Super-Sol Wants a Slice of the Dairy Business, Too

After hitting over 1,000 items with its own private label, Super-Sol, the country's largest supermarket chain, is gearing up for its next battle: dairy products.

Super-Sol's private brands already make up 10% of its sales, and now it wants to take on some of the biggest names in local food manufacturing - including Strauss and Tnuva. The chain has already talked to a number of dairies about cooperative efforts.

There are many obstacles to entering Israel's dairy-products sector and Super-Sol is not expected to start its own line until 2011 at the earliest. The sector boasts almost NIS 7 billion in sales annually, and has three main players: Tnuva, with an almost 60% market share; Strauss with 23%; and Tara with 8%.

Industry sources say there is almost no chance that either Strauss or Tnuva would cooperate with Super-Sol, as the use of its private label would come at their expense. It is much more likely that the chain would link up with Tara. However, sources close to that firm, which is owned by the Central Bottling Company (more commonly called Coca Cola Israel), say Tara is also not interested.

Another possibility for Super-Sol is to go into business with a small dairy - or even establish its own - which would be quite costly and complicated, and would be the least preferable option for the chain.

Super-Sol will most likely start with basic products only, such as milk, soft chesses and butter. Products that require more complicated manufacturing processes, such as yogurt and deserts, would only come later - if at all.

Super-Sol introduced its own private label in October 2006, and has been pushing it aggressively ever since. It is now the best-selling private label among supermarkets, and features a wide variety of products including mineral water, coffee, canned goods, juices, pasta and rice. For example, Super-Sol's own label accounts for up 12% of all pasta sales. Super-Sol sells 20% of the country's food products, and the chain must move into the dairy market if it wants to expand significantly. It has already made some moves against other suppliers, such as by introducing its own chocolate line in competition with Strauss.

Super-Sol's suppliers are already on the defensive, as the company has tried to remove their employees who arrange products on supermarket shelves; suppliers have already asked the Antitrust Authority to look into the chain's business practices.