BMI's Executive Summary

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The Sector At A Glance

Key Insights On The Food & Drink Sector Of Israel

In November, Israel's leading retailer Super-Sol was fined for price gouging, indicating that the tides may be turning in Israel's highly competitive mass grocery retail (MGR) sector, as discussed in BMI’s newly published Israel Food & Drink Report. Super-Sol was fined ILS450,000 (US$104,895) for pricing irregularities, which included overcharging for price-controlled items, inconsistencies between the price marked and the price charged at the cash register, and failure to display prices on items. The company pled guilty, and under a plea bargain, signed a ILS400,000 guarantee not to repeat the offence over the next two years.

Apart from the bad press for the company, this lawsuit also has greater implications for Israel’s extremely consolidated MGR sector. Up until 2005, three domestic retailers – Super-Sol, Blue Square and Clubmarket – had dominated the entire sector. However, following Clubmarket’s collapse and subsequent acquisition by Super-Sol, the industry has been dominated by just Super-Sol and Blue Square. This acquisition was a turning point for an industry that was previously characterised by profit-damaging price wars. Now that Super-Sol no longer needs to adopt such an aggressive and loss-making pricing system to maintain its previously marginal market leadership over Blue Square, it looks like consumers may be in for higher prices. In addition, the country’s small, independent players, which have worked very hard in recent years to build up a reasonable market share, will find themselves facing an even harder battle in an industry dominated by two players, who are continually in the process of expanding their store networks.

BMI is forecasting sales growth of 29.9% in Israel’s MGR sector to 2010, which, although solid, is low in comparison to the country’s neighbours as a result of its higher level of development. New entrants to the sector are unlikely, due to the intense competition that exists, as well as the consolidation trend that has started and is set to continue. In addition, security concerns and low disposable incomes, due to relatively high levels of unemployment, act as deterrents. Accordingly, the above growth forecast will be a consequence of the business activities of existing retailers, as well as the gradual erosion of the market share of traditional marketplace retailing, as the presence and acceptance of modern retail formats grows and grows.

The state of the country’s MGR sector is reflected in Israel’s poor ranking in our regional Business Environment Rankings, as it comes in at sixth place, despite its high level of political and economic development and high per-capita consumption.

Contents

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Chapter 1 – Business Environment

Table: Middle East Business Environment Rankings

SWOT Analysis

Israel Food & Drink Industry SWOT

Israel Political SWOT

Israel Economics SWOT

Israel Business Environment SWOT

Economic Forecast

Table: Israel - Economic Activity

Chapter 2 – Retail

Regional Overview – Discount Retailing

Table: Discount Store Sales in US$bn

Table: Key Players in Discount Retail

Industry Forecast Scenario – Israel

Table: Israel Mass Grocery Retail Sales - Value by Format - Historical Data & Forecasts

Company Developments

Market Overview – Israel

Table: Structure of Israel’s MGR Sector By Number Of Outlet

Table: Structure Of Israel’s MGR Sector – Sales Value By Format (US$bn)

Chapter 3 – Food & Drink

Regional Overview – Middle East

Table: Milk Production By Volume (tonnes)

Table: Key Players

Industry Forecast Scenario

Food Consumption Indicators – Historical Data & Forecasts

Table: Value/Volume Sales Of Selected Food Sub-sectors – Historical Data & Forecasts

Table: Selected Beverage Sub-sectors Value Sales – Historical Data & Forecasts

Industry Developments

Company Developments

Market Overview – Israel

Table: Israel Agricultural Sub-sector Production – Historical Data

Table: Sectoral Trade Indicators

Chapter 4 – Tobacco

Industry Forecast Scenario

Table: Israel Tobacco Indicators Historical Data And Forecasts

Industry Developments

Company Developments

Market Overview

Chapter 5 – Competitive Landscape

Key Players

Table: Key Companies In Israel’s MGR Sector – 2005

Table: Key Players In Israel’s Food & Drink Sector – 2005

Regional Company Case Studies

Lulu Company Profile

Table: Lulu Outlets

Ülker Company Profile

Table: Ulker

Table: Ulker’s Regional Presence

Regional Food & Drink Case Study – Aujan Industries

Table: Aujan Industries – The Figures

Table: Aujan Industries Production Facilities – Saudi Arabia

Table: Aujan Shareholders

Mecca-Cola’s Performance in the Middle East

Table: Mecca-Cola Global Presence

Table: Mecca-Cola – The Figures

Company Analysis

Frutarom

Super-Sol

Blue Square

Osem

Tnuva

G Willi-Food International

BMI Forecast Modelling

How we generate our industry forecasts

Retail Industry

Sources

Competitive Landscape for Middle East & Africa Food & Drink Reports: Sample of  
Companies Ranked

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At-a-glance perspective on the strengths, weaknesses, opportunities and threats facing each market’s food & drink industry. BMI also provides similar economic and business environment studies. Company SWOTs (Strengths, Weaknesses, Opportunities, Threats) covering all leading food and drink companies operating in each market, including competitive intelligence on geographic presence and competitive positioning of multinationals against local companies; leading products, services and brands; sales and local market share; foreign direct investment, projects, partners and acquisition strategy. Illustration of the industry via rankings tables comparing revenues, number of outlets, number of employees and registration dates. BMI analyses each company’s performance, market position, strategy and investment potential.

Network of Middle Eastern & African Food Sources

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BMI's Middle Eastern & African Food Reports are based on an extensive network of multilateral organisations, government departments, food industry associations, chambers of commerce and company reports. Information sources include: