Having brought the People of Israel the message of heavy-discount shopping and cellular communication, Rami Levi is turning his attention to coffee machines. The retail baron means to import the machines and sell them for just NIS 390 at most, and to offer capsules for 30% less than their price today.
Rival coffee machines generally run at about double the cost of the future "Rami Levi Hashikma coffee machines." Espresso Club's Nautilus machine, for instance, costs NIS 900, and its capsules cost NIS 1.60 to NIS 2 per unit.
Levi is negotiating with two potential suppliers for the machines, Espresso Club (which is suing Strauss Group for not buying it ) and Kennedy, a maker of various household electric appliances.
Coffee sector sources expressed dubiety. One recalled the misadventure of Super-Sol with Cremesso coffee machines. "When the strongest retailer in the market invests NIS 10 million and sells only about 1,000 machines in two months, it's a disaster," he said. "It could be that Israel isn't ready yet to buy machines off the shelf at a supermarket."
He added that when the Yellow chain of convenience stores at Paz gasoline stations jumped into the coffee machine market with Lavazza, a powerful international brand, it didn't make the mistake of sticking its own brand on the machines. "Electric appliances don't sell as easily through private labels. This isn't bottled water or towels," he said.
That said, the Israeli market for coffee machines using capsules has doubled in each of the last three years. In 2009, $5.5 million worth of the machines were imported. In 2010 imports jumped to $11.7 million, and last year imports passed $18 million.
Super-Sol says that during the two-month running-in period it sold 2,457 coffee machines, and notes that the first ad campaign will only be appearing next week, as the chain starts its Passover advertising. It added that the Cremesso machines, made in Switzerland, are considered to be prestigious, and that it sells the capsules for the machines at an "attractive price of NIS 1.75 each."
Rami Levi exploded onto the media scene after offering chickens for a shekel per kilo, compared with the price of about NIS 20 at the time.
In other news of Rami Levi, Procter & Gamble is working to reach a new arrangement with the discount retail chain, which yanked its Pampers diapers because they cost too much. Levi hasn't placed any orders of Pampers for 10 days, after the company refused to lower prices: "I'd have had to sell them for more than NIS 45 a package," Levi said last week, adding that if they "wanted to play tough, fine - thanks but no thanks." Stay tuned.
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