Will Shufersal Ltd. (TASE:SAE) manage to break Similac and Materna's duopoly on infant formula? Today, Shufersal launched its infant formula under the brand name Shufersal Baby. The series of infant formula products is manufactured by US drug giant Perrigo, one of the four US manufacturers with an US Food and Drug Administration (FDA) certification and the only one which is ISO quality standard certified. Shufersal is launching this brand at highly attractive prices. All Shufersal Baby formulas will be sold for a uniform price of NIS 39.90 for a 700 gram package - 25%-30% cheaper than the competing brands.
Shufersal CEO Yitzchak Abercohen says, "We come along with two pieces of good news: a high-quality product and significantly lower prices. Without any tricks. Therefore, I believe that families will connect with this. The fixed, ongoing price for this product is NIS 39.90. Coupons may occasionally be available for credit card owners and store club members."
"We will start with a 10% market share"
The infant formula market is extremely uncompetitive, with Materna and Similac controlling 92% of the sales This market is highly profitable for manufacturers but generates losses for the retail chains, which sell the products as a loss leader in order to attract customers. Estimates are that Shufersal has been losing about NIS 20 million annually from infant formula sales. The advantage for Shufersal is therefore double: it can offer the products to consumers with low prices while at the same time stopping losses in this category.
The writer was Shufersal's guest during a visit to Perrigo in the US.
Published by Globes [online], Israel business news - www.globes-online.com - on August 29, 2016
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