Until now, Shufersal Ltd. (TASE:SAE), Israel's largest food retailer, imported fresh beef for its private brand from Argentina. Shufersal will now begin importing discounted fresh beef from Poland, sources inform "Globes."
Shufersal currently markets fresh beef from Argentina and France under the Angus brand, which is believed to be of superior quality. Delivering this beef to Israel is more costly, but with the increase in fresh beef import quotas by the Ministry of Economy and Industry in recent years, competing food chains such as Rami Levy Chain Stores Hashikma Marketing began importing lower-priced beef from Poland, thereby detracting from Shufersal's ability to compete against them. The first delivery of Polish beef is scheduled to arrive in Israel next week.
Shufersal has been keeping track of this trend for some time, and its management recently decided to expand its imports to Poland in order to supply a cheap product for price-oriented consumers. Polish meat will be marketed under the Shufersal brand name, not the Angus brand name, because it is a different type of beef. Shufersal will offer it at a price that will be competitive with other Israeli suppliers.
Direct competition with dominant suppliers.
Shufersal launched its Angus private brand of beef in 2015 in direct competition with dominant beef suppliers Tnuva and Dabah Salah & Sons. Shufersal CEO Itzik Abercohen said at the time that the company private brand of beef would reach a 30-50% share of the fresh beef sales in the chain. Two years later, however, in a "Globes" interview, he revealed that the brand already accounted for 58% of the chain's fresh beef sales.
Shufersal's private brand currently accounts for 25% of sales in 2018, amounting to NIS 3 billion, making it the fourth largest supplier in the Israeli retail market.
In late 2018, Shufersal revealed in a shelf prospectus and agreement between it and a foreign company named Carnes Pampeanas, controlled by Eduardo Elsztain, for importing fresh beef from Argentina. The deal, approved a year ago, included 1,200 tons for a one-year period for up to NIS 35 million. The two companies actually began the importing of fresh beef to Israel in the preceding year, but at lower volume.
Elsztain, the controlling shareholder in Discount Investment Corporation, was also the controlling shareholder in Shufersal until recently, but diluted his holdings to only 26%. Incidentally, the been import agreement, was approved when Discount Investment Corporation was still the controlling shareholder in Shufersal.
Only a slight drop in prices
Imports of fresh beef to Israel have substantially increased consumption of fresh beef at the expense of frozen beef, but resulted in only a slight drop in prices. In late 2018, the Ministry of Economy and Industry began requiring the chains winning tax exempt auctions to sell fresh ground beef in accordance with a fixed quota. The ministry claimed that a shortage of cheap fresh beef for which the quota was distributed in the chains was forcing consumers to buy more expensive beef.
The importers and importing chains were therefore required, starting in 2019, in a quota to display on the shelf fresh beef at the maximum price at which they were committed, accompanied by suitable signs, so that there would always be a fresh beef alternative at a lower price.
Published by Globes, Israel business news - en.globes.co.il - on June 5, 2019
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