Alon Holdings Blue Square - Israel Ltd. (NYSE: BSI; TASE: BSI) supermarket brand Mega today responded to the expanding cottage cheese protest by cutting prices for cottage cheese and white cheese to NIS 5.49 per tub. The supermarket notified dairy producers Tnuva Food Industries Ltd., Strauss Group Ltd. (TASE:STRS), and Tara Dairy of the reduction. It added that the reduction lowered the retail price to less than what it pays for these products, and it therefore demands the dairy producers to lower the purchase price to the new level.
Mega gave the dairy producers until July 1 to lower the purchase price they offer the retailer, otherwise it will consider whether to continue buying the products. Mega said that this was an interim solution, and if laws are passed or the regulatory intervenes, it will act accordingly.
Blue Square CEO Zeev Vurembrand said, "We are seeing a public protest that is only growing stronger and requires us to find a fair solution to the public sentiment. The time has come for the dairy producers to take responsibility and immediately reduce the prices of products. I am pleased by the cabinet decision to examine the issue of rising prices, but until a decision is taken on the matter, it is impossible to continue letting the public pay the price. We must not let this important public protest die. The producers' silence and passing the responsibility onto the regulator is not understandable."
Blue Square rival Shufersal Ltd. (TASE:SAE) is now offering two tubs of cottage cheese for NIS 10, and independent supermarket chain Rami Levi Chain Stores Hashikma Marketing 2006 Ltd. (TASE:RMLI) has cut its price for cottage cheese to NIS 5.49 per tub.
Published by Globes [online], Israel business news - www.globes-online.com - on June 22, 2011
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