Price Battles Reach Baby Formula

Price of baby formula drops 700-gram container of Materna to sell for about NIS 60; 900-gram container of Similac to cost approximately NIS 90.

With the battle over cottage cheese over and the war over diapers raging, consumer outrage focused on the next arena: baby formula. As a result, all the major retail and drugstore chains are offering discounts.

Starting today, a 700-gram container of Materna can be found for about NIS 60, and a 900-gram container of Similac will set you back about NIS 90.

"We decided to increase the sales on baby food since that was the next step that made sense after diapers," said Rami Levy, owner of the Rami Levy Shivuk Hashikma chain, who has declared it his goal to lower prices.

Unlike cottage cheese, on which the stores certainly made a profit, they usually lost money on formula. It was considered a "loss leader" - a discounted product that would bring in shoppers, who would buy other products on which the stores would make money.

The baby formula market in Israel is highly concentrated. It's a half-billion shekel a year market serving 590,000 households with infants, yet it is dominated by two players - Materna (owned by Osem, which is in turn owned by Nestle and has 56% of the market ) and Similac (owned by Promedico, which has 42% of the market ).

Optimil, made by Medici Medical, was launched three years ago but hasn't made substantial inroads into the market.