the purchase, and again on July 12.

TheMarker found that prices at Yeinot Bitan are on average 9% more now than before the acquisition.

The purchase of Mega made Yeinot Bitan owner Nahum Bitan the industry’s second-largest player, with annual sales of 5.5 billion shekels a year.

Yeinot Bitan increased the prices of 10 of the 33 items, and cut the price of two items. Tivol’s all-natural corn schnitzel went from 14.90 shekels to 22.90 shekels, while Pinuk’s shampoo for regular hair rose from 7.90 to 9.90 shekels; and Tnuva’s 30% reduced sugar chocolate milk increased to 11.90 shekels, up from 8.90 shekels.

Likewise, Badin white fabric softener cost 19.90 shekels, up from 14.90; and Tzabar’s 700-gram restaurant style hummus cost 12 shekels, up from 8.90 shekels.

Vegetable prices increased as well in some cases. Cucumbers cost 5.90 shekels, up from 2.90, even though wholesale prices decreased by 0.70 shekels during that period.

The purchase from Yeinot Bitan would have cost 532 shekels this week, up from 489 shekels two weeks ago.

TheMarker checked the prices of the same items at competitor Rami Levy, another privately owned discount chain. TheMarker found that these items would have cost 495 shekels at Rami Levy two weeks ago, and 493 shekels this week.

The survey indicates that while prices at Yeinot Bitan and Rami Levy were comparable two weeks ago, Yeinot Bitan is now about 8% more expensive than Rami Levy.

Yeinot Bitan took control of Mega’s 127 branches on July 1. Previously, the court had appointed trustees in charge of Mega. The trustees accused previous parent company Alon Blue Square and Alon Israel of running the bankrupt chain into the ground. The chain had sought court protection from creditors back in January.

Yeinot Beitan has 71 branches. It paid 455 million shekels for the chain.

Bitan made no official announcement after the purchase and has not stated what his strategy is for Israel’s second-largest supermarket chain.

When TheMarker asked whether he would cut prices at Mega, he replied, “I believe so, God willing.”

All signs indicate that Bitan is not changing Mega Ba’ir’s branding, at least not in the near future.

Meanwhile, prices at Mega Ba’ir have remained nearly unchanged – the prices of 29 out of 33 items remained the same as two weeks ago. An average purchase would cost 554 shekels now, versus 561 shekels two weeks ago.

Yeinot Bitan’s VP-Marketing Erez Eisenberg told TheMarker last week that Mega was unlikely to see drastic changes within a year of the purchase. Making changes in a chain as large as Mega is risky business, he added.

Suppliers told TheMarker that Yeinot Bitan has not sought to change their terms since the Mega acquisition. Yeinot Bitan is buying goods for Mega based on the agreements Mega had prior to the acquisition, sources said.

Some sources said that Yeinot Bitan and Mega had similar terms, while others said the Yeinot Bitan had slightly preferable terms.

Yinot Bitan said in response: “Prices at Mega Ba’ir haven’t changed, as we stated at the time of purchase. In the first stage there will not be dramatic changes. We’ll get to know the chain and decide on a work plan. Regarding Yeinot Bitan, the items checked were on sale two weeks ago and it’s almost certain that they’ll go back on sale. The check was not thorough and was based on only 33 items, out of 15,000 available.”