Coca Cola Israel it seems is as mad as hell and isn’t taking it anymore. That is, from Super-Sol, the country’s biggest supermarket chain, which among other things has been selling a private-label brand of cola in packaging that looks similar to Coke’s.
Central Bottling Company, the Israeli Coca Cola bottler, has acquired a 25% stake in BringBring, a new online food retailer, it was revealed on Monday. In doing so, Central Bottling is mounting an assault on Super-Sol’s own online supermarket and its most important growth engine.
Ofir Steinberg, one of BringBring’s three founders and its CEO, didn’t relate Central Bottling’s stake to any war with Super-Sol. “Coca Cola [Israel] doesn’t plan to control the company or manage it. While it does hold a 25% share, the other shareholders together control it,” he said.
Nevertheless, on paper at least, BringBring poses a formidable challenge to Super-Sol Online.
The new online venture is promising deliveries of food and other basic household goods within four hours after an order is placed and at no charge for orders over 200 shekels (about $56). That is a big improvement over Super-Sol’s service, which promises only same-day service and charges 30 shekels for orders of less than 750 shekels.
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“Super-Sol leads the online market with an estimated 70% share of online sales. We want to be a strong and dominant No. 2,” said Steinberg.
Coca Cola Israel, which is the biggest maker of soft drinks in Israel, has been at war with Super-Sol since the supermarket chain launched a line of private label colas last August that sell for far less than Coke. It opened another front against Central Bottling later on with its Cash and Carry unit, which wholesales groceries and other products to small groceries.
Because Super-Sol is such a big player, it gets much lower prices from manufacturers and importers than other wholesalers and retailers can — and in the case of Cash and Carry, it is passing on the discounts to its grocery customers. That has eaten into the big profit margins that food and drink manufacturers like Central Bottling enjoy from sales to mom-and-pop stores.
BringBring was started by Steinberg, a former CEO of the food importer Diplomat and a failed online grocery venture called Siton Online, together with Alon Zamir, a former vice president for marketing at Coca Cola Israel. Three unnamed investors from the high-tech sector provided much of the $5 million in startup costs.
BringBring launched its pilot in March and is rolling out the service nationwide over the next few months. It works in a behind-the-scenes partnership with supermarket chains, so that the shopper’s order comes exclusively under the BringBring brand.
“Instead of operating our own warehouses, we have links with scores of supermarkets all over the country,” explained Steinberg. “The minute an order arrives, we send it to one of the supermarkets in line with where it is located.”
BringBring’s weakness is on price. A survey by TheMarker, using a shopping basket of 10 items, found that the bill added up to 191.80 shekels at BringBring versus 188.10 at Super-Sol Online, although Super-Sol’s delivery charge kicks in on much smaller orders.
The same 10-item shopping basket came in at 162 shekels at Rami Levy online. Deliveries from the discount chain, however, are only guaranteed for the following day and an order of that size would include a 30-shekel delivery fee, making it equal to BringBring’s.