Mega follows Shufersal's lead on price cuts

The supermarket chain will cut the price of 32 products by 20%.

Alon Holdings Blue Square - Israel Ltd. (NYSE: BSI; TASE: BSI) supermarket chain Mega is following rival Shufersal Ltd. (TASE:SAE), by announcing today that it will cut the prices of 32 basic goods by 20%. Mega cut its prices for bread, dairy products, eggs, pasta, cornflakes and other cereals, children's snacks, frozen foods, canned goods, baked goods, and cleaning products.

Mega's announcement comes after Shufersal reached an agreement with the Tel Aviv Student Union last night to cut prices for 30 basic goods by an average of 20%. Mega apparently rushed to make a similar move to prevent a boycott like the one that the student threatened against Shufersal unless it agreed to the price reductions. That boycott was called off following the agreement.

Mega says that the selection of products of which the prices are being cut is based on an analysis of products consumed by all Israeli families. Many of the products are own-brand products. Mega says that the basket of products will be a cheaper alternative, and that this is a new long-term pricing policy, not a temporary one-off deal.

Blue Square CEO Zeev Vurembrand said, "We are aware of the public's need for permanently lower prices for food products, rather than specific solutions of sales campaigns and discounts. Only a strong private brand can create real competition and force food companies to lower prices."

Blue Square's share price rose 0.3% by mid-afternoon on the TASE today to NIS 24.02, after falling 2.9% in New York to $6.60, giving a market cap of $435 million.

Published by Globes [online], Israel business news - - on August 31, 2011

© Copyright of Globes Publisher Itonut (1983) Ltd. 2011

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